Indianapolis. Lower End vs Higher End rentals

[Account Closed]

I have been shopping around Indianapolis for cash flow rental properties and have found a strong difference in opinions among investors.  Some say buy the higher end properties above $70000 on the outside of the city in areas like lawrence,  and others say to buy lower end stuff with higher cash flows closer to the city center in areas like fountain square.  Each strategy has its pros and cons but I am curious to hear from other investors there thoughts on this matter.  

[Ryan Mullin]

In general the low end vs high end argument will always be the same. @Matt Rosas and @Shawn Holsapple summed it up and I'm sure that there are dozens of threads on this topic as a whole. But this particular debate is flawed from the beginning as it relates to 2 very different Indianapolis areas. To say that Fountain Square is low end and Lawrence is high end makes me laugh.. and cry. lol.

First of all, Lawrence is actually its own city, where as Fountain Square is a just a neighborhood.

The higher end rehabbed properties in Fountain square are selling for over 200k. 2 years ago it was 150k. 4 Years ago it was 100k. ish.. To me that shows real appreciation. Not just keeping up with inflation but an actual increase in value. That is one of the many reasons why I have my money in Fountain Square.. I will come back to that tho...

In Lawrence you have everything from $500k and million $ houses in Geist all the way down to worthless houses at 42nd and post. In my opinion majority of Lawrence has always stayed somewhat the same.. Very consistent with property values and rent ranges. The only exception would be the amount of money that was poured into Fort Benjamin Harrison around 2009... I believe. Fort Ben is actually a historic district with homes built circa 1900 - 1930's btw. -Very cool area.

In general you could say that the south end of Lawrence is low end and the north end is high end. But that is a very general statement.  For the most part 42nd st to 46th st is lower end rentals, 46th to 52nd is higher end rentals and once you get close to 56th st and north the numbers don't really work for rentals...  mostly home owners.  

PS. If you are on or south of 38th street you are NOT IN LAWRENCE.

If you want to invest in "high end" rentals you can certainly do that in Lawrence. If you want to pick up some of the cheapest houses in Indy metro you can certainly do that in Lawrence as well.

Can you make really good money in Lawrence. Absolutely. Ive done it. Do people lose there a$$ in Lawrence... yep. I've seen it happen.

Fountain Square on the other hand is relatively small neighborhood just south east of downtown. The main difference to me from a REI perspective is that Fountain Square (and some other neighborhoods around downtown) is changing. You can actually see the progress happening. The demographic of the neighborhood is changing and has been for quite some time. 5 to 10 years ago it was scary. Every single day I talk to someone that had rentals here a while back and has all kinds of horrible tenant stories. Guess what: I was LIVING here then. I know what it was like. Back then we were buying houses for 10 - 15k all day long. Nowadays you have hipsters fighting to buy 200k plus houses. It's changed. Really, geographically it had to change. As downtown Indy grows the neighborhoods on the outer fringe will continue to be gentrified and values will increase.

Historically this has also happened in these specific neighborhoods:

chatam arch / chatam arch / cottage homes

Old north side / herron morton / fall creek place

Lockerbie / Fletcher Place / Fountain Square.

You can google the locations and use zillow to see how the values are highest close to downtown and spread from there. 20 - 30 years ago all these areas were ghetto. Indy's downtown was ghetto. Things have changed.  

Fountain Square isn't a low end neighborhood anymore.  I know investors that have super nice houses right by the restaurants and bars that get 1500 - 1800 per month.  They bought them when prices were low...  and HELD them until now.  To me that is the essence of a good buy and hold.  

In conclusion:   Lawrence and Fountain Square have really good opportunities to make money.  There is no right or wrong way to invest.   Especially in Indy.  

I just happen to prefer downtown neighborhoods.  

*Sorry about the rant.    :)