Investing inside the loop in Indianapolis

[Damian Robinson]

I am getting so many mixed messages on investing inside the loop in c areas being a good idea or bad. If there are

Investors that have actually invested in these communities please give me some of your experiences. The homes I

look at are rehabbed and will have a good management company since I am out of state.

[Ross Denman]

Here are the things that I look at inside the loop in Indianapolis (and even somewhat outside the loop on the E and NE sides.)

#1. Crime - https://www.trulia.com/real_estate/Indianapolis-In...

The tenant demographic in these areas (excluding downtown) are usually people with lesser means. They have to live there because it's cheap.

#2. Retail Sales - A realtor can provide more information on this

In areas that have very little retail sales and few owner occupants will have very little appreciation and shows limited desirability of an area. While things are changing in Indianapolis, it's still quite affordable and many people still prefer to own their own homes (around 60-65%.) Homeowners will raise the market prices, whereas investors usually suppress the market prices. This helps ensure equity, appreciation, and a better tenant demographic.

#3. Number of distressed homes in the immediate area - Your local team can help evaluate this.

I've seen too many out of state investors buy a house on an almost entirely vacant block (ghost town.) While these are shrinking in Indianapolis every year, there are still areas that are heavily distressed. Nobody that you would like to live in your homes want to live here (unless you are working low-income strategies.) These areas have tons of crime, squatters, and any number of undesirable activities and nuisances. There are opportunities to strategically invest in these areas with other investors, but you have to target clusters of 5+ homes to bring up a neighborhood block by block. It's a great strategy, but I don't see it being done very often.

Overall, due diligence is everything. Many homes and deals can be worked profitably if you have enough tools in your network. There are tons of ways to lose money in Real Estate... The trick is to identify them and protect against them as quickly and proactively as possible. Just because a deal works on paper doesn't mean that it works in real life. Building a team of honest and trustworthy professionals is immensely important. Personally, I am not a fan of most C Class areas, but I do have plenty of investors who are working those properties profitably. It's all about understand and protect yourself from potential risks, a willingness and capability to do the right things and provide good housing, and have reasonable expectations (quit listening to the wholesalers pitching 25% ROI's in the hood.)

Just an example... I have a client who has purchased 4 investment properties in the last year. Three of them are in 46218 Brightwood area. I am not typically fond of this area, but she has chosen cute homes on decent streets and done great mid-scale rehabs. We found stellar tenants for 2 of them fairly quickly and a decent tenant for the 3rd, but it took a little longer than we had hoped (about 45 days.) Normally, I wouldn't recommend someone to target those areas unless you had a good team to evaluate the locations and provide a quality scope of work to attract the highest quality tenant from the available tenant pool. The best tenants have choices. They can choose location and the quality/finish of the home. They are willing and capable of paying for it. They also take pride in the home that they live in protecting it from damages and excessive wear and tear. That's when you know that you've hit a homerun!