Top Locations Why It’s a Good Time for Indianapolis Real Estate Investments by Daniela Andreevska February 2, 2017January 31, 2019 by Daniela Andreevska February 2, 2017January 31, 2019 As a real estate investor, you should keep your eyes constantly open for new investment opportunities and new profitable markets. In your search for your next income property, you should explore the option of Indianapolis real estate investments. Why? Here are some reasons. Trends in the Indianapolis Real Estate Market Maybe an Indianapolis investment property is not your first thought when you think about your next investment. Nevertheless, you should know that the Indianapolis real estate market is a very dynamic one at the moment, offering some great opportunities for investors. According to the Metropolitan Indianapolis Board of Realtors, the last couple of years have witnessed the strongest growth since the collapse of 2006, owing to job growth, competitive interest rates, and loosening of lending standards. The growth in sales in mid-2016 reached 10% over the same period of 2015. What all these signals mean is that you should consider investing in Indianapolis real estate now instead of waiting for when prices become too high. Is the Indianapolis Real Estate Market a Seller’s or a Buyer’s One? In order to be able to answer this question, let’s look at the current features of Indianapolis real estate investments: Short sales times: Real estate agents are reporting some of the fastest sales they have seen in their careers. Sales in the Indianapolis real estate market are closing within days and sometimes within hours after listing. Sale prices above listing prices: To be able to buy their desired Indianapolis home, buyers offer and pay at least $10,000 above the asking price, in face of multiple offers. Low inventories: Inventories are running low as any listed Indianapolis investment property is immediately gone. Builders have recognized the growing need for new properties and are responding to this demand. Although the number of new home constructions went up by 18% between the first quarter of 2015 and 2016, these properties will not be completed soon enough, which means that sales will remain strong, while the market will continue tightening in 2017. Historically high prices: Prices are going up for Indianapolis real estate investments and have reached historically high values. Related: Best Places to Invest in Real Estate in 2017 Well, any real estate investor will be able to tell you that the Indianapolis real estate market is clearly a seller’s one. However, this doesn’t mean that you should not go for investing in Indianapolis real estate. On the contrary, it’s best to buy your Indianapolis investment property right now as prices are expected to continue hiking as a result of shrinking inventories. Are Short-Term or Long-Term Indianapolis Real Estate Investments More Profitable? One of the crucial questions in real estate investing is whether to go for a short-term or a long-term investment, i.e., whether you are buying an income property for cash flow or for appreciation. At the moment it’s best to be buying long-term Indianapolis real estate investments. The simple reason is that long-term value gains are large! An Indianapolis investment property purchased a year ago has appreciated by an average of $10,000, below the national average of $17,000. However, Indianapolis real estate investments bought 9 years ago have appreciated by $49,000, which exceeds the national average of $16,000. Related: 6 Things to Know about Real Estate Appreciation Indianapolis Real Estate Investments: The Figures Before you can make an informed decision whether investing in Indianapolis real estate is right for you, you should perform a market analysis and find the comps. Or alternatively you can use the readily available numbers from Mashvisor’s real estate calculator, which will save you time and energy. Below are the most important figures you need: Median Property Price: $221,000 Traditional Rental Income: $910 Airbnb Rental Income: $1,900 Traditional CoC Return: 1.9% Airbnb CoC Return: 8.0% Traditional Cap Rate: 5.8% Airbnb Cap Rate: 12.3% Airbnb Occupancy Rate: 39.5% As you can see, Indianapolis real estate investments are affordable, especially in comparison with other hot markets like Los Angeles ($939,000), San Diego ($828,000), New York ($494,000), Miami ($494,000), Chicago ($366,000), Philadelphia ($344,000), and Minneapolis ($270,000). Both the rental income and the profitability measures – CoC return and cap rate – clearly show that Airbnb is better than traditional renting for an Indianapolis investment property. But before we jump to the conclusion that you should go for Airbnb Indianapolis real estate investments, let’s check out the existing short-term rentals legislation. Related: Investment Property Returns Dictionary Are Airbnb Indianapolis Real Estate Investments Legal? According to a 2016 report on Airbnb regulations in US cities by R Street Institute, Indianapolis is one of 11 “silent cities” along with Cleveland, Columbus, Dallas, Detroit, El Paso, Mesa, Milwaukee, Omaha, Phoenix, and San Antonio. This means that these cities’ municipal codes do not explicitly allow or prohibit Airbnb activities. That’s great news for those thinking of investing in Indianapolis real estate. Top Neighborhoods for Indianapolis Real Estate Investments To help you narrow down your search for an Indianapolis investment property, let’s look at the top 3 neighborhoods for investing in Indianapolis real estate. 1. Ravenswood Median Property Price: $100,000 Traditional Rental Income: $1,500 Airbnb Rental Income: $1,660 Traditional CoC Return: 11.3% Airbnb CoC Return: 12.8% Traditional Cap Rate: 16.9% Airbnb Cap Rate: 18.5% Airbnb Occupancy Rate: 40.3% Until the 1920s, Ravenswood used to be a riverfront resort, after which it started turning into a residential neighborhood, just 8 miles away from Downtown. Ravenswood’s top characteristic is affordability as the median property price is less than half the city average. The expected CoC return and cap rate for an Indianapolis investment property here are excellent, and both traditional and Airbnb are very profitable here. Actually, if you prefer to go for traditional rental strategy, Ravenswood is the place for you. 2. Near Southside Median Property Price: $170,000 Traditional Rental Income: $760 Airbnb Rental Income: $2,520 Traditional CoC Return: 1.9% Airbnb CoC Return: 15.3% Traditional Cap Rate: 6.3% Airbnb Cap Rate: 20.5% Airbnb Occupancy Rate: 49.4% The Near Southside neighborhood is less affordable than Ravenswood, but the median price is still below the city-wide level. However, you should keep in mind that while Airbnb Indianapolis real estate investments are really profitable here, traditional ones are not. 3. Near Eastside Median Property Price: $135,000 Traditional Rental Income: $980 Airbnb Rental Income: $2,400 Traditional CoC Return: 3.9% Airbnb CoC Return: 14.6% Traditional Cap Rate: 8.4% Airbnb Cap Rate: 19.8% Airbnb Occupancy Rate: 25.7% Another very good option for investing in Indianapolis real estate is Near Eastside, where prices are quite low. Once again, Airbnb is definitely the preferable strategy in this neighborhood. These are some of the most important aspects of Indianapolis real estate investments. If you think that an Indianapolis investment property might be your next investment choice, hurry up before prices go up as inventories go down. Start Your Investment Property Search! START FREE TRIAL Start Your Investment Property Search! START FREE TRIAL AirbnbAirbnb RegulationsCap RateCash on Cash ReturnIndianapolis INTraditional 0 FacebookTwitterGoogle +PinterestLinkedin Daniela Andreevska Daniela is Marketing Director at Mashvisor. She has been writing about real estate investing for a number of years. Previously, she worked in economic policy research and fundraising. Daniela holds a Master degree in Middle East and Mediterranean Studies from King’s College London. 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