If you’re contemplating investing in the Indianapolis real estate market, 2020 might be the year. Ideally located and filled with good jobs, entertainment, and friendly people, the city blends big-city buzz with small-town charm. Moreover, it’s a cash flow market with real estate investment opportunities that attract local and out-of-state investors. Forecasters praise its years of steady growth and believe the Indianapolis housing market 2020 is shaping up to continue the trend. In this blog, we offer an in-depth overview of why Indianapolis can be one of the best places to invest in real estate. We also list the Indianapolis neighborhoods where you’ll find the best investment opportunities.
Here are 5 Indianapolis real estate market trends and the housing market forecasts 2020 that explains why Indy should be home to your next rental property.
#1 Highest Job Growth in the Midwest
The first thing that investors look for in an investment location is a strong economy that attracts business and a new population. This is something you’ll find in Indianapolis, IN. The city’s healthy economy is established on a balance of major corporations and successful small businesses. Major sectors here include real estate, finance, insurance, healthcare, and Fortune 500 companies. The city is also home to over 150 tech companies. All of these businesses contribute to Indianapolis’s hot employment market and add thousands of new jobs every year. The city added 22,900 new jobs in 2019 alone which is an annual increase of 2.1%.
The strong job market and low cases of unemployment add significantly to the city’s population. According to the Indiana Business Research Center, the Indianapolis metro area will continue to be the state’s main source of population growth over the coming decades. The population is expected to climb from 1.99 million residents in 2015 to 2.51 million in 2050 – an increase of 26%. These streams of new people and jobs are good news not only for the economy, but for the Indianapolis real estate market 2020 as well. This is the first reason to buy an Indianapolis investment property.
Related: Invest in 2020’s Fastest Growing Cities in The US
#2 Affordable City to Own Real Estate
The next reason to invest in residential real estate in the Indianapolis housing market is that the city offers great value for investors. Compared to other cities of a similar size, Indianapolis house prices are extremely reasonable and close to both the national and state medians. According to Mashvisor’s real estate data, the median price of Indianapolis homes for sale is currently $259,388 ($123 price per square feet). This makes buying Indianapolis investment properties much more affordable than other cities of the same size such as Dallas and San Diego.
Plus, it’s not just the Indianapolis real estate market that is affordable. The city ranks #24 in the lowest cost of living. The costs of living here are lower than in other cities within the Midwest real estate market. For example, Indianapolis’s costs of living are 25% lower than Chicago’s, 8.6% lower than Cleveland’s, and 4.8% lower than Milwaukee’s. In addition, Indianapolis real estate investors also benefit from the city’s housing expenses which are 19% lower than the national average and utility prices which are 2% lower than the US average. All of this shows that Indianapolis is by far one of the most affordable places to live and invest in real estate in 2020.
To start looking for and analyzing affordable Indianapolis rental properties for sale, click here.
#3 Strong Rental Market in 2020
When searching for where to buy a rental property, investors must focus on finding markets with high rental demand. This is another trend benefiting the Indianapolis real estate market 2020. With a population of nearly 2 million people, the Indianapolis metro area is the second-largest in the Midwest. While the Indianapolis housing market prices are affordable, our data estimates that the price to rent ratio here is 18. This number indicates that it’s probably better for residents to rent a property than to buy one. This explains why half of the people in Indianapolis rent.
Contributing to Indianapolis’s real estate rental market is its college scene and student market. Indy is a college town with university students choosing to live off-campus. Moreover, graduates tend to move in the immediate area, keeping renal demand high all over the city and contributing to the growing rental price. This makes Indianapolis a great housing market for owners of long-term rental properties. In addition, Indiana is one of the most landlords-friendly states in the US. Indianapolis real estate investors, thus, enjoy favorable laws and positive cash flow.
Related: How to Find Positive Cash Flow Properties in 2020
According to Mashvisor’s data, you can expect to earn $1,254 in monthly rental income from an Indianapolis rental property and cash on cash return of 2.1%. Keep in mind, these are just city averages. Meaning, you can find Indianapolis real estate investment properties with much higher returns based on the neighborhood and property itself. You can use our real estate investment software to start your search for the most profitable rental properties in Indy.
#4 High Property Appreciation Potential
According to housing market predictions, the employment boom that Indianapolis is experiencing will make home values increase steadily year after year. This means that Indy isn’t affected by the wild appreciation or depreciation swings that affect other markets. This tells us that Indianapolis is a more stable housing market, which makes investing here is likely less-risky. Compared to the rest of the country, the real estate appreciation rate in Indy is among the highest in America. Data from NeighborhoodScout shows that Indianapolis appreciation rate over the past twelve months is 6.15%. This is higher than appreciation rates in 87.25% of the cities and towns in the US.
This is not a recent Indianapolis real estate market trend. Indy’s cumulative appreciation rate over the last 10 years has been 35.83%. This equates to an annual average house appreciation rate of 3.11%. Thus, Indianapolis ranks in the top 30% nationwide, according to NeighborhoodScout. The fact that this trend isn’t new but has been apparent for years allows us to forecast that residential real estate properties in Indianapolis will continue appreciating in 2020 and beyond as well. As a result, you may rest assured that buying Indianapolis rental properties will be a profitable real estate investment now and over the long-term.
#5 Airbnb Investing is Also Profitable
Tourism and travel also play a big role in Indianapolis’ thriving economy. Visitors flock to the area for meetings, conferences, museums, and of course, the Indianapolis 500 – the largest single-day sporting event in the US. A record number of visitors came to Indy in 2017, creating billions in economic impact. This means there’s a great opportunity to make money by investing in Airbnb Indianapolis’s short-term rental properties. In fact, Airbnb called Indy America’s top trending destination back in 2018 when it saw a 256% increase in bookings. But what about Airbnb regulations? Is Airbnb legal in Indianapolis?
Yes – the Indianapolis real estate market is known for its hospitality and friendliness to Airbnb. In 2018, the State of Indiana passed a law that prohibits localities from banning the home-sharing service. Indianapolis Airbnb laws also protect private property rights of short term rental owners and Airbnb hosts, which is great for Airbnb real estate investors. However, Airbnb regulations to keep in mind is that the State of Indians requires hosts to obtain a permit and collect taxes. If you rent out rooms on Airbnb for fewer than 15 days, however, then you are exempt from the tax.
Related: 20 Cities with No Airbnb Legal Issues in 2020
According to Mashvisor’s short-term rental data, Airbnb Indianapolis real estate investors make a higher monthly rental income of $1,899. The Airbnb average daily rate that hosts charge for each stay is $148. Furthermore, Airbnb hosts can expect a 48% Airbnb occupancy rate and a 2.7% cash on cash return. These numbers tell us that renting out on Airbnb is the optimal strategy for investing in the Indianapolis housing market 2020.
Where to Invest in Real Estate in Indianapolis
Now that you know why we recommend buying an Indianapolis real estate investment in 2020, you probably want to know where to find the best opportunities in Indy. Below, we list the 5 best Indianapolis neighborhoods for owning traditional rentals and 5 best Indianapolis neighborhoods for Airbnb real estate investing. All the data provided are estimated using Mashvisor’s Investment Property Calculator – the ultimate tool for analyzing properties for sale in any housing market in the US. To learn more about our product and investment tools, click here.
Best Neighborhoods in Indianapolis Real Estate Market – Traditional
1) Martindale-Brightwood
- Median Property Price: $73,411
- Price per Square Foot: $49
- Traditional Rental Income: $1,053
- Price to Rent Ratio: 6
- Average Days on Market: 93
- Traditional Cash on Cash Return: 6.2%
2) Devington
- Median Property Price: $116,353
- Price per Square Foot: $77
- Traditional Rental Income: $1,091
- Price to Rent Ratio: 9
- Average Days on Market: 379
- Traditional Cash on Cash Return: 4.5%
3) Arlington Woods
- Median Property Price: $123,914
- Price per Square Foot: $77
- Traditional Rental Income: $1,117
- Price to Rent Ratio: 9
- Average Days on Market: 110
- Traditional Cash on Cash Return: 4.5%
4) North Perry
- Median Property Price: $145,000
- Price per Square Foot: $129
- Traditional Rental Income: $1,340
- Price to Rent Ratio: 9
- Average Days on Market: 8
- Traditional Cash on Cash Return: 4.3%
5) West Indianapolis
- Median Property Price: $73,180
- Price per Square Foot: $60
- Traditional Rental Income: $855
- Price to Rent Ratio: 7
- Average Days on Market: 134
- Traditional Cash on Cash Return: 3.4%
Best Neighborhoods in Indianapolis Real Estate Market – Airbnb
1) South Perry
- Median Property Price: $203,483
- Price per Square Foot: $104
- Airbnb Rental Income: $1,502
- Average Airbnb Daily Rate: $214
- Airbnb Occupancy Rate: 48%
- Airbnb Cash on Cash Return: 9.4%
2) West Indianapolis
- Median Property Price: $731,80
- Price per Square Foot: $60
- Airbnb Rental Income: $1,737
- Average Airbnb Daily Rate: $62
- Airbnb Occupancy Rate: 66%
- Airbnb Cash on Cash Return: 8.5%
3) Valley Mills
- Median Property Price: $210,937
- Price per Square Foot: $114
- Airbnb Rental Income: $2,671
- Average Airbnb Daily Rate: $151
- Airbnb Occupancy Rate: 42%
- Airbnb Cash on Cash Return: 7.61%
4) Garden City
- Median Property Price: $165,470
- Price per Square Foot: $95
- Airbnb Rental Income: $2,784
- Average Airbnb Daily Rate: $116
- Airbnb Occupancy Rate: 58%
- Airbnb Cash on Cash Return: 7.3%
5) Ameriplex
- Median Property Price: $180,000
- Price per Square Foot: $62
- Airbnb Rental Income: $2,499
- Average Airbnb Daily Rate: $167
- Airbnb Occupancy Rate: 44%
- Airbnb Cash on Cash Return: 7.2%
Ready to Start Your Property Search?
One final Indianapolis real estate market trend is that it’s currently a hot seller’s market – meaning it’s more attractive for sellers than buyers. However, savvy investors know that this doesn’t mean they won’t be able to find and score great deals, especially if they’re using real estate investment tools. You can find such tools right here on Mashvisor! Our software provides you with a toolbox that includes everything you need. You’ll be able to search for Indianapolis homes for sale, analyze Indianapolis neighborhoods and properties, find off-market deals, get access to homeowner data, and more.
To give our tools a try, start your 7-day free trial with Mashvisor now.