Why do so many invest in Indy

24 Replies | Indianapolis, Indiana

I am finding that you get more for your money in Fort Wayne, South Bend, Goshen, etc. Why are more people not investing in these smaller cities?

I am keeping an eye out for a live in duplex in all of the cities of Indiana. I would like to know if there are concerns living/investing in these smaller towns.

I am just guessing that people speculate that prices in Little Flower or Irvington will sky rocket in the coming years whereas no neighborhoods in the smaller cities of Indiana would do this?

I've been buying in Muncie for years.  I get properties from tax sale.  Not every B class city is the same in Indiana, however.

In cities without large factories or colleges, your units will be purchased for much less, but sit empty much longer. Furthermore, if you need repair work done, the options for various items like flooring or roofing are limited to maybe one or two contractors nearby.

Muncie and Anderson are centered around both manufacturing and large colleges (Ball State and Anderson College). They are also surrounded by farm land.  Muncie in particular has a large regional hospital and a transport hub.  This characteristic is shared by a few other cities like Fort Wayne, South Bend and Bloomington.  It also has dramatically lower taxes than the states surround it.

The downside to these areas are the downsides to Indiana in general. Public schools are a mess.  Heroin use is rampant.  Section 8 tenants are more common than usual.  Some smaller town governments can be inept or corrupt (the mayor of Muncie in under FBI investigation).  Hands need to be greased, and projects babysat longer. Choices for competent property management is sparse. 

@Fred Ewert - I'll add Elkhart to your list (which I assume you were including in the Goshen area).

I can't think of a better blue-collar population to invest in especially with all the booming RV factories up there. The biggest downfall is when the next recession hits, Elkhart will probably get hammered again as they are very focused on a few luxury industries.

Just make sure you buy for cash flow and not appreciation and you should be great!

People are definitely investing in Fort Wayne.  That is one of the reasons that our housing prices have increased a lot since the recession.  Houses that were $20,000 are now $40,000+.  I'm not sure where you got your information that people are NOT investing here.  It is the second largest city in Indiana.

Fred - Happy to connect with you to discuss Ft Wayne, Anderson, and Indy markets. We currently operate out of all 3 at this time. Feel feee to PM me

Indianapolis itself is a really cool city. The children’s museum is top notch, downtown is really cool,  not even to mention of course the Indy 500. 

I was HML to turn key operators in the satellite cities of Kokomo Muncie etc.. back in the early 2000s .

you had some good things  like the inner city thefts were not there.. you could walk into a home that was vacant and it was still all in tact same home in a inner city area will usually be stripped or a squatter.

the issue was stable rent collections.. these areas the wages are not high and collecting rent long term was a challenge to those I was lending to ( well actually the end client I was paid off by the time the tenant went in) but I ended up owning properties in each of these markets .  did not do any thing In FT Wayne.. though so that one I don't know.

I do like the cities within 30 minutes of Indy though.. compared to buying inner city stuff in Indy that can be super challenging to own out of area for a long period of time.. its one reason there is so much of it.. burnt out landlord syndrome is alive and well and its wholesaler heaven in those areas.. Wholesalers are routinely picking up homes for 5 grand or so.. in the inner city areas of Indy to this day.

I saw a couple new construction 3 bed 2 bath homes in inner city Indy for 40k a pop.  Are those in a war zone?

@Fred Ewert there is absolutely nothing wrong with the satellite cities. The reason they don’t get nearly as much attention is like you said appreciation will likely not be as high and it’s harder for an out of state investor to develop a network there. There just aren’t as many resources. For a local, I believe it can be a huge opportunity. 

@Adrian Chu I'm involved with some new builds in Indianapolis right now.  I don't see it alot in terms of rentals.  It's more of an alternative to flipping.  It can work very well.  

New builds are interesting.  They can be lower risk than a large flip.  There are fewer surprises in the construction arena with new builds.  There aren't pre-existing structural issues.  They can take less time than an extensive flip.  Flip side is that returns are a little lower, but overall, I don't think too bad.  It's a risk vs reward thing. 

You'll sometimes hear people talk against new builds vs flips.  I think many times they are uninformed.  It's in our nature as investors to look at the higher returns.

 Now, you do need to do your homework when it comes to new build.  It won't work well in every neighborhood.  I'm not seeing any new builds in big rental areas, only in the popular flip areas of Indianapolis.  These areas are in the city.  I think the term inner city can have a different meaning to different people.  

Other thing is the neighborhoods.  Normally, it's either a flip neighborhood or a rental.  There are some that blend those two together.  Flippers don't want to be in rental neighborhoods. 

I'm not seeing many rental type properties go for quite as low as 5k this year, but there are bad one's going for 10-15k (I mean wholesalers picking them up at those prices.)  They are either in war zones or they need so much work that they'll never be profitable as a rental. 

We see some good things in that C range and higher.  There are areas that were D areas 3-4 years ago, that are totally different types of neighborhoods now.  The homes have been rehabbed.  The neighborhoods have a much improved quality to them.  The homes are just older homes that have been rehabbed.  It will be interesting to see these neighborhoods in 5-10 years. 

Some of the township areas have good outlooks.  Schools are better and a quality that is of course less urban.  In the 90's and early 2000's there were alot of "vinyl village" type neighborhoods built in many of the township areas.  It was all about home ownership at the time.  These neighborhoods now have a few more renters.  Many of the neighborhoods still have the visual appeal and are nice communities to live in.  The price points for these are obviously a little higher. The properties are newer, crime numbers look lower, schools perform well. 

I'm in and out of C & B areas all the time.  I see some D, but overall, I'm just not in D neighborhoods much. 

Account Closed  I only say people aren't investing compared to Indy because there are 1,900 posts in the Indy forum vs only 190 in the Fort Wayne forum. I'd love to see more activity there for learning sake. I wonder if a handful of people are doing well there and don't want the secret out?

Originally posted by @Adrian Chu :

I saw a couple new construction 3 bed 2 bath homes in inner city Indy for 40k a pop.  Are those in a war zone?

 Possibly.  Indianapolis is a street-by-street city.  Investors are wanting to invest in class B or class C-on-the-fringes of B and upcoming, and that's really a street-by-street thing in Indy.  It's possible to find a Realtor & PM in Indy to help assess the neighborhoods, but for my comfort level (as a fellow Seattle area investor) it was important for *me* to have boots-on-the-ground, and see for myself before I was comfortable investing in Indy. 

@Fred Ewert I can't speak for everyone, but a lot of people prefer larger markets with a larger renter pool, diverse jobs/economies and growing populations. That's what I like about Indianapolis. You don't usually find that in the smaller markets.

The economy is strong and playing a big role in the Indy market. I lived in a C- and now A class location. I can also tell you that people are over paying for properties; the house across the street from me has sold 3 times in 2 years! It's a small 2 bdrm 1 bath, A class neighborhood, and not worth $225k! Just my 2c. 

I invest in Indy mostly because of the good returns. Been there 5 years and have had consistent 7-8% returns passive. Have 7 SFH's and just starting an AirBnB project.

It’s business friendly, inexpensive to purchase, has had a steady increase in population for decades, and great jobs. The state has a AAA credit rating and 100M in budget surplus which can help to significantly improve the city and civil services.

@David Martin Jr   I've lived in Indy for 5 years and know all the streets. You have a good eye because that's an area I'm targeting myself. Another area to look into is the near west side of downtown. 

As a Realtor in downtown Indy -- A big portion of my investor clients (myself included) are looking in neighborhoods with good levels of future growth. Such as:

-Garfield Park
-Fountain Square (South FS is still affordable with good ROI)

-Bates Hendrix

Another area that isn't being talked about as much is Twin Aire.  I'm trying to help my rental property investors start to consider that neighborhood. The Near East side of Indianapolis has major growth trends already in the works for the next foreseeable future...in my opinion.

As a Realtor that works out of Fountain Square - Feel free to PM me with any questions on neighborhoods and numbers I help my investors achieve!

@Jaron Walling - "near west side of downtown"?

I've spent a lot of time on BP and in other forums. The majority of the areas that I'm coming across in my reading are  locations on the east side of town (by east I'm talking about east of I70/65); Holy Cross, Arsenal Heights, Grace Tuxedo, Tuxedo Park, Christian Park, Little Flower, and of course Fountain Square and Bates Hendricks(technically west of I65 and south of I70). I did have one person mention "West Indy", which I assumed was west of White River and south of I70.

Where would you say "near west side of downtown" is generally speaking? 

I find it strangely odd that I almost NEVER read about anything "west", except for maybe Speedway. 

Originally posted by @Adrian Chu :

I saw a couple new construction 3 bed 2 bath homes in inner city Indy for 40k a pop.  Are those in a war zone?

 what does logic tell you..  I have been selling LOTS in the better parts of Indy for 40 to 60k.. just the lots.. 

Hi, I'm a local investor in Indianapolis and being boots on the ground for other investors,  I have found lots of potential in Indianapolis because of people from other states coming in to leave.  I would be able to keep a lookout for anyone because I work as an ambassador for a car sharing service driving around the city during the week. 

I inherited an ag: timber company . The old tenement houses that farmers lived in before they became wealthy , are now my best performing assets .a 25/35k 2Br 1 ba cash flows7k year over year which is a return in excess of 70%. There is no appreciation to these low income semi rural homes, but I get calls all the time asking do I have anyone moving, am I Considering new low cost contraction at former tenement sites. Clearly filling an enormous need. This is in johnson ? Shelby and Bartholomew counties