No multifamily properties in Indianapolis?

Question

Hello,

I'm an out-of-country investor and an avid follower of BP podcast and as such, I got convinced that investing in small multifamily is the way to go.

My intention was to start investing in Indianapolis metro but I then noticed that there almost no small multifamily properties in the area.  What could be the growth strategy in Indy and how it compares with growing the number of multifamily doors?

I would appreciate any insights.

Thanks!

Andrew Hogan · Answer

There are plenty of small, AND large. The only trick is finding a DEAL!

Amy Heitner · Answer

Hi @Gerardo Waisbaum,

The 'Emerging Trends in Real Estate' 2020 report from Urban Land Institute and Price Waterhouse Coopers has the following encouraging things to say about Indianapolis..."This year sees an upward step for Indianapolis’s 16th place in overall prospects, up a few positions from a year ago. One local broker notes,“Indy is a vibrant place to grow industrial. There’s more spec construction in industrial than we’ve ever had; it appears the demand will support that.” Another broker concurs: “People who wouldn’t consider Indianapolis five years ago are now looking to put money in the market.” Indianapolis is rapidly reinventing its downtown, with vigorous levels of rental apartment and condo development—prompting a construction boom in downtown offices. Tech firms now lead the pack in employment growth. The emergent signs of an 18-hour city cannot be missed. Local sentiment places Indianapolis 10th in the nation for development/redevelopment opportunity. Indianapolis is one of those markets whose national investment market share since 2016 and through mid-2019 is right in line with its 0.6 percent share of national population."

Joseph Cacciapaglia · Answer

How did you come to the conclusion that there aren't many multifamily properties there? I'm not saying you're wrong, but a lot of out of state people think that about my market sometimes. This is because most of the small multifamily deals don't get listed on the usual sites that people expect. Some are on Realtor.com, Loopnet.com, etc., but many are only ever listed on local brokers' sites. If you don't know where to look here, you won't find them. Could it be that it's a similar situation in Indy?

Dom Chit · Answer

Building on this older thread- can anyone recommend any brokers that work in the smaller MF sphere- between 10 to 75 units?

Thanks!

Jeb Brilliant · Answer

@Gerardo Waisbaum There are VERY few purpose built 3 and 4 unit properties in Indianapolis proper. There are several duplex's even some in some great areas but those are few and far between. I would suggest getting in touch with some wholesalers who can funnel you just duplex's. Though I will say @Mike D'Arrigo is 100% right, they tend to be a little rougher to own but I've personally done pretty well with them. Good luck!

Joseph Koury · Answer

Her Gerardo - we are Kansas City investors with small multi-family experience. We are looking to expand to other markets as well on some larger deals. After attending a real estate conference and listening to some economists and data scientists, it seems that there are more transactions in multifamily real estate than ever before. Have you thought about expanding your search area? Cap rates are depressing due to the heavy influx of foreign money(their cap rates are even lower), but we believe that there is still opportunity in the right markets. One strategy we found interesting was to partner with an operator who already has deals working and a good marketing strategy to find deals. You can organize a fund of investors or be the sole investor and partner on the project in a passive or join partner capacity first. If you want to connect further, please reach out.

Gerardo Waisbaum · Answer

Thanks all for your responses. The idea was to start with plexes (2-4 units) and to grow beyond that as the next step. So far I've found mainly duplexes in questionable areas. Anyway, It seems like SFR should be the main strategy in the area.

Mike D'Arrigo · Answer

@Gerardo Waisbaum Inventory in general is very tight in Indianapolis and even more so for MF, however, I wouldn't say there is no MF in Indy. As much as I am an advocate for SFR in Indy, I don't recommend it for MF with rare exceptions. Most of the MF in Indy is converted SFR's in old, rough neighborhoods. Indianapolis is a great cash flow market but primarily for SFR. That's what I have seen anyways after being active there for almost 10 years.

Jaysen Medhurst · Answer

I see a bunch of MFR on Trulia, @Gerardo Waisbaum. What are your criteria?

No multifamily properties in Indianapolis?

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