Real Estate Investing in Indianapolis in the last 10 years!
Real Estate Investing in Indianapolis: Flip or Hold for 2015?
Now that 2015 is here it’s time we start looking at where Real Estate Investing in Indianapolis will take us. Will this be a year like last year where most investors who owned rental properties in Indianapolis made a 10% increase in asset value due to increase in prices? Or will this be a year in which we want to start focusing more on flipping? This is where the unknowing part of real estate investing really gets exciting.
Now that we are in our 10th year in the biz we want to identify some of the past real estate investing trends in Indianapolis as well as some historical data before we start predicting what will happen in Indianapolis Real Estate for 2015. As the saying goes, “those who don’t know their history are doomed to repeat it” and those who are not data driven will surely perish. Okay, that last part I just made up but it sounds good doesn’t it? Plus it’s not that far from the truth. Either way let us examine a few of the most impacting economical housing trends in the last 10 years.
The Roller Coaster Ride!
The last 10 years have been a real roller coaster ride and investors made A LOT OF MONEY in the early part of the century. I couldn’t get to another Starbucks without running into a Mortgage Lending Broker or a person who worked in the Mortgage/Real Estate Industry. They seemed to be everywhere, and most of them were making great amount of money. Some in the very high six digit range. Of course this all started in the early 1990’s, when the US Government passed several laws that lowered lending standards so more people could afford homes (or at least afford their mortgage payment). Business was good for almost everyone, this includes sellers, buyers, investors, you name it. Everything seemed so easy and too good to be true.
During this time, all we did was flip, flip,flip. We could buy a property at almost retail and rehab it and by the time we sold it it was 11% more than what the original retail value was when we first assessed it. It was easy to gross almost 40% after we sold the property. They were good times indeed, especially considering we weren’t in California or Florida where prices went up even more.
The Housing Bubble
Unless you’ve lived under a rock, then you know what happened in the housing market around the end of 2006. The lowering of the lending standards created many new entrants into the home buying market and quickly reduced the housing supply which raised home prices at a steady but aggressive pace. The increase in home value created an economic boom in new-home construction and people everywhere started looking at houses as an investment, including people who are not known for investing in real estate. (This comes to show you that not everyone is a real estate investor, especially when you don’t know what you are doing.)
So the real estate market grew and the bubble formed and with it came the variety of specialty loans designed to allow buyers to borrow more while paying less and the mindset that a house was a sure-fire investment that could never lose money. It is still one of the best ways to invest your money but like all investments it has its risk. So in the end, housing got to a price where no one wanted to buy anymore, the market crashed and so did the economy that supported it.
Once the dust settled Indianapolis had one of the highest foreclosure rates in history of the country. About 1 in every 10 homes were in foreclosure and Indiana values went down 10% from its peak in 2007 to 2011. 10% doesn’t seem very high but that’s because the values here in Indianapolis never rose over 50% like in other states of the country when the bubble was still in high gear.
Fast Forward to 2011
This is where it all bottomed out. Real Estate Investing in Indianapolis picked up again because people knew if you can buy low you can eventually sell high. In 2011 Elden Investments was buying almost anything it could put its hands on. Prices were so low it was ridiculous to see how great of a deal they were. Like most investors, we found off market deals that were 60% to 90% off their 2007 highs. But that’s when we realized we couldn’t flip them anymore. No one was buying anything and we didn’t know what to do at the time. Remember, when we first started real estate investing in Indianapolis all we knew was flipping properties. At the point all of our money was tied up in investments.
Cashflow and Turnkey
At the time we had one home that we were renting because we had a friend who asked us about moving into one of our flips. Our buyer fell through and so we thought it would be a good idea. Then we had another contact wanting to rent another one of our houses and before we knew it was started renting out all of our properties. They made perfect sense because we were renting properties at a little over the average rent amount with properties we had purchased for pennies on the dollar. I wish I could say that we planned it that way but it just happened that way by chance. We realized that as a longterm strategy we could make a whole lot more income this way because it was residual income. What is better than passive income?
In Conclusion
According to USNews.com, for most of the country it makes a lot of sense to hold properties. If you own turnkey properties you will more than likely have another great year because values are still rising. Real Estate Investing in Indianapolis will be the same and it is still not too late to get great deals on properties here in Indy. Whether you want Turnkey Properties in Indianapolis or wholesale properties, Indianapolis is the perfect market to start creating your passive real estate investing for the new year. Take it from us, don’t let this year slip by you because you never know what great opportunities are out there for you, even in the real estate investing world.
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