Indiana is filling the gap between affordable living and big city amenities for young professionals getting priced out of metropolitan areas. Living costs are 2% below the national average, and annual job growth is up by 2.5%. Every neighborhood is within reach of 32 state parks and front-row seats to watch the Indianapolis Colts, Indiana Pacers, and the Indy 500. Coffee shops and craft beer are always nearby, usually found next to a lineup of spots with local comfort food.
Indiana’s population of 6.8 million is projected to add another 660,000 residents by 2050. As in-migration and employment trend upwards, demand for rental properties will increase. With the average home priced at $221,019, investors can leverage low acquisition costs to break into the growing Indiana real estate market. Use our list of the best cities in Indiana for young professionals to find your next rental property.
- Median home price: $240,000
- Median price per square foot: $131
- Rental vacancy rate: 11.4%
- Distance to city center: 1 mile
- Access to public transportation: Bus, Subway
- Median rental income: $1,509/month
- Population: 869,387
Affordability, low unemployment rates, and thriving urban communities make Indianapolis one of the best cities to live in Indiana for young professionals. The state capital offers more than 860,000 residents an unbeatable blend of recreational trails, college and professional sports, museums, cocktail bars, farmer’s markets, and culinary districts.
Indianapolis has seen over $6.5 billion in acquisitions and IPOs from the tech community over the past 20 years from big brands like Salesforce, Genesys, and Appirio. Future job growth is expected to hit 37.5% in primary technology, manufacturing, life sciences, and motorsports sectors.
As a bonus if you’re a landlord looking to invest, nearly half of Indianapolis is renting. Single-family homes dominate 60% of the market, bringing in around $1,500 monthly in rental income. Housing costs are fairly consistent across the board, so it’s worth looking in pricier neighborhoods. Properties in Downtown and Broadripple usually rent for between $2,073-$2,138/month.
2. Fort Wayne
- Median home price: $209,900
- Median price per square foot: $119
- Rental vacancy rate: 8.7%
- Distance to city center: 0.5 mile
- Access to public transportation: Bus, Train
- Median rental income: $1,119/month
- Population: 268,378
With just over 268,000 people, Fort Wayne is the second largest urban area in Indiana after the capital. Younger residents are moving closer to the art scene to be within walking distance of the Arts United Campus, Museum of Art, and Artlink Contemporary Art Gallery. The Three Rivers Festival also draws nearly half a million people to the city center for a week of food and entertainment.
Fort Wayne employment is on a steady incline, adding over 5,000 jobs this year. Major companies like General Motors, Steel Dynamics, and Harrison Corporation contribute to a strong manufacturing sector. Startup incubators and co-working spaces are also on the rise to fit the needs of an expanding entrepreneurial community.
The city is adding more living options and amenities to its downtown and riverfront areas to keep up with demand. This presents an opportunity to buy into developing markets at a low price point and capitalize on annual rent increases of 15%. Fort Wayne rental properties typically earn $23,386 in annual rental profits after expenses (averaged across all property types).
3. South Bend
- Median home price: $179,000
- Median price per square foot: $116
- Rental vacancy rate: 11%
- Distance to city center: 0.2 mile
- Access to public transportation: Bus, Trolleybus
- Median rental income: $1,337/month
- Population: 102,686
South Bend is a small community of 102,686 on the St. Joseph River. The cultural center of the city rotates around the prestigious University of Notre Dame, making South Bend one of the best cities in Indiana for young professionals who want to mix football fandom with employment opportunities in higher education.
Like many Rust Belt cities, South Bend is pouring money into residential development to offer younger crowds more living space, restaurants, bars, and entertainment. That said, long-standing attractions like the National Studebaker Museum, Morris Performing Arts Center, and South Bend Museum of Art still draw residents daily.
Everything from affordable housing to high-end rentals is in demand, pushing rent prices up 14% this year. With appreciation rates on the high end of 20% and median housing prices at $179K, South Bend real estate investing is seeing a lot of activity. Neighborhoods in Harter Heights and Twyckenham Hills are getting attention for higher returns up to $1,755 in monthly rental income.
- Median home price: $309,000
- Median price per square foot: $176
- Rental vacancy rate: 5.1%
- Distance to city center: 0.7 mile
- Access to public transportation: Bus
- Median rental income: $1,995/month
- Population: 85,226
Bloomington brings a historical aesthetic to 33 neighborhoods surrounded by 230 miles of nature trails and an unmatched international food scene with over 100 restaurants. Indiana University is responsible for half of the population, contributing to a vibrant young atmosphere filled with live music, coffeehouses, farmer’s markets, and 30 annual festivals.
With accolades from Forbes “Best Places For Business Careers” and Entrepreneur Magazine’s “Top 50 Small Cities for Entrepreneurs”, Bloomington is one of the best cities in Indiana for young professionals looking to join or start a business. Tech and medical manufacturing are also seeing gains with industry giants Cook, Catelent, and Baxter.
This college town has a median age of 24, with 65% of its residents living in rental properties. Even with student turnover, occupancy rates remain high at 95%, so you won’t have any trouble keeping units full. two-bedroom units represent the bulk of the market, renting for $1,420 to $1,950/month.
5. West Lafayette
- Median home price: $325,000
- Median price per square foot: $152
- Rental vacancy rate: 5.9%
- Distance to city center: 1.5 miles
- Access to public transportation: Bus, Trolleybus
- Median rental income: $1,951/month
- Population: 49,668
Sitting across the Wabash River lies a rich arts and culture scene in West Lafayette. The nightlife in Chauncey Village is elevated by Purdue University next door, featuring Harry’s Chocolate Shop, Brothers Bar & Grill, and Triple XXX Diner. The Arts & Market District is just over the bridge, where quaint coffee shops and galleries line every inch of 4th Street to 12th Street.
Purdue University employs 24% of West Lafayette’s 49,668 residents, making it the largest employer in the city. Thousands more are working with nearly 100 tech companies throughout the region, including Skywater Technology, SkyePack, and Cisco Systems.
Property taxes usually fall around 0.72%, which will help offset the $325K price tag on most West Lafayette real estate. Low vacancy rates combined with a 65% renter fraction will keep your units occupied and save on turnover costs. Neighborhoods in New Chauncey have a steady influx of young professionals paying roughly $2,025/month for a two-bedroom unit.
The Bottom Line
Real estate investors can anticipate demand in Indiana based on the rising number of jobs and low unemployment rates. This trend signals a strong supply of renters relocating to fill the new jobs. As more young professionals move to Indiana for career opportunities, real estate value and demand will continue to increase.
Get the market insights you need to start building your portfolio with our Free Guide to Real Estate Investing in Indiana.