Cons of investing in Indianapolis that I might not know

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Cons of investing in Indianapolis that I might not know

Danny R.
Member since 2020 · 6 posts · 0 votes

I’m considering investing in the Indianapolis market within the next 4-6 months. I’m looking to purchase 5 properties of up to 150K each with cash. But there are some cons I’m probably unaware of. I’ve been doing constant research on that market but here is something I’m now concerned about and would like to hear from you guys.

Winter in Indianapolis. I know it gets cold and icy there but as someone from Southern California I never experienced what it’s like to live somewhere where it snows. I don’t know what it’s like to have to deal with snow on a daily basis and all the dangers that come with it.

So, I have some questions for those who have more experience living in snowy areas.

1) Do I have to pay someone to clean the walkways to the properties every time it snows? What about the sidewalk?

2) If a tenant slips and falls because of ice on the property, am I liable for their injuries?

3) What happens to pipes? Do they freeze and break? Is having pipes replaced a constant expense? And when it warms up do they leak due to damage caused by the ice?

4) How often do furnaces and AC units break due to the cold weather?

These are just some of the questions I can think of right now. I’m sure there’s a lot more that I don’t even know to ask.

Thank you

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Mike D'ArrigoPro Member
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
5y

@Danny R. These are all good questions. Indianapolis is a great cash flow market but there are some things you need to be aware of. I'll respond to your questions in their order.

1. Your tenant lease should specify that the tenant is responsible for all yard maintenance and shoveling of snow. Of course Indianapolis get snow but not as severe as many Midwest markets like Chicago and other cities further north. Indy has an average of 24 snow days and gets an average of 26 inches of snow a year. They might have snow on the ground for up to a couple of weeks at a time but unlike some markets, don't have snow call winter. 

2. People can sue for any reason. It doesn't mean that they will win. I would recommend carrying a $1M umbrella insurance policy to protect yourself.

3. Pipes will only freeze if the house is vacant and the heat isn't being run. If you have a vacancy, you'll want to winterize the property and drain the pipes. Replacing pipes can be very expensive.

4. Furnaces and AC's don't normally just break because of weather but they may have a shorter useful life due to being run more. This would be more the case with furnaces. You can extend the life by doing regular annual maintenance and changing filters. Ask your property manager if they can provide this service. At the very least, provide your tenant with a supply of filters and tell them to replace them. 

5. Although you didn't ask about it. Indy can be subject to hail storms. Hail damage is generally covered by insurance.

I would not consider Indianapolis's climate severe but it isn't California. There are other markets with much more severe weather conditions. 

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  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    5y

    @Danny R. These are all good questions. Indianapolis is a great cash flow market but there are some things you need to be aware of. I'll respond to your questions in their order.

    1. Your tenant lease should specify that the tenant is responsible for all yard maintenance and shoveling of snow. Of course Indianapolis get snow but not as severe as many Midwest markets like Chicago and other cities further north. Indy has an average of 24 snow days and gets an average of 26 inches of snow a year. They might have snow on the ground for up to a couple of weeks at a time but unlike some markets, don't have snow call winter. 

    2. People can sue for any reason. It doesn't mean that they will win. I would recommend carrying a $1M umbrella insurance policy to protect yourself.

    3. Pipes will only freeze if the house is vacant and the heat isn't being run. If you have a vacancy, you'll want to winterize the property and drain the pipes. Replacing pipes can be very expensive.

    4. Furnaces and AC's don't normally just break because of weather but they may have a shorter useful life due to being run more. This would be more the case with furnaces. You can extend the life by doing regular annual maintenance and changing filters. Ask your property manager if they can provide this service. At the very least, provide your tenant with a supply of filters and tell them to replace them. 

    5. Although you didn't ask about it. Indy can be subject to hail storms. Hail damage is generally covered by insurance.

    I would not consider Indianapolis's climate severe but it isn't California. There are other markets with much more severe weather conditions. 

    2Reply
  • Eric M.
    Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
    5y

    Indy gets chilly but you are over thinking the cold issues. It gets little snow and not regularly. Some ice storms. The biggest snow I have heard about there recently was 7 inches and it melted quickly. That much is rare. Usually it is an inch or less and melts fairly quickly. Even in January it only gets down to like 20 degrees or so. You need to get below that to really worry about pipes, etc. Maybe once or twice a year there. Something to make tenants aware of but not be concerned about. You should know which exterior walls your pipes are on and make sure those walls are properly insulated and you should be fine 99% of the time.

    In terms of things you might be concerned about, cold and snow are pretty far down on the list.

    Visit. Visit in winter so you understand what it is like. Get to know the city and the neighborhoods. They are quite different. The housing stock is a bit older in most of the middle class areas so you need to be wary of that. Buy solid houses in a solid neighborhood. Screen tenants well and the vast majority of your issues are taken care of.

    It is not the most progressive area but it is solid and growing for the most part. 

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  • Steven Foster Wilson
    Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
    5y
    Originally posted by @Danny R.:

    I’m considering investing in the Indianapolis market within the next 4-6 months. I’m looking to purchase 5 properties of up to 150K each with cash. But there are some cons I’m probably unaware of. I’ve been doing constant research on that market but here is something I’m now concerned about and would like to hear from you guys.

    Winter in Indianapolis. I know it gets cold and icy there but as someone from Southern California I never experienced what it’s like to live somewhere where it snows. I don’t know what it’s like to have to deal with snow on a daily basis and all the dangers that come with it.

    So, I have some questions for those who have more experience living in snowy areas.

    1) Do I have to pay someone to clean the walkways to the properties every time it snows? What about the sidewalk?

    2) If a tenant slips and falls because of ice on the property, am I liable for their injuries?

    3) What happens to pipes? Do they freeze and break? Is having pipes replaced a constant expense? And when it warms up do they leak due to damage caused by the ice?

    4) How often do furnaces and AC units break due to the cold weather?

    These are just some of the questions I can think of right now. I’m sure there’s a lot more that I don’t even know to ask.

    Thank you

    Ive got a better idea, come 120 miles east to Columbus OH. We've got a growing population, lots of coffee shops and breweries, and were rated top for our fashion!

    Winters can be cold, but ive never had a problem with pipes bursting. Also snow removal can be placed on the tenant depending on the size of the place and the prior agreement.

    1Reply
  • Account Closed
    ME · Member since 2020 · 12 posts · 2 votes
    5y

    @Danny R. Indianapolis was flooded with investors a few years ago but it is still a revitalizing hot zone in certain areas where there are 500k+ homes sitting next to “dumps”. So when these “dumps” come available there are multiple offers on the spot from in and out of town investors. Keep this in mind when bidding on a house in the future! People have also been slimming there margins when it comes to buying criteria in hopes that certain places will appreciate in 5-10 years.

    0Reply
  • Anastasia Gamino
    Investor · Indianapolis, IN · Member since 2017 · 50 posts · 46 votes
    5y

    Great questions and responses! Like stated above, you can write in your lease that tenants are responsible for clearing their driveways especially for SFH and duplexes. If it's getting really cold(like in the negatives), I send a cold weather reminder to tenants to keep their heat on at least 65 degrees, to keep their faucets going with a trickle of water, and that they are responsible for snow and ice removal for their unit's walkways. I agree with the umbrella policy as well.

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