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Indianapolis is ranked as the 4th best housing market positioned for growth in 2022.
Indianapolis is ideally located and brimming with good jobs, entertainment, and friendly people. The so-called Circle City blends Big City buzz with small-town, midwestern charm. It’s also a city with incredible, cash-flowing properties and a high ceiling for expansion. Real estate forecasters praise its years of steady growth and high rental demand.
One reason the demand for homes in Indianapolis is so strong is the number of out-of-state real estate investors. A recent report from HousingWire notes that remote real estate investors are putting Indianapolis at the top of their list of markets where property is still affordable and potential cash flow returns are higher.
Use our Rental Property ROI Calculator to evaluate your next deal in Indiana
When Indiana comes to mind, many people think of the robust automobile industry, budding corn fields, or the Indianapolis Colts.
But the Hoosier state has recently developed a reputation for its viability as a place for real estate investment.
Suppose you’re among the many investors on the hunt for the next property investment opportunity. In that case, this guide to Indiana’s real estate market will reveal why this charming yet often overlooked Midwestern state should be part of your investment plans.
There are many things to consider before purchasing any type of property, and Indiana is one state that makes a good case for itself.
Above are some key stats about Indianapolis real estate market that make it attractive for investors.
Admittedly, Indiana isn’t the first place that comes to mind when people think of places to live.
But, if you take a closer look, it’s no surprise that this state has new residents and property investors setting their sights on the Crossroads of America as a potential place to invest their money and grow their wealth through real estate.
Whether you’re looking for a change of scenery, are in the fair market value to purchase a new home, or want an investment property that you can rent, Indiana is certainly a state worth your consideration.
Additionally, if you’re looking to purchase property to rent, Baselane’s property management software can make tenant and property management a breeze, no matter where you’re located.
Below, you’ll find a few reasons why investing in Indiana real estate is suitable for those seeking a place to purchase properties.
The population of Indiana sits at around 6.8 million, and according to World Population Review, the state has grown by approximately 300,000 residents since 2010. The population growth rate is around 0.54%.
Indiana’s projected growth is predicted to increase by approximately 660,000 residents by 2050, putting the population at 7.27 million.
Population growth is steady in the state, which likely means home property values will continue to rise as demand increases.
Additionally, Indianapolis is the 15th largest city in the USA, making it a top contender for desirability. The four major densely populated urban areas in Indiana after Indianapolis are Fort Wayne, Evansville, Carmel, and South Bend.
According to Kapil Singla, an investor in the South Bend area of Indiana, in the post-COVID era, “many Illinois residents have moved to Indiana to take advantage of the lower cost of living and higher quality of life.”
Benefits for Real Estate Investors: Population growth anywhere indicates a setting where people want to live, as newcomers bring more jobs, renters, and businesses with them while fostering the growth of a bustling and attractive setting.
Job growth is abundant in Indiana, which poses an advantage for those seeking new career opportunities, meaning many of them will need a new place to live.
Indiana is ahead of the curve when it comes to job growth. The market has risen by 2.5% in the last year alone, placing the state 4% higher than the national average.
As revealed by BestPlaces.com, Indiana’s unemployment rate sits at 5.6%, 0.4% lower than the national average, which is currently 6%.
Benefits for Real Estate Investors: Job growth in Indiana means a stronger rental market (higher household income) and more demand for property, thus improving the value of your investment.
Indiana also provides a home for a diverse economy. Some industries vital to Indiana’s economy include healthcare, logistics and transportation, manufacturing, the public sector, and technology. There are many trusted companies in the state as well. According to IndyStar, last year’s top employers included Charles Schwab and Salesforce. However, many companies operate in the state, with the 100 largest companies including Go Electric, Anthem, Cummings, and many more.
Benefits for Real Estate Investors: A diverse economy with various sectors grants Indiana residents security, even if they lose their initial job. Real estate investors and renters alike can rely on a diverse economy that will not disrupt the rental fair market value.
Indiana is a business-friendly state, and this is because of the state’s low tax rate.
As of July 1, 2021, Indiana’s corporate tax rate is 4.9%. It’s no surprise business owners would flock to this Midwestern state as the rate sits well below the national average corporate tax rate in the USA, which hovers around 21%.
Landlords and real estate investors can also rejoice, as Indiana is one of the most landlord-friendly states in America.
For starters, there are no rent control laws in Indiana. Landlords can increase rent to their liking as long as they give a 30-day notice.
Landlords in the state can also charge a security deposit and late fees, with deductions as necessary. They must, however, pay the security deposit back to the tenant within 45 days.
Landlords can also evict a tenant ten days after not paying rent, making dealing with delinquent tenants a little easier.
Benefits for Real Estate Investors: A state that implements laws in favor of its landlords makes managing a rental home or several properties easier, especially if they live remotely.
The price-to-rent ratio is the median home value divided by the median annual rent.
Median Home Value ÷ Median Annual Rent = Price-to-Rent Ratio
At its most basic level, the ratio is a benchmark for understanding whether it is better to rent or buy in an area. When home prices rise significantly faster than the local rents, the ratio will rise – indicating a possible housing bubble where it may be better to rent. Anything under 15 indicates that it is likely more affordable to buy, and areas over 20 are likely better to rent.
The Indiana price-to-rent ratio from the latest estimates is 16.7.
Benefits for Real Estate Investors: Indiana offers affordable homes that allow landlords to charge cost-effective rents, creating a stable market for those seeking to invest in a rental property.
According to a report on Indiana real estate market value conducted by Kiavi.com, Indiana is a renter’s market, constructing a compelling case for real estate investors to bring their money to the state.
Indiana overall also has high occupancy rates. In Q4 of 2021 and Q1 of 2022, Indiana had a vacancy rate of 9.7%. Today, the vacancy rate in the state is approximately 8.7% which is about 50% higher than the US average of 5.87%. However, the vacancy rate has declined by approximately 10%.
As mentioned earlier, the average Hoosier household income is $66,360, with year-on-year job growth steadily increasing at 1.8%. On the other hand, the average cost of rent is $1,395 per month. A person renting in Indiana would spend one-fifth of their paycheck on rent on average.
The population of Indiana is estimated to grow by almost a million people by 2050. With more people flocking toward new opportunities, they’ll also need a place to live if they can’t afford a house or short-term housing while they look for their dream home.
Benefits for Real Estate Investors: Trends for real estate investors in Indiana favor growth for a blooming state. The low prices of homes and low tax rates allow homeowners to pay off their mortgages faster or reinvest in upgrading the property.
As mentioned earlier, Indiana has a strong occupancy rate, meaning renters or their owners inhabit most real estate properties.
Indiana has a vacancy rate of around 8.7%. A good occupancy rate shows that the state has a consistent market, meaning your potential property could be easily occupied upon investment, and you won’t have trouble keeping your units full.
Benefits for Real Estate Investors: If you purchase property in Indiana, you’re more than likely to find renters to occupy your units.
Out-of-state real estate investing in Indiana can be a great opportunity to diversify your portfolio and potentially increase returns. The downside is that navigating unfamiliar markets or managing rental properties remotely can be challenging.
This guide covers real estate market trends, property values, deals on home prices, and other tips to help you find and manage Indiana real estate investment properties from out of state.
Option 1: Hire a property manager
Option 2: Build a local team
Option 3: Use property management software
Indiana’s growing population, job market, and relatively low property prices make it a great investment property opportunity. By following these tips, you can efficiently find and manage Indiana real estate investment properties as an out-of-state landlord.
Indiana is a prime location for cash-flow properties, with nearly 800,000 renters and steady construction on single-family homes to keep up with the demand. For the commercial real estate market, Indianapolis is listed as the state’s best city for real estate investment opportunities.
Before buying any rental properties for long-term or short-term rentals, it’s important to know the Indiana landlord-tenant laws. These outline Indiana landlords’ and tenants’ rights and obligations for lease terms, rent increases, late fees, evictions, and other rental processes.
When it comes to landlord-tenant law, Indiana is among the best landlord-friendly states in the US. Indiana laws on eviction are relatively lenient, allowing landlords to evict tenants within 10 days of failing to pay rent. There is also no grace period for month-to-month leases, and the tenant can be evicted immediately if the property is damaged.
There are no Indiana laws for rent control. While you can’t raise rent prices during an active lease term, there’s no cap on rent increases for new leases (including lease renewals). Landlords only have to give written notice of the rent increase 30 days before the lease renewal date.
Property taxes are another reason why investors are flocking to the Indiana real estate market. Indiana property taxes sit around 0.87% compared to the national average of 1.11%. The states with the highest property taxes are New Jersey at 2.46% and Illinois at 2.29%.
Leases longer than three years in Indiana must be in writing, but it’s recommended to use a written lease for all long-term and short-term rentals as a physical record of an agreement. Rental agreements in Indiana can be adjusted to fit new clauses or terms with 30 days’ notice to the tenant.
Required information for Indiana rental agreements:
When signing a lease, always review landlord and renters rights Indiana policies to acknowledge the responsibilities and obligations of both parties entering the agreement.
Tenants have the right to request repairs for damages to the unit at any time. Indiana landlord-tenant law requires landlords to make repairs in a reasonable amount of time, as agreed upon with the tenant. Landlords who fail to repair damages within the agreed-upon timeframe may face consequences in court.
To avoid legal disputes and promote a healthy landlord-tenant relationship, carefully read the following terms to understand every rental agreement’s basic Indiana landlord-tenant law requirements.
Adhering to Indiana rental income laws ensures a positive experience for both landlords and tenants. Seek help from a real estate attorney or manager for tenant disputes that could impact your rights and cash flow as an Indiana real estate investor.
Indiana, Ohio, and Colorado are all states with attractive real estate markets. If you're deciding between Indiana and comparable states, like Colorado and Ohio, we have some stats that can help you decide. Below, you'll find a comparison of the three states and what they offer regarding real estate investing.
|One Year Population Growth (%)||0.4%||0.22%||1.27%|
|One Year Job Growth (%)||3.50%||1.80%||4.10%|
|Median Household Income||$56,303||$56,602||$72,331|
|Unemployment rate (%)||2.20%||3.90%||3.40%|
|Crime Rate (combined crimes)||0.02%||0.02%||0.03%|
|Tenant Occupied rate (%)||31.0%||34.0%||34.0%|
|Median Single Family Home Value ($)||$221,019||$211,374||$591,189|
|Above/below National Average (%)||-51.65%||-49.77%||+141.10%|
|Growth rate YoY (%)||14.62%||13.53%||18.20%|
|Median Monthly Gross Rent ($)||$1,100||$1,300||$2,250|
|Above/below National Average (%)||-3.79%||-10.34%||55.17%|
|Property Tax Rate (avg %)||0.85%||1.56%||0.51%|
|Vacancy (avg %)||8.7%||4.6%||3.4%|
|Acquisition Price-to-Rent Ratio (Median home price/ Median Monthly Gross rent)||16.7||13.5||21.9|
|Landlord friendliness (out of 100)||65||70||67.5|
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Indianapolis is the largest city in Indiana, and it’s also the state’s capital. Its bustling metropolitan is home to almost one million residents, making it the 15th most populous city in the USA.
Fort Wayne is the second largest city in Indiana and home to over a quarter of a million Hoosiers, making it the second most populous city in the state.
The city is in the northern region of Indiana, a mere 50 miles from the Michigan border. It is known for its abundance of careers in the healthcare sector.
Fishers is the sixth most populous city in Indiana, with a population just shy of 100,000.
Despite its size, it is one of the fastest-growing cities, having a population of only 7,500 in 1990. A bonus of Fishers is that it’s roughly a 30-minute drive from Indianapolis.
With a population of almost 50,000, Mishawaka touts a potent, growing, financially stable, and safe environment for its residents. It also offers residents a two-hour drive from Chicago.
Lafayette is a quaint town in Indiana with a population of approximately 73,000. It is home to the esteemed Purdue University and is close to the Illinois state border.
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Indiana is known for having a great quality of life, and there are many reasons for this. One of the first reasons Indiana is loved by its residents is the low cost of living.
According to Forbes, Indiana is 2% below the national average for the cost of living, making it cheaper than many major cities in the United States.
Compared to some of the best cities in the United States for real estate investing, Indianapolis has a lower cost of living than Atlanta, Georgia (by 13%) and Dallas, Texas (by 21%).
Some of the best universities in the country are located in the state of Indiana, including the University of Notre Dame, Ball State University, University-Purdue, and Ivy Tech Community College.
Two of the most popular teams in sports call Indiana home.
For the NFL, Indianapolis Colts proudly represent Indiana on the field, and as for the court, none other than the Indiana Pacers represent the state in the NBA. There are also the Men’s and Women’s NCAA Basketball Tournaments for those who enjoy college sports.
And, of course, the Indy 500 Nascar race is perhaps the biggest event in the state.
There’s something for everyone in the state, not just sports fans.
Indianapolis is home to many cultural venues, including the Indianapolis Art Center and the Indianapolis Symphony Orchestra.
Most people would likely agree that Indiana isn’t exactly the first state that comes to mind when people think of an exciting place to live in the United States.
Still, its proven annual stability makes the Indianapolis real estate market a reliable state for real estate investing.
Trends show that the state has a track record of improving when it comes to almost all aspects of prosperity.
Indiana is certainly worth your attention if you’re looking for a place with stability, simplicity, and charm.