What do you think of when you hear people talk about Indianapolis? Do you think of its nickname, “Naptown?” Some may think of it as being just some city in the Midwest that hosts the Indy500 and is the “Crossroads of America.” On the business side, people outside of the state may associate the Hoosier capital to Eli Lilly or for it being one of the most affordable bigger cities in the county. All of this has some truth in it, but that is not what we want to talk about. When you hear the word Indianapolis, you should now think of real estate.
Reason #1: The Stability
Every investor has thought about or experienced first hand the impact of the current global pandemic. With some of the financial future of the U.S. economy being unknown, the housing markets that will remain strong after COVID-19 is something any real estate guru would love to know. But there are predictions on what markets will remain strong. According to a recent BiggerPockets article, ATTOM Data Solutions reported Marion County (Indianapolis) as one of the six counties least at risk of suffering a significant downturn in the housing market. Indianapolis is not one of six counties in the Midwest, it is one of six counties in the ENTIRE country. Read that again! Risk is a factor that can impact any real estate deal, which is why Indy can be a market not only for your cash flow or number of units goals, it can also be a place where the shift in supply and demand will not ruin your portfolio.
**A great investor not only invests in current booming markets, they are able to spot out the markets that have bright futures and Indy is one of them.**
Reason #2: The Business Environment
No matter what tricks you have in finding quality home deals or occupying your units, if the demand is not there it could lead to some obstacles. Why are people flooding to Indy? Other than the affordable cost of living or the friendly environment of the Midwest city, the job market can be another reason to invest in real estate. Indiana was ranked as the 5th best state in the U.S. for business, according to Chief Executive Magazine in 2019. The U.S. Census Bureau ranked Indianapolis as 3rd in “The 25 Best Cities for Job Seekers” and reported over 45,000 job openings in 2020 alone. Specifically in Indy, some of the highlighted growing commercial investments that will influence housing demand and prices include the $300 million dollar Bottleworks project and the $6 billion dollar IU Health Hospital opening in 2026.
The Indy Tech scene has seen drastic growth in the last few years and is attracting young top talent to stay in Indianapolis long term. The Tech Hub environment not only has resulted in young professionals flooding into Indy and its suburbs, it has translated to a greater demand for high quality rental properties. This increased demand and higher quality of tenants has also led to elevated rent prices.
So if the cost of living, entertainment options, energetic sports scene, transportation sector, educational opportunities and population growth are not enough to convince you to invest in Indianapolis, Indy having the highest job growth in the Midwest should be another obvious reason.
Reason #3: The Numbers Don’t Lie
Not only did Forbes name Indianapolis America’s best city for renters, Indianapolis also had the largest rental growth rate in one bedroom rentals in the U.S. Does that not matter to you? Well, Indianapolis has a 95.6% occupancy rate, the fourth highest among the 20 largest single-family rental markets. Combining the low vacancy rates with the Indy workforce that generates quality tenants, this seems to be every investor’s dream.
Norada Real Estate Investments classified Indianapolis as “an excellent destination for cash flow rental properties.” The year-over-year appreciation of investment properties is another key indicator of the investment opportunity. Norada estimates the next 3-year appreciation forecast of investment properties in Indy to be 10.3%. Another growth indicator is the rise in home prices in the city. Since 2016, the medium home price in Indianapolis has appreciated by over 38%. This statistic on top of the business friendly environment that allows homes to sell extremely fast is crucial for investors.
The numbers do not lie, rather they tell a story about the potential… And the potential is here and not going away for the Indy real estate market.