Up until a few months ago I had never thought much about investing in Indianapolis, or Indiana for that matter. I didn’t know a single person there, and was definitely not thinking about ever buying properties there.
In late fall of 2016 I was frustrated that we had not yet purchased an investment property in 2016, and I was also unwilling to lower our investing criteria. Our local market had become flooded with investors buying the ugly stuff that is normally left for buyers like me (darn those HGTV shows) so I decided that maybe it was time to consider investing in areas outside of Washington, so I went to work researching areas to invest.
I knew California and Oregon were out because they were too similar to our Seattle market. I axed Arizona, Nevada, and New Mexico because I think their climate is pretty extreme for most people and that may prohibit growth. I could be totally wrong on this one, but one look at the summer temps and I think most people who are not from there or used to that would move or look elsewhere. Similar to the hot states, I eliminated the super cold winter ones like Minnesota, Wisconsin and Michigan. Then I pretty much decided from there that the Midwest was probably where I wanted to focus.
Since millennials are more nomadic and less interested in home ownership, I decided to look for cities that would likely appeal most to them, kind of like an Austin, TX of the Midwest. I narrowed it down to the major cities in a few Midwestern states, and then looked at each city’s population changes over the last 6 years.
The best cities in terms of population growth as a percentage happened to be Indianapolis, Birmingham, Nashville, St Louis, Kansas City and Little Rock.
Now for the most important search of all: a reputable, honest and knowledgeable agent who works with investors. For anyone that has ever tried to find an agent who knows how to work with investors, you would know how much of a challenge this is. Almost all agents say they work with investors, but few actually know how to. The reason why “investor agents” are so important is because they know the hot areas for renters, and they know that it’s all about the income the property produces. They ask all of the questions up front of the listing agent to verify what those expenses are before they even share the property with the investor. This saves everyone time and builds trust.
I found some great agents, and put them to the ultimate test – finding deals. Several of my initial favorites never actually sent me any deals. However, two really stood out, and they happened to be in Indianapolis and Nashville. So, that’s where I started.
Flash forward a few months and one new duplex later, Indy is my new favorite place to invest.
We recently returned from an extended weekend there, and really fell in love with the city and the people. I could instantly see the appeal of living there, it’s a pretty clean city with a great downtown nightlife scene. There was no traffic while we were there, and their freeways and highways are easy to navigate and make sense (unlike Seattle where it’s almost one way in, one way out being on the water).
We stayed in the Fountain Square neighborhood, which is in the process of revitalization. We found that most all of the remodeled historic homes were converted into modern style homes like this one:
Many local investors are buying up older homes in the historic neighborhoods and remodeling them with a 5 year hold plan as the neighborhood values increase. I can see this strategy working here, and it’s a very different strategy that I’ve never considered before.
One of the reasons we went to Indy was to check out the duplex I closed on in December, and meet with my property manager, contractor and our agent.
The duplex I purchased in December is in the suburbs, and we received differing opinions on investing in the suburbs vs in the city core from the property manager, contractor and agent. One said the suburbs would offer better tenants, and the contractor said that people are moving from the suburbs to the city since it has been getting cleaned up the last few years.
Honestly, I think an investor would do fine either way here so long as it was a good area.
We were turned on to a few areas that are scheduled to have additional city services such as new sidewalks, so we spent a lot of time driving through neighborhoods and seeing what their houses look like.
In Fountain Square the houses were built in the early 1900’s and any new builds or renovations are done with a modern style design.
It’s very interesting seeing the historic homes right next to these modern homes, though it is pretty cool.
Our property manager also turned us on to a great wholesale company with amazing deals and fantastic returns.
My goal is to purchase another 5-10 properties here if we can find deals that offer the 15% + cash on cash returns that I am looking for, and I would definitely plan another trip back to Indy!
Like this post? Share it.