As the third most populous city in the Midwest real estate market, the City of Indianapolis is home to many real estate investment opportunities. Real estate in Indianapolis has seen great success in 2019. But how is Indianapolis real estate expected to perform in 2020? Read this blog to learn about Indianapolis’ real estate trends and best neighborhoods!
Related: Will Midwest Real Estate Make You Money in These Cities?
Indianapolis Real Estate Market: Mashvisor’s Data
In order to understand why you should invest in Indianapolis real estate and where to buy a rental property in the market, we need to analyze Indianapolis’ real estate data. Don’t know where to find the data on the Indianapolis housing market? Look no further! With Mashvisor’s investment property calculator, Indianapolis real estate investors can find and analyze any investment property in the city.
Here is Mashvisor’s data on the Indianapolis real estate market:
Pricing
- Median Property Price: $225,582
- Price per Square Foot: $104
- Price-to-Rent Ratio: 16
Traditional Investing
- Rental Income: $1,146
- Cap Rate / Cash on Cash Return: 2.1%
Airbnb Investing
- Rental Income: $2,056
- Cap Rate / Cash on Cash Return: 6.0%
- Occupancy Rate: 53%
As you can see, we’ve included data about the Airbnb Indianapolis real estate market. Does this imply that Airbnb is legal in Indianapolis?
Is Airbnb Legal in Indianapolis?
Fortunately, it is. A detailed breakdown of Indianapolis’ Airbnb regulations can be found here. Here’s a brief overview of the most important Indianapolis Airbnb laws:
Overall, Indianapolis Airbnb laws are relatively lenient but they are still in development. Nonetheless, Airbnb Indianapolis real estate investors are required to obtain a short-term rental permit and pay taxes. The permit comes with a $150 registration fee. The 7 percent hotel tax and 10 percent Marion County Innkeeper’s Tax required from hosts have, since July, begun to be remitted by Airbnb itself.
Indianapolis Real Estate Trends for 2020
As it pertains to the Indianapolis real estate market 2020, there are four real estate trends investors need to keep in mind. These include affordability, appreciation, traditional investing demand, and Airbnb Indianapolis success.
Related: The Future of Real Estate: 4 Trends of 2020
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Affordability
A staple of Midwest real estate is its impressive affordability. This is arguably the greatest strength of the Indianapolis housing market 2020. For starters, Indianapolis house prices are considerably inexpensive. As seen from Mashvisor’s data, the city’s median property price is $225,582. This is less than the state’s median of $236,058. It is also much cheaper than the national median of $325,200.
Indianapolis also has a very affordable cost of living, as it is 12% lower than the US average. It also has the 27th lowest cost of living in the US. The city’s cost of living is also lower than in other cities in the state. According to NerdWallet, based on the state’s household income average of $54,000, Indianapolis’ cost of living is lower than the cost of living in Bloomington (by 11%), South Bend (by 7%), and Evansville (by 1%). A low cost of living attracts people to the city and those who cannot afford to buy a home, increase the tenant pool.
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Real Estate Appreciation
As seen from Mashvisor’s data and predictive analytics, the average Indianapolis real estate investment generates high rental income for both traditional and Airbnb strategies. Indianapolis investment properties also benefit from another form of profit: appreciation, or an increase in property value over time. Indianapolis has historically had high appreciation rates, even with the housing market crash about ten years ago. According to NeighborhoodScout, the Indianapolis real estate market has appreciated by 36.54% since 2000, which leads to an average annual rate of 1.61%. This rate is higher than those of 70% of other cities and towns in Indiana and 78% of other cities and towns in the US as a whole. It is projected that 2020 will have an even higher appreciation rate of 4.9%, according to Zillow.
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Traditional Investing Demand
The traditional long-term rental strategy will continue to be a supreme strategy in 2020 for a variety of reasons. According to the PwC’s Emerging Trends in Real Estate report, Indianapolis ranks 16th for overall real estate prospects and 20th in homebuilding prospects. Demand is high in Indianapolis. On the buyer’s market/seller’s market spectrum, Indianapolis is a hot seller’s market, according to Zillow. The city’s high investor demand is highly influenced by the expansion of the city’s downtown area and tech industry growth. Multifamily investment properties, apartments, and condos, in particular, are expected to be in high demand. The city’s demand is also due to its status as one of the best cities to live in the US.
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Airbnb Success
Finally, the Airbnb Indianapolis real estate market is forecasted to continue its success in 2020. For starters, Indianapolis is one of the fastest-growing Airbnb cities in the US. In 2017, Indianapolis was the top trending Airbnb destination. Hosts generated over $8.4 million in rental income during that time. Over the last few years, Indianapolis Airbnb hosts have seen a 17.4% revenue growth year-over-year. With the city’s mix of arts and culture, there will be no shortage of Airbnb guests to host in 2020.
Related: What Airbnb Occupancy Rate Can You Expect in 2020?
Best Neighborhoods in Indianapolis for Traditional Rentals
Where should you look for Indianapolis homes for sale? If you are interested in traditional Indianapolis rentals, then, according to Mashvisor’s data, keep an eye on these neighborhoods:
Ravenswood
Pricing
- Median Property Price: $200,540
- Price per Square Foot: $112
- Price-to-Rent Ratio: 12
Traditional Investing
- Rental Income: $1,379
- Cap Rate / Cash on Cash Return: 4.6%
Delaware Trail
Pricing
- Median Property Price: $311,879
- Price per Square Foot: $104
- Price-to-Rent Ratio: 15
Traditional Investing
- Rental Income: $1,742
- Cap Rate / Cash on Cash Return: 4.0%
Best Neighborhoods in Indianapolis for Airbnb Rentals
What about Airbnb investing? According to Mashvisor, the best Indianapolis neighborhoods are Near Southeast and Eastside.
Near Southeast
Pricing
- Median Property Price: $99,188
- Price per Square Foot: $73
- Price-to-Rent Ratio: 10
Airbnb Investing
- Rental Income: $1,770
- Cap Rate / Cash on Cash Return: 9.8%
- Occupancy Rate: 46%
Eastside
Pricing
- Median Property Price: $132,825
- Price per Square Foot: $80
- Price-to-Rent Ratio: 13
Airbnb Investing
- Rental Income: $2,051
- Cap Rate / Cash on Cash Return: 9.6%
- Occupancy Rate: 67%
While buying your Airbnb Indianapolis investment property, you should learn what’s required to become an Airbnb host in 2020.
Once 2020 sets in, the Indianapolis real estate market will most definitely be one of the top-tier rental markets in the Midwest and the US as a whole. Want to start finding Indianapolis investment properties for 2020? Click HERE to start your 14-day FREE trial with Mashvisor’s calculator!
