What makes a market like Indianapolis work?

Question

There are deals to be had everywhere in this country if you look. But there seems to just be a lot of return potential in Indianapolis. My question here is WHY. What is happening there that has prices low but rents relatively high? I don't recall seeing anything about 100,000 jobs moving to Indy. What is the indicator that you can look for in the next "it" market? I get the Midwest thing, but why not St Louis or Milwaukee? What's going on in Indianapolis? I'm not trying to steal anyone's secret sauce here, just looking for a discussion of what the driving forces are, and can they be repeated elsewhere?

Cory S. · Answer

Why Invest in Indianapolis, INIndianapolis fundamentals cater to both cash flow and long-term growth. While many markets saw dramatic increases and decreases, property values in Indianapolis have remained relatively stable over the last few years. The city has increased by 15.2% over the last decade (above the National average of 9.7%) and continues to put upward pressure on home prices and rental rates. Indiana state is currently running a budget surplus making it a very business friendly economy. The average home ownership in Indianapolis is 75% (while the national average is below 67%) – the shortage of rental properties leads to a stable rental market demand.General Facts “Indianapolis is a destination for people and for businesses. Because of our impeccable financials, AAA-debt rating, stable tax environment and balanced budgets, businesses know what to expect in Indy — which makes them more likely to act, create jobs and invest in Indianapolis because they can plan.” – Mayor Greg Ballard, Indiana Chamber of Commerce 2012 Community of the Year Award13th largest city in the nation (Wikipedia)#1 among the top 10 most affordable cities with an affordability score of 95.8% (CNN Money , August 2012)Rated as one of America’s best downtowns (Forbes, 2011)The city is the host to major sporting events including the famous Indy Car RaceIndiana is a judicial foreclosure state

Tyler Joel Renick · Answer

The short answer is simple "#18 Peyton Manning" or it might be... We have a stable economy with plenty of well paying jobs, namely Anthem Inc., Eli Lilly and Co., Cummins Inc., Simon Property Group Inc., Berry Plastics and Allison transmission to name a few. We are also a large city, by that I mean that it covers a lot of ground, we are mid-sized when it comes to population. Our city has experienced a lot of growth in the last decade and will probably continue to grow due to our geographical location coupled with encouraging political climate and hard working middle class. It's a great place to lay down some roots if you are a large company like Carrier.... We also have a very low cost of living (probably because the weather sucks and nobody wants to live here) but if you can tolerate 45 degree shifts in temperature in a 24 hour period you'll love it here! I think at some point we will experience real estate prices more in line with Chicago but for now it can still be had for a bargain! I am a local investor, if you would like to chat it up send me a message.

Josh C. · Answer

The secret sauce is fantastic property management companies. :) Seriously though, we are a big enough city to be stable. Have a state and local government that is pro business and quick to give incentives to businesses to create jobs. Being centrally located (we are the cross roads of America you know) also attracts business. But for some unknown reason we haven't had a bustling downtown until we got the super bowl. Then everyone and their mom suddenly realized that the city and not just the burbs were great. Now downtown and other pockets have nice housing stock that people with money want to live in so that market is extremely hot currently. But a rising tide raises all ships. Not sure if I really said anything, but pro business and the fact my property taxes are a third what your mob controlled town is has something to do with it.

Mohammad Alabsy · Answer

Tons of money still looking for parking and many people hoarding properties using other people money.. just to say we have this many doors.. no real reason. When returns on other forms of investments go up with interest rates you will see the bubble begin to burst it's a cycle and I wouldnt want to be caught holding a bag. just my 2 c.

Jeff Schechter · Answer

@Kenneth Cowan There are quite a few factors going into this. Indy is just one of those "up and coming" cities. The perfect size, fantastic price-to-rent ratios, low property taxes, laws that favor owners over tenants, inexpensive labor, etc. When you combine these factors with excellent management, you can create amazing returns. I would agree with other comments from this thread that we may see prices more in line with Chicago eventually, as there is TONS of gentrification going on here. Gorgeous $350K victorians one block away from $9K properties that are boarded up. The feeding frenzy isn't going to last forever. Investing in Indy NOW is great bet.

Josh C. · Answer

@Kee You overall retail is a small portion of our employers. Manufacturing and distribution are more of our core businesses. Not sure of the percentages just from living here most of my life driving the city.

James You · Answer

with the retail and commercial sector expected to decline, how would this effect a company like simon property group. would this effect the job market and indy's economy?