Investment in Indianapolis

[Aarti Bambha]

Hi I am an out of state Investor looking to invest in Indianapolis. I am looking for single family homes which should meet 1.5% rule with medium income $41000 plus. Which zip codes are the best to invest in? If there are any wholesalers who have off market deals then please get in touch.

[Ross Denman]

@Aarti Bambha I wouldn't attempt to track by "zip code" as it can cover a lot of territory. Make decisions more based on school systems (if your investing in family homes,) crime, home ownership vs investment properties, rental pricing, etc.

Also... start putting together a team. I'm a firm believer that your property manager will be at the nucleus of your team. They will be more aligned with your goals as they make their money from the income generated by the property... not the sale.

Here are some tools that should help you pre-screen opportunities.

Redfin.com - Redfin's home value estimate tends to be more accurate than Zillow's. While these numbers still vary quite a bit, it is information to check against.

Zillow.com - Zillow provides a rental zestimate. Zillow is typically between $50 and 10% too high on this estimate in Indianapolis. My recommendation is to round this number down after subtracting $50-75 from the rental zestimate when figuring numbers for your deal.

Finestexpert.com - This is probably my favorite free tool and there are not a lot of people who know about it. It also has some built in calculators as well.

Rentometer.com - You also can use this to assist in determining rent ranges.

Permits and Enforcement searches - http://permitsandcases.indy.gov/citizenaccess/

This is my absolute favorite tool for research. You can find out permit information to get an idea if larger scale work has been done and permits pulled for those. You can also search for Code Enforcement violations and Board of Health Violations here as well.

Flood Map search - http://dnrmaps.dnr.in.gov/appsphp/fdms/

It is important to know whether or not your home is in a flood plain. Banks will mandate flood insurance which is very costly and will have a huge impact on your ROI. Flood insurance can easily cost $1k-3k annually.

Tax Parcel Information - http://maps.indy.gov/AssessorPropertyCards/

You can use this to get ownership information on properties.

Trulia’s Crime Map - https://www.trulia.com/real_estate/Indianapolis-Indiana/crime/

This is the easiest way to get data regarding crime in an area. Great tool.

Property Tax bill information - http://www.in.gov/dlgf/4929.htm

I don't use this very much, but it's interesting

Well Water Records Search - https://indnr.maps.arcgis.com/apps/webappviewer/index.html

I don't use it too much, but you can verify whether or not there is a well on a property

Here are some recommendations. These do not apply to all situations, but this is my personal opinion of the best ways to invest in Indianapolis.

• Invest in properties that have a retail value. The best way to determine this is 6 months sales history less than .5 miles. These are the numbers that an appraiser uses as well. If there is no MLS history, or all of the MLS sales are very inexpensive (less than $50k) it is likely an area that only caters to investors. There is nothing wrong with these properties, but if you do decide to sell, you will be selling to investors who are not likely to pay much more than you purchased the home for. Usually very little appreciation.

• Invest in properties that value over $50k. Banks do not like to loan for less than $50k. Having homes that will appraise for $50k+ gives you another opportunity by mortgaging or refinancing your properties. Once again, appraisers have to have data to establish this price. If all of the sales are investment properties, they are likely not going to evaluate will.

• When investing in Pre WWII homes, older than 1940, stick to homes less than 1,500 sq ft unless you are investing in higher end rentals ($1,200/mo+.) These homes may cater to clientele that don't always take the best care. When they move, you are frequently going to have to paint and redo floors every vacancy. The larger the home, the higher the cost.

• When investing in Post WWII homes, built after 1940, target 3 bedroom family homes. Try to find homes with at least 950 sq ft. Extra bathrooms (even 1/2 baths) can be very good and garages are nice as well. People outgrow bathroom space first so we see longer tenancies in homes with adequate bathroom space.

• Try not to purchase homes on busy streets unless they have parking in rear or a turn-around drive-way.

• People do not typically stay in homes without central air conditioning for more than a year or two. If a home doesn’t have central air conditioning, try to plan on having one installed.

• Curb appeal helps draw in the best tenants possible. Spend a little money on the outside as well as the inside. This helps tenants feel that you want to take care of the home and they are more likely to take care of it as well.

• Ensure that your homes are clean, have fresh paint jobs, no funny smells, and have electricity/heat. No one likes to view a rental home in the dark and/or cold. Try to upgrade something in the home every vacancy or two. New sinks, ceiling fans, light fixtures, front porch light, doors, etc can make a home feel like it's taken care of and your tenants are more likely to go out of their way to ensure that it’s kept up.

Hope that gives you some insight and direction. Feel free to reach out if you need anything.