I'm looking at a deal in Indianapolis and am unfamiliar with the area. I'm wondering if anyone with experience out there can give me an idea of what the market is like and the viability of this deal. My focus is on cash flow.
The property I'm looking at is a single family home, total investment of around $40,000 and rental comps at $650.
1) How are the neighborhoods in the 46218 zip code? Is it a B or C area?
2) Is one month a reasonable time for tenant placement?
3) Are there any issues with investing in Indianapolis that I should be aware of?
Thanks in advance for taking the time to address my questions and concerns.
I live in Carmel north of Indianpolis and I prefer to invest in my own backyard at this point in my investing career. I wasted almost a year looking at houses under $50k and everyone one of them felt "slum lord" like. Some areas I went to and I never got out of the car, for example an opportunity zone. I focus outside of the circle freeway, interstate 465 for those not familiar. I now focus on $100k-$150k ARV ranges in areas with GREAT schools with rents in the $1200-$1300 ranges. I certainly do not meet the 2% rule but I can cash flow positive which is all I care about right now. Even in that rent price point, I struggle with tenant qualifications. My lowest price rental I bought and rehabbed for $85k that rents for $1050 was the easiest to rent as far number of applicants. At $1300 the number of applicants is scary but I do get them rented. Just sharing my limited experience in Indianapolis as a person who lives here.
I'm also quite new in the area but my understanding is that could be significant differences from block to block. In any case, you may get some help for this post:
Want to share address? Zip codes are too broad in Indianapolis. But based on rental comps and sales price I’ll guess C to possible D. I’m a local Property Manager and happy to help, but would need at least cross streets to go off of.
@Josh C. is right. At that price point and rent, this is more like a D class neighborhood, It certainly isn't anywhere close to a B class. As a general rule of thumb, a 3Br C class property in Indianapolis is going to start in the low $70K price range with rents of $750 or more. Anything renting for $650 is not going to attract good tenants. Indianapolis varies block to block so you can't generalize about a zip code. Drill down and get to know the neighborhoods and streets otherwise you will make a big mistake.
I live in Carmel north of Indianpolis and I prefer to invest in my own backyard at this point in my investing career. I wasted almost a year looking at houses under $50k and everyone one of them felt "slum lord" like. Some areas I went to and I never got out of the car, for example an opportunity zone. I focus outside of the circle freeway, interstate 465 for those not familiar. I now focus on $100k-$150k ARV ranges in areas with GREAT schools with rents in the $1200-$1300 ranges. I certainly do not meet the 2% rule but I can cash flow positive which is all I care about right now. Even in that rent price point, I struggle with tenant qualifications. My lowest price rental I bought and rehabbed for $85k that rents for $1050 was the easiest to rent as far number of applicants. At $1300 the number of applicants is scary but I do get them rented. Just sharing my limited experience in Indianapolis as a person who lives here.
@Nick Giulioni Thank you so much for taking the time to reply. I'll definitely keep that in mind and make sure anyone I decide to work with knows the area well. And thanks for the offer, the help is much appreciated. I'll definitely be reaching out in the following days as I am learning as I go.
@Mike D'Arrigo Thank you for your insight, I truly appreciate it. I'll keep those numbers top of mind moving forward and make sure I know what I'm getting myself into with a particular neighborhood before making any decisions.
@Eric Severson Thank you so much for your reply, I really appreciate you sharing your experience. That's all great information to keep in mind and I'll make sure to take a look at those areas.