We have chosen Indianapolis for a variety of reasons. After completing transactions in Florida and California, we polled our prospective clients and the answer was consistent, they were looking for something safer. Florida and California admittedly are sexier, warmer, and more entertaining. They are also the states’ highest in foreclosures. So the niche that our clients wanted us to fill is the conservative and consistent part of their portfolio. With that in mind our research concluded that there are several principles required for performing real estate.
Choosing a Market is important to determine your risk/reward factors and ultimate cash flow. Time-Tested Keys of performing Real Estate are: Size, Universities nearby, Pro-Landlord Legal Climate, and a Diverse Local Economy.
Indianapolis, Indiana, provides an excellent market for generating passive income with rental properties. Market research shows Indianapolis as a favorable environment for rental property investors. One of the important keys to keep in mind when choosing a rental market is to look for a diverse economic market. Indianapolis, the 12th largest city in the United States, and home to the largest single day sporting event in the world, the Indianapolis 500, embraces a thriving economy. 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. 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, hhgregg Inc, Guidant, State Farm Insurance, Wellpoint, Roche Diagnostics and many more.
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!
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.
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.
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!