Indy Rental Market Staying Strong

Indianapolis touts one of the most stable real estate markets in the country, in both sales and rental markets. While many of our nation’s cities suffered a 30-50% decline, our real estate market dipped a modest 7% throughout the last recession.

Our rental prices have soared 11+% over the past year. Indeed, real estate is a solid choice in rounding out an investment portfolio. Buying and holding for income and appreciation has been my goal from the start … flipping has always been a popular topic of conversation but is no guarantee of immediate or long-term return.

I like Larry Arth’s explanation of the value in real estate investment. He wholesales properties in several locations, and Indianapolis is one of his favorites. Here’s his take on the concept, as stated in Personal Real Estate Investor Magazine:

“IDEAL is the acronym for the 5 wealth building principles

I (INCOME) positive cash flow

D (DEDUCTIONS) interest, depreciation, repairs, all expense are tax deductible

E (EQUITY) as tenants pay down the mortgage the principle builds up is equity for you

A (APPRECIATION) annual property value growth

L (LEVERAGE) O.P.M. (other people’s money) you gain all the above from borrowed money

There is no other investment available that can fulfill all 5 of these wealth building principles. Most investments will return 1 or 2 of these wealth building principles and only real estate has the ability to return all 5.”

Nice!  🙂

 

 

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Good Ol’ Midwest

American housing is some of the most affordable in the world.  Although many homeowners and investors took a huge hit in the ’08 (and beyond) collapse of our housing market, it’s been slowly creeping back.

Not only have foreign investors been scooping up US foreclosures over the past several years … individuals and hedge funds on both coasts and throughout the country have also been on the bandwagon and are reaping nice profits throughout the land.

Foreclosures aside, housing in the US is hugely affordable, with a median cost of a home at 3.5 times the median income.  Check out this chart I found in the latest issue of Personal Real Estate Investor magazine, detailing the least and most affordable major markets across the world … interesting stuff:

HousingHopefully, you can discern what it says.  Four of our west coast cities made the “least affordable” list.  But in the “most affordable” list, you’ll find six of the ten on that list are right here in the good ol’ Midwest!  Impressive, yeah?

And of course, Indianapolis is one of them.  With our vibrant downtown area that attracts large groups/conventions with its wonderful walking/biking paths, the canal, zoo, convention center, museums, symphony, fantastic cuisine and hotels, sports venues, etc., it has become a destination in and of itself.

No wonder I’m having to be more creative in finding great deals … Indianapolis isn’t “flying under the radar” any more.  It’s been getting its share of great publicity.

Well deserved.

 

Indianapolis Rental Market Going Strong …

I’ve owned and managed rental properties in Indianapolis for 18 years … it’s been quite the journey.  (See “A Bit About Barb” along the top of this blog site.)  I started with low-income properties, moved into middle income and have added high-end property management to my repertoire.

The low-income rental market will remain constant, regardless of what’s going on in the economy.  After all, everyone needs a place to rest their head, and those who earn 25K or less will be life-long renters.  They seek a well-maintained rental, accompanied by an attentive landlord … and that’s where I come in.

But the upper level rental market in Indianapolis — and across the country — is booming.  Thousands of people lost their homes to foreclosure and although their credit is a mess because of it, they still have decent jobs and the ability to make rent payments.  They won’t be able to buy a home but they want to live in one, of course!  The other factor is, there are many who have lost faith in “the American dream” of home ownership and are becoming renters by choice.  They can afford to buy but are choosing not to.  They don’t trust the government, the economy, the stability of the real estate market.  They’re happy to be renters, not buyers.   And again, that’s where I come in.  And many others as well …

Hedge funds, huge companies like American Homes For Rent, and thousands of international buyers are snapping up homes, doing a quick rehab and renting them out.  I just sold a home to a woman from Singapore who was spending two weeks here in Indianapolis, and hoping to buy 40 rental properties in that time.

The Indianapolis rental market has always been steady … a good money maker.  Even when the real estate market tanked, we weren’t hit nearly as hard as many states.  And with the growth of our downtown area and wonderful suburbs, the sky’s the limit.

Life is good …

The Case For Rentals

I’ve owned and managed low and middle income rentals in Indianapolis for over 17 years now, through the good times and the bad.  My goal was to purchase these rental properties for income and long-term investment.  I’ve flipped a few along the way, but that’s never been my model.  Through the years, I added property management to my list of skills … other people’s homes or rental properties.

Why invest in rentals?  There are a couple reasons:

1)  Housing is a universal need.  Regardless of fluctuations in the economy, people need a roof over their head.  And even when everything in the housing market went to hell through 2008 and beyond, my rentals held strong.  Yes, there was more turnover (people were losing their jobs and/or getting laid off more frequently) but I had no trouble filling my vacancies.

2)  There’s a segment of the population that will never be homeowners … those who earn less than $30,000/year will most likely be renters throughout their lives.  And according to the last census, that segment included about 35% of the population.  Furthermore, since the housing collapse, many people have become more wary of buying homes, and even those who can afford it (and get financing) are choosing to rent instead.

Indianapolis is a wonderful city in which to work and raise a family … it didn’t see the horrible downturn in the housing market that some other areas experienced.  Our rental market is strong and will continue to be strong in the foreseeable future.

We landlords and investors are lovin’ it!   🙂