Indianapolis

The Indianapolis Market

The decision to choose Indianapolis wasn’t taken lightly. Indianapolis is known as the “Land of Cash Flow”

As investors ourselves we found a perfect storm to invest in cashflow properties in Indianapolis. We wanted to ‘stack the deck’ in our favor by choosing a city with many external factors in place to support our rental portfolio. With safe consistent cashflowin mind, our research concluded that there are several factors that needed to be in place, Indianapolis has these and more.

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Time-Tested Keys of performing Real Estate are:

City Size / Population
Diverse Economic Market
Job Growth Environment
Nearby Universities
Pro-Landlord Legal Climate
Reasonable Property Taxes

SAMPLE FINANCEABLE REHABBED HOME

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PURCHASE PRICE

$100,000

CASH FLOW

$400

RENT

$1,050

MORTGAGE AMOUNT

$80,000

EST. INTEREST RATE

$550

EST. INSURANCE

$550 per year

EST. TAXES

$1200 per year

EST. PAYMENT

$550

General Indianapolis Facts

Indianapolis is a destination for people and for businesses. Because of our impeccable financials, AAA-debt rating, stable tax environment and balanced budgets, businesses know what to expect in Indy — “which makes them more likely to act, create jobs and invest in Indianapolis because they can plan.” – “Mayor Greg Ballard, Indiana Chamber of Commerce 2012 Community of the Year Award.”

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Cost of Living & General Market

One of the top “affordable” cities to live with an affordability score of 95.8% (CNN Money)
Cost of living is 8.5% below the national average (Forbes)
Both state taxes and utility costs are one of the lowest in the nation (City-Data.com)

City Size / Population

Real-Estate-Done-4-U-map-location-img Indianapolis is the capital of the State of Indiana, and county seat of Marion County. The thinking there is building a rental portfolio that has state and government tax revenue flow into it. The more cash flowing into the city itself, the more cash available for living expenses, including rent. In addition to a cash capitol, Indianapolis is Indiana’s largest city, and the 13th largest city in the U.S.; this has provided Indianapolis with the means to establish its now rich and diversified economy. The city of Indianapolis contributes to the fields of manufacturing, distribution, education, health care, and finance, as well as playing host to numerous conventions and sporting events.

With efficient roads leading out of the city in all directions, Indianapolis quickly became a major logistical hub connecting St. Louis, Peoria, Kansas City, Milwaukee, Chicago, Detroit, Cleveland, Toledo, Columbus, Cincinnati, and Louisville, earning Indianapolis its nickname “The Crossroads of America.”

External Factors of this Midwestern City include its location at the exact center of the United States. Within 700 miles lives roughly 65% of the entire United States.

Diverse Economic Market, Job Growth Environment

Real-Estate-Done-4-U-nightlights-city-img One of the important keys to keep in mind when choosing a rental market is to look for a diverse economic market. Over the last decade, Indianapolis has experienced significant growth in its economic development. Advancements have been made in the manufacturing, distribution, retail, and service industries, and Indianapolis homeowners consider it the most affordable city for its size. Indianapolis has seen steady growth of employment opportunities in the last couple years from large companies including Kroger and Amazon that have greatly enriched the job market. With over 200 retail shops, over 250 diverse dining options, upwards of 35 hotels, and plenty of entertainment options including sports, the arts, and recreational spaces, Indianapolis demonstrates its diverse economic market.

The economic sectors represented in Indianapolis include Advanced Manufacturing, Agriculture, Information Technology, Insurance and Financial Services, Life Sciences, Sports / Motor Sports, Tourism, and Transportation / Logistics. Headquartered in Indianapolis are a variety of major companies, including Conseco, Eli Lilly and Company, Brightpoint, hhgreggInc, Guidant, State Farm Insurance, Wellpoint, Roche Diagnostics and many more.

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The new $1.1 billion Indianapolis International Airport terminal (IND) completed in 2008 transports 7.5 Million passengers a year. In 2013, IND was recognized by the Airports Council as the best airport in North America, and awarded Best Overall Passenger Experience by J.D. Power and Associates.

Entertainment venues include The Children’s Museum, with five floors dedicated to fun and learning for children and families about science, art, humanities and world cultures, The Indianapolis Museum of Art, which is one of the ten largest museums of art in the nation, The Cultural Trail, an internationally-acclaimed eight mile biking and walking trail that connects all six of Indianapolis’ Cultural Districts, and so much more!

Real-Estate-Done-4-U-downtown-img Indianapolis is also home to fantastic eateries; one of the most exciting being Subzero Ice Cream with thousands of flavor combinations where customers can watch as Liquid Nitrogen is used to turn milk, yogurt, or a dairy-free beverage into their custom designed ice-cream flavor right before their eyes! In 2012, Indianapolis hosted the Super Bowl XLVI at Lucas Oil Stadium.

As well as being the closest capital to occupy the exact center of its state, Indianapolis is within a day’s drive to 2/3rds of America’s population. Chicago, America’s 3rd largest city is less than a 3 hour drive from Indianapolis. Detroit, the 9th largest city, is 4 hours away, New York, America’s largest city is about a 10 hour drive, Niagara Falls is 8 hours, and Atlanta is less than 8 hours away.

Forbes magazine ranked Indianapolis the 6th best city for jobs in 2008, grounded on the statistics of income and job growth, low unemployment rates, and cost of living.
For the fourth quarter of 2009, Indianapolis was ranked as the most affordable major housing market in the U.S. by the National Association of Home Builders and Wells Fargo.
Indianapolis was included on Forbes’ list of Best Places for Business and Careers in 2013
International headquarters for Eli Lilly, a NYSE company and S&P 500 stock with over $20 Billion in revenue and over 40,000 employees.
Home to Major FedEx Hub
New $1.1 Billion dollar airport
Headquartered in Indianapolis are a variety of major companies, including Conseco, Brightpoint, HHgreggInc, Guidant, State Farm Insurance, Wellpoint, Roche
Diagnostics, Simon Property Group, and Sallie Mae.

Amazon is hiring 1,800 employees for fulfillment centers in Indianapolis and surrounding areas.
Approximately 6 million square feet of industrial buildings in the metro area that came to market in 2014, approximately 50% are utilized as warehouses.
Kroger will be adding an estimate of 3,400 employee by 2017 as it builds 11 new stores and renovates over 20 others in the region.
Angie’s List will generate 1,800 new and relocated positions at its downtown location by 2019.
Housing starts have increased to near pre-recession levels.
In 3rd quarter 2015, Single Family Housing permits increased slightly while multi-family permits fell just over 20%. The city has affordable rental housing
which is the ideal storm of sorts for a savvy investor.
Many Investors are paying cash as quality rehabbed and rented homes can be acquired in the $60k-$85k range.

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In addition to including a diverse economic market, other time-proven keys of performing Real Estate are the State and Local Government, surrounding universities, and gross rental income per purchase price. Growth of the state and local government is measured with sales, income, and property tax as indicators of the state capital’s cash flow. This is a crucial component for measuring and forecasting the performance of investment properties. Forbes magazine ranked Indianapolis the sixth-best city for jobs in 2008, grounded on the statistics of income and job growth, low unemployment rates, and cost of living. For the fourth quarter of 2009, Indianapolis was ranked as the most affordable major housing market in the U.S. by the National Association of Home Builders and Wells Fargo. Then in 2013, Indianapolis was included on Forbes’ list of Best Places for Business and Careers.
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Real-Estate-Done-4-U-building-img Universities play an important role in the value of rental properties. Every year thousands of students enroll in universities without fail, and when they do, they are also looking for a place to live. Indianapolis is home to many universities including Purdue University, Butler University, Indiana University, University of Indianapolis, Marian University, and Indiana Wesleyan University. Having rental properties near these universities is advantageous due to the significant number of students in need of rental properties.

With its favorably priced rental market, Indianapolis is rated one of the Best Bang for the Buck Cities by Forbes. With low purchase prices and low property taxes, combined with high rental rates, the return on investment is quite favorable. When buying a rental property, it is important to make sure that the gross rental income is at least 1% of the purchase price for a smart investment, and for Indianapolis rental properties, it isn’t difficult to find rates of 1% or higher!

Indianapolis is a sweet spot with a large diverse workforce across a broad range of industries promoting economic stability – further providing a stable landscape for affordable rental ownership and consistent cash flow.

Nearby Universities

Universities play an important role in the value of rental properties. Every year thousands of students enroll in universities without fail, and when they do, they are also looking for a place to live. Indianapolis is home to many universities including Purdue University, Butler University, Indiana University, University of Indianapolis, Marian University, and Indiana Wesleyan University. Having rental properties near these universities is advantageous due to the significant number of students in need of rental properties.

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The Housing Market

The median income for a household in the city was $40,154, and the median income for a family was $48,979. About 9.0% of families and 11.8% of the population were below the poverty line, including 16.1% of those under the age of 18 and 8.1% of those ages 65 or older. These characteristics support the strength of Indianapolis as an investment opportunity, since the household income is relatively high in comparison to the cost of housing and the poverty rate is relatively low. This creates an attractive environment for investment, since there is a healthy pool of potential renters with steady employment

The National Association of Home Builders and Wells Fargo ranked Indianapolis the most affordable major housing market in the U.S. for the fourth quarter of 2008, and Forbes magazine ranked it the sixth-best city for jobs in 2008, based on a combined graded balance of median household incomes, lack of unemployment, income growth, cost of living and job growth. In 2009, Indianapolis ranked first on CNN/Money’s list of the top 10 cities for recent graduates.

In the 1970s and 1980s, Indianapolis suffered at the hands of urban decay. Major revitalization of the city’s blighted areas, such as Fall Creek Place, and especially the downtown, began in the 1990s and led to an acceleration of growth on the fringes of the metropolitan area. This growth trajectory has expanded out to many high quality neighborhoods in the outskirts of the city with many newer homes and attractive affordability.

Real-Estate-Done-4-U-racing-img Indianapolis’s future appears bright as the city continues to invest heavily in improvement projects, such as an expansion to the Convention Center, upgrading of the I-465 beltway and an entirely new airport terminal for the Indianapolis International Airport.

Indianapolis fundamentals cater to both cash flow and long-term growth. While many markets saw dramatic increases and decreases, property values in Indianapolis have remained relatively stable over the last few years. The city has increased by 15.2% over the last decade (above the National average of 9.7%) and continues to put upward pressure on home prices and rental rates. Indiana state is currently running a budget surplus making it a very business friendly economy. The average home ownership in Indianapolis is 75% (while the national average is below 67%) – the shortage of rental properties leads to a stable rental market demand.Indianapolis represents the type of market that we seek for our investors and for our own portfolios as well.