OOS Investing in Indy

[Cameron Fowler]

Hey BP Community,

I am looking for OOS Investors looking at getting into the Indianapolis market. Would love to hear insight also from those who are out of state investing right now about your experience or challenges. What was the hardest part of the transition into the market? Comment some of the highlights you have had or looking to solve. 

[Bradley Buxton]

@Cameron Fowler

Talk with @Becca F. She has a lot of experience investing in Indy and she's not an agent. 

[Becca F.]

Cameron, I could write a 10 page paper about my experiences. I used to live in Hamilton County then rented out my home (owned 11 years) after I moved back to California - that rental has gone well, great tenants (on Year 4 of lease now), doubled in value from 2013 to 2021 but the property tax increases are substantial. Very few repairs (replaced HVAC and water heater when I lived there) but it's a newer home, built in 2005. 

I bought 2 Class C homes on East Side of Indianapolis in 2023 so the higher interest rates are a negative factor. That hasn't gone  well. C#1 has had 9 repairs out of 12 months, called in by tenant. I was supposed to cash flow $176 a month but now I'm break even with property tax increase in April 2024 and -$300 to -$500 most months. The seller did the renovation not me. C#2 currently problem solving this - too long of story to comment on here.

I think you could put together a guide for first time or OOS investors so they don't need to look at multiple sources, like city-data, Neighborhood Scout etc:

- Guide to Indy metro areas with median home prices, rents, property tax rates, typical insurance rates, how close these areas are to major employers, which companies are moving to Indy, median incomes for each county, unemployment rate, etc.  

This part no one told me about except for honest contractors and property managers:

- get a sewer line scope. In California a home seller is required to get an inspection of the private sewer lateral a certain number of years prior to the sale. The number of years depends on the city. Some require a Certificate of Compliance before close of escrow. Never had an issue with buying in CA with sewer line issues unlike Indy.

- a house can pass inspection but once it's under daily stress from an occupant living there things can start to break 

- just because the seller renovated it doesn't mean there won't be capital expenses and repairs. You never know how good the renovation is. I personally wouldn't recommend an OOS new investor do a BRRRR from far away but at least the investor would know what work was done, if the contractor is trustworthy.

- On my property tax rates, 2.72% for Hamilton County and 2.78% for Indy and there's no pattern to the increases, 7% one year, 4% another year then 17% the most recent one (Hamilton County and Indy Class C#1). I don't know if there's a cap for investors. I can't appeal the increases because the assessed values are less than the comparable market values. For someone running their numbers, I would factor in a 17% increase the next year in property taxes to be cautious, not the 3% or 7% most people use. I had to figure this one out on my own. 

- Stolen AC unit on East side of Indy and to get a cage. 

Knowing what I know now, I would have bought one newer home in the suburbs or townships and  accepted the negative cash flow in exchange for appreciation to not deal with repair issues. Feel free to DM for more insights :) 

[Eran Lifshitz]

@Cameron Fowler

You received here a lot of inputs from Becca.

Me & my partner are out of state investor (far out of state, from Israel (-:) and we operate in the Indi market since 2016, so we have gained a lot of experience (done few fix&flips, acquired few duplex's for buy&hold, hold few notes in Indi and provided some HML for investors working there).

To add to what Becca said, one of the main challenges for OOS investor is to build the local team to support his business. Whether this is local realtor, professional and trustworthy contractor, property management company, inspector and so on.

I think this is one of the main challenges in my opinion for being OOS investor as you must have boots on the ground especially as you are far away and can't visit/see/manage the properties yourself.

Currently we focus on HML in few states, not only Indi, let me know if we can assist in any way.

Good luck!

Eran

[James Viglione]

Quote from @Becca F.:

Cameron, I could write a 10 page paper about my experiences. I used to live in Hamilton County then rented out my home (owned 11 years) after I moved back to California - that rental has gone well, great tenants (on Year 4 of lease now), doubled in value from 2013 to 2021 but the property tax increases are substantial. Very few repairs (replaced HVAC and water heater when I lived there) but it's a newer home, built in 2005. 

I bought 2 Class C homes on East Side of Indianapolis in 2023 so the higher interest rates are a negative factor. That hasn't gone  well. C#1 has had 9 repairs out of 12 months, called in by tenant. I was supposed to cash flow $176 a month but now I'm break even with property tax increase in April 2024 and -$300 to -$500 most months. The seller did the renovation not me. C#2 currently problem solving this - too long of story to comment on here.

I think you could put together a guide for first time or OOS investors so they don't need to look at multiple sources, like city-data, Neighborhood Scout etc:

- Guide to Indy metro areas with median home prices, rents, property tax rates, typical insurance rates, how close these areas are to major employers, which companies are moving to Indy, median incomes for each county, unemployment rate, etc.  

This part no one told me about except for honest contractors and property managers:

- get a sewer line scope. In California a home seller is required to get an inspection of the private sewer lateral a certain number of years prior to the sale. The number of years depends on the city. Some require a Certificate of Compliance before close of escrow. Never had an issue with buying in CA with sewer line issues unlike Indy.

- a house can pass inspection but once it's under daily stress from an occupant living there things can start to break 

- just because the seller renovated it doesn't mean there won't be capital expenses and repairs. You never know how good the renovation is. I personally wouldn't recommend an OOS new investor do a BRRRR from far away but at least the investor would know what work was done, if the contractor is trustworthy.

- On my property tax rates, 2.72% for Hamilton County and 2.78% for Indy and there's no pattern to the increases, 7% one year, 4% another year then 17% the most recent one (Hamilton County and Indy Class C#1). I don't know if there's a cap for investors. I can't appeal the increases because the assessed values are less than the comparable market values. For someone running their numbers, I would factor in a 17% increase the next year in property taxes to be cautious, not the 3% or 7% most people use. I had to figure this one out on my own. 

- Stolen AC unit on East side of Indy and to get a cage. 

Knowing what I know now, I would have bought one newer home in the suburbs or townships and  accepted the negative cash flow in exchange for appreciation to not deal with repair issues. Feel free to DM for more insights :) 

Hi, Becca F.! Thanks for sharing your experiences investing in Indiana from OOS. I'm also an investor from California looking to get into the greater Indianapolis market. Would love to know your thoughts on the Avon, Plainfield, Brownsburg area? Seems the only way to get those areas to cash flow at the moment is with a 50-60%+ down payment, but I'm leaning towards playing it safe with my first SFH investment there rather than risking going into the more affordable C-class areas. I've heard too many horror stories from people investing in the rougher areas in Indy or losing their hat in multi family unit there.

[Tyler Lingle]

Quote from @James Viglione:

Quote from @Becca F.:

Cameron, I could write a 10 page paper about my experiences. I used to live in Hamilton County then rented out my home (owned 11 years) after I moved back to California - that rental has gone well, great tenants (on Year 4 of lease now), doubled in value from 2013 to 2021 but the property tax increases are substantial. Very few repairs (replaced HVAC and water heater when I lived there) but it's a newer home, built in 2005. 

I bought 2 Class C homes on East Side of Indianapolis in 2023 so the higher interest rates are a negative factor. That hasn't gone  well. C#1 has had 9 repairs out of 12 months, called in by tenant. I was supposed to cash flow $176 a month but now I'm break even with property tax increase in April 2024 and -$300 to -$500 most months. The seller did the renovation not me. C#2 currently problem solving this - too long of story to comment on here.

I think you could put together a guide for first time or OOS investors so they don't need to look at multiple sources, like city-data, Neighborhood Scout etc:

- Guide to Indy metro areas with median home prices, rents, property tax rates, typical insurance rates, how close these areas are to major employers, which companies are moving to Indy, median incomes for each county, unemployment rate, etc.  

This part no one told me about except for honest contractors and property managers:

- get a sewer line scope. In California a home seller is required to get an inspection of the private sewer lateral a certain number of years prior to the sale. The number of years depends on the city. Some require a Certificate of Compliance before close of escrow. Never had an issue with buying in CA with sewer line issues unlike Indy.

- a house can pass inspection but once it's under daily stress from an occupant living there things can start to break 

- just because the seller renovated it doesn't mean there won't be capital expenses and repairs. You never know how good the renovation is. I personally wouldn't recommend an OOS new investor do a BRRRR from far away but at least the investor would know what work was done, if the contractor is trustworthy.

- On my property tax rates, 2.72% for Hamilton County and 2.78% for Indy and there's no pattern to the increases, 7% one year, 4% another year then 17% the most recent one (Hamilton County and Indy Class C#1). I don't know if there's a cap for investors. I can't appeal the increases because the assessed values are less than the comparable market values. For someone running their numbers, I would factor in a 17% increase the next year in property taxes to be cautious, not the 3% or 7% most people use. I had to figure this one out on my own. 

- Stolen AC unit on East side of Indy and to get a cage. 

Knowing what I know now, I would have bought one newer home in the suburbs or townships and  accepted the negative cash flow in exchange for appreciation to not deal with repair issues. Feel free to DM for more insights :) 

Hi, Becca F.! Thanks for sharing your experiences investing in Indiana from OOS. I'm also an investor from California looking to get into the greater Indianapolis market. Would love to know your thoughts on the Avon, Plainfield, Brownsburg area? Seems the only way to get those areas to cash flow at the moment is with a 50-60%+ down payment, but I'm leaning towards playing it safe with my first SFH investment there rather than risking going into the more affordable C-class areas. I've heard too many horror stories from people investing in the rougher areas in Indy or losing their hat in multi family unit there.

 Yes, that is the only way to cash flow there due to the high price to rent ratio. A typical home will cost $300,000 and rent for $2500, which with taxes, insurance, maintenance, capex, management will not cash flow. You would just own that for the appreciation & equity growth (not necessarily a bad thing). However, you may want to consider some decent urban markets that area nice enough and cash flow or some tertiary markets like Lebanon, Kokomo, and even Anderson where cash flow is more achievable! 

[James Viglione]

Quote from @Tyler Lingle:

 Yes, that is the only way to cash flow there due to the high price to rent ratio. A typical home will cost $300,000 and rent for $2500, which with taxes, insurance, maintenance, capex, management will not cash flow. You would just own that for the appreciation & equity growth (not necessarily a bad thing). However, you may want to consider some decent urban markets that area nice enough and cash flow or some tertiary markets like Lebanon, Kokomo, and even Anderson where cash flow is more achievable! 

Thanks for the suggestion, Tyler! I've actually been looking into some properties in Lebanon and McCordsville this past week. Perhaps I'm just looking in the wrong neighborhoods and don't know the area well enough yet, but it seems like the rent to purchase price ratio in those areas is still really tight to cash flow. I'll have to check out Kokomo and Anderson. The Indy market is super tough right now with the current formula of where purchase price/tax rates/rental income/interest rates are sitting. Most SFH's I've been checking out have appreciated 100% in just 4 years time and are easily priced 30-50K+ (or more) above obtaining a decent yield / CoC. 

[Becca F.]

Quote from @James Viglione:

Hi, Becca F.! Thanks for sharing your experiences investing in Indiana from OOS. I'm also an investor from California looking to get into the greater Indianapolis market. Would love to know your thoughts on the Avon, Plainfield, Brownsburg area? Seems the only way to get those areas to cash flow at the moment is with a 50-60%+ down payment, but I'm leaning towards playing it safe with my first SFH investment there rather than risking going into the more affordable C-class areas. I've heard too many horror stories from people investing in the rougher areas in Indy or losing their hat in multi family unit there.

James, I'm highly biased towards Hamilton County: Carmel, Fishers, Westfield and Noblesville. I think Avon, Plainfield and Brownsburg are nice areas although I didn't drive out west when I visited, once in 2023 and more recently 3 months ago. Somewhere with good schools is a good place to invest in my opinion for long term appreciation. For the high appreciation numbers you've seen from 2019 to 2022, that applies to many cities in the USA. 

Have you flow out to the Indy area and gotten to know the neighborhoods? I would highly recommend visiting there. I think it's very difficult to buy remotely unless you're an experienced investor who knows that they're doing. 

Where are you in California?  You can DM me. I think that would be more productive than commenting numerous times on a forum - I might put you to sleep with my essays. 

[Becca F.]

Quote from @Tyler Lingle:

 Yes, that is the only way to cash flow there due to the high price to rent ratio. A typical home will cost $300,000 and rent for $2500, which with taxes, insurance, maintenance, capex, management will not cash flow. You would just own that for the appreciation & equity growth (not necessarily a bad thing). However, you may want to consider some decent urban markets that area nice enough and cash flow or some tertiary markets like Lebanon, Kokomo, and even Anderson where cash flow is more achievable! 

I completely agree with the appreciation and equity growth. I flew out to Indy in May 2024 and drove around Carmel, Westfield, and Noblesville. I couldn't believe the number of new apartment complexes going up - some of those luxury Carmel apartments are almost approaching California rents, did a tour of one of them. It was like a resort! I have friends in Carmel and talk to them weekly - I know that a lot of Indy residents make fun of Carmel but I really like the north side.  

I'm of the opinion that it's better to own fewer high quality properties that appreciate more than lots of cheaper properties. If I knew what I knew in 2018, I would have bought another property in Hamilton County... I also missed the ship with the Austin appreciation lol

[John Salcedo]

Quote from @Becca F.:

Quote from @Tyler Lingle:

 Yes, that is the only way to cash flow there due to the high price to rent ratio. A typical home will cost $300,000 and rent for $2500, which with taxes, insurance, maintenance, capex, management will not cash flow. You would just own that for the appreciation & equity growth (not necessarily a bad thing). However, you may want to consider some decent urban markets that area nice enough and cash flow or some tertiary markets like Lebanon, Kokomo, and even Anderson where cash flow is more achievable! 

I completely agree with the appreciation and equity growth. I flew out to Indy in May 2024 and drove around Carmel, Westfield, and Noblesville. I couldn't believe the number of new apartment complexes going up - some of those luxury Carmel apartments are almost approaching California rents, did a tour of one of them. It was like a resort! I have friends in Carmel and talk to them weekly - I know that a lot of Indy residents make fun of Carmel but I really like the north side.  

I'm of the opinion that it's better to own fewer high quality properties that appreciate more than lots of cheaper properties. If I knew what I knew in 2018, I would have bought another property in Hamilton County... I also missed the ship with the Austin appreciation lol

@Becca F. are you still investing in Indy?   I’ve been searching for properties there for a few months   Got a few duplexes under contract but then the GC gave me estimates for a lot more than I had expected and I didn’t move forward   

[Becca F.]

Quote from @John Salcedo:

@Becca F. are you still investing in Indy?   I’ve been searching for properties there for a few months   Got a few duplexes under contract but then the GC gave me estimates for a lot more than I had expected and I didn’t move forward   

I'm not buying anymore in Indy. Mine were SFHs (keeping two of them for now, sold one). I looked for duplexes but there were very few. The PMs I talked to said tenants tend to stay longer in SFHs since most value privacy over living right next door to someone even though "cash flow" might be higher with a duplex. I'm no longer of the mindset of "acquiring doors" and "cash flow on paper" so I'm re-evaluating my entire strategy. I think long term appreciation and quality over quantity is better for my situation. My advice to people prioritizing cash flow is to start a business, which I would do but that's adding another job onto my W2 job. 

Feel free to DM me if you have more questions :)