(Indianapolis) Most Important Factors In A Rental Property

13 Replies

Hey all,

I'm from San Francisco and am new to the Indianapolis investment scene. In my search for rental properties, I found myself wondering what factors are the most important in a rental property. More specifically, what characteristics do tenants find most desirable about a rental property that will yield higher rents and lower vacancies?

Here are some factors that I think are important, but not sure how they would rank in comparison to each other:

-location

-crime rate

-# of bedrooms/# of bathrooms (are more bedrooms always more desirable?)

-square footage

-what else?

I am wondering more about the generic characteristics of rental properties (i.e. location or square footage) as opposed to the individual features of a specific property (i.e. new kitchen, hardwood floors, etc). 

I thought this would be a good topic for discussion and would love to see what all the local experts think. 

It depends on what rent price range you are working with.

Low end like near bus stops and don't seem to care too much about the area or other perks.

Mid level renters like upgraded flooring and good paint jobs along with central AC.

I don't work in the higher end rental, so I can't comment much on that.

Like I tell all the out of State investors that want to get started - "Interview and select a good property manager first" and then start looking at properties.  The PM should be able to point you to the right areas and what amenities to add to your home.

@Brandon Low

Great question. Here's my 2 cents.

Location

I look at location first. Location and crime rate kind of go hand in hand. Crime rates are specific to certain locations. Indianapolis can vary neighborhood to neighborhood so you have to know the areas well.

# Bedrooms

This depends on the class of property and the area. For a B class property, you want 3/2 minimum. Most C class neighborhoods will be 3/1 or maybe 3/1.5 and that is fine, however, a 4Br will always command a premium and rent quicker. I would stay away from 2Br unless you have a sizable portfolio already. They can take a little longer to fill vacancies and don't attract families that tend to stay longer.

Size

Square footage isn't a big factor in my experience unless the size is outside of the norm for the area.

Schools

This varies a lot. Some renters don't care about it at all and to some it's very important. Some prefer township schools over IPS but the reality is that even a lot of the township schools aren't that good. The best school districts are in Franklin township where rents will be $1100-$1200. Those that can only afford $750-$800/rent don't have a lot of options.

Amount of rent

This is a big predictor. I like rents to be $750 and above on a 3Br. Once you get below $700, you see a very different caliber of tenant.

Public transportation

C class tenants are more likely to be dependent on public transportation so access so public transportation might be important.

You said you weren't interested in the individual features so much but these can be a major factor in how much rent you get and how long tenants stay. A property that has recently been well rehabbed will rent much faster or for more rent than one that has not. Don't over look this. That's one of the first things tenants look at, especially kitchens and baths.

Good responsive property management is also important to retaining tenants. Too often, landlords neglect to look at their PM from the tenants point of view, but if the PM isn't responsive to tenants needs and quickly handling repairs, tenants don't stay.

@Shawn Holsapple - what price range do you consider mid-level renters? $1000-$1200/month? Also, can you PM me some good property managers you work with?

@Mike D'Arrigo - Living in san francisco where space is a luxury, the concept of square footage not mattering seems strange to me. In any case, I'm glad that is one less factor to think about in the Indianapolis market.

Do suburbs (outside the i-465 loop) take longer to rent out? I'd imagine the tenants would stay longer, but at the same time, would take longer to fill a vacancy simply because the population is not as dense. 

@Brandon Low

 Just to clarify, I'm saying sq footage isn't important if the property is within typical range for the area. There's not going to be much diffence between 1100 sq ft and 1200, However, more space can be a selling point if there's enough difference. In my experience, # of rooms is more important that overall sq ft. For instance, a 1200 sq ft 4Br/2B1 will generally be more attractive then a 1400 3Br/1Ba with bigger living room.


Do suburbs (outside the i-465 loop) take longer to rent out? I'd imagine the tenants would stay longer, but at the same time, would take longer to fill a vacancy simply because the population is not as dense. 

 Works both ways...   some tenants have to live in a particular town like Brownsburg or Southport because of their kid's schools systems.  But yeah, there is fewer over all people to choose from in a smaller town.     

Originally posted by @Brandon Low :

@Shawn Holsapple- what price range do you consider mid-level renters? $1000-$1200/month? Also, can you PM me some good property managers you work with?

@Mike D'Arrigo - Living in san francisco where space is a luxury, the concept of square footage not mattering seems strange to me. In any case, I'm glad that is one less factor to think about in the Indianapolis market.

Do suburbs (outside the i-465 loop) take longer to rent out? I'd imagine the tenants would stay longer, but at the same time, would take longer to fill a vacancy simply because the population is not as dense. 

 [For me] mid level is the bread and butter range of $750-$900.

Here some "must haves" for some people looking for a place to call home..  (that I don't think were mentioned yet.)  

  • Some folks have to have a garage.  
  • For some a fenced in yard is huge plus..   dogs / kids / privacy   ..For some its just the yard itself that they like.   
  • Central air in the summer time.  Everyone asks...   low end its not expected.  
  • Basement, attic, closets or storage space in general.  
  • Laundry hookups!   If you've ever tried to rent a unit with no laundry hookups.. its hard.  A lot of guys over look it but usually females make the final decision!  lol.  
  • Stove and fridge.   It sounds obvious to me but some landlords don't offer appliances.  
Originally posted by @Shawn Holsapple :
Originally posted by @Brandon Low:

@Shawn Holsapple- what price range do you consider mid-level renters? $1000-$1200/month? Also, can you PM me some good property managers you work with?

@Mike D'Arrigo - Living in san francisco where space is a luxury, the concept of square footage not mattering seems strange to me. In any case, I'm glad that is one less factor to think about in the Indianapolis market.

Do suburbs (outside the i-465 loop) take longer to rent out? I'd imagine the tenants would stay longer, but at the same time, would take longer to fill a vacancy simply because the population is not as dense. 

 [For me] mid level is the bread and butter range of $750-$900.

 Agreed!    the sweet spot!  

Originally posted by @Brandon Low :

@Shawn Holsapple - what price range do you consider mid-level renters? $1000-$1200/month? Also, can you PM me some good property managers you work with?

@Mike D'Arrigo - Living in san francisco where space is a luxury, the concept of square footage not mattering seems strange to me. In any case, I'm glad that is one less factor to think about in the Indianapolis market.

Do suburbs (outside the i-465 loop) take longer to rent out? I'd imagine the tenants would stay longer, but at the same time, would take longer to fill a vacancy simply because the population is not as dense. 

Regarding rental demand in suburbs....it's very strong. For one thing, the inventory of homes to rent in the suburbs is quite a bit lower. Much more owner occupied than the inner city....this is a very general statement, and there are exceptions both ways.


Regarding rental demand in suburbs....it's very strong. For one thing, the inventory of homes to rent in the suburbs is quite a bit lower. Much more owner occupied than the inner city....this is a very general statement, and there are exceptions both ways.

 I think rental demand is pretty strong all over Indy metro.  Even properties in the hood are getting rented fairly quick if they are nice, clean, on bus line, etc...   In the rougher inner city areas there are a lot of vacancies but properties that are actually nice and priced right are still in high demand.  Low income folks have to live somewhere.  If the properties perform or not is a different story.  

In the trendier spots downtown most of the inventory is being gobbled up by people flipping to home owners so rentals are far and few between.  Its the same way in the higher end north side suburbs like carmel, fishers, westfield and zionsville.   Barely any rentals.   

Right now is leasing season too...   The way winters have been so freaking cold in Indianapolis lately leasing slows down quite a bit in Nov, Dec, and Jan...  But I feel like spring time made up for that lag...  People get there tax check in springtime and leasing goes bananas!   

Originally posted by @Ryan Mullin :

Regarding rental demand in suburbs....it's very strong. For one thing, the inventory of homes to rent in the suburbs is quite a bit lower. Much more owner occupied than the inner city....this is a very general statement, and there are exceptions both ways.

 I think rental demand is pretty strong all over Indy metro.  Even properties in the hood are getting rented fairly quick if they are nice, clean, on bus line, etc...   In the rougher inner city areas there are a lot of vacancies but properties that are actually nice and priced right are still in high demand.  Low income folks have to live somewhere.  If the properties perform or not is a different story.  

In the trendier spots downtown most of the inventory is being gobbled up by people flipping to home owners so rentals are far and few between.  Its the same way in the higher end north side suburbs like carmel, fishers, westfield and zionsville.   Barely any rentals.   

Right now is leasing season too...   The way winters have been so freaking cold in Indianapolis lately leasing slows down quite a bit in Nov, Dec, and Jan...  But I feel like spring time made up for that lag...  People get there tax check in springtime and leasing goes bananas!   

 Ryan, I agree....I've never had a vacancy issue in Indy in 10 years! But we avoid winters if possible and price to market. I've found you can really find long term tenants in all areas of town. I have very few single year tenants.

I think sq footage is important in the burbs.. We have a couple of rentals on the far east side, and my 2000+ sq ft homes rent MUCH quicker than the sub 2k houses...

I agree with a lot of what is being thrown around in this forum.. I will work in the lower income areas, and I find that as long as I have a nice home, that I rent very quickly. We price aggressively, but I can get $50-100 more in an area based off extra amenities(garage, fenced yard, laundry facilities, etc). We also are very profit conscious with up charges for pets, renting washer/driers, renting detached garages in some cases, etc... We've tried to rent window A/C units, but haven't had anyone take us up on them yet.. haha

Thank you everyone for such insightful posts - I'm sure this will serve as a good thread for any out of state investors looking to get started in Indianapolis!

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