Hello to anyone who may stumble upon this post!
I'm Devon, an investor focused agent in the Central Indiana market, I've been helping real estate investors purchase properties for about the last 4 years and it's been a very interesting journey to say the least. I thought I would take a few minutes just to share some insight into how 2023 has been going in case you are interested in exploring the Indianapolis market for yourself.
- First and foremost, and not unique to Indy, obviously interest rates have been the main character in the story for anyone looking to buy. We saw quite a lull in Q1 of this year and were actually able to get some pretty good deals and negotiate offers more than I've see in the last 2 years. This was pretty short lived, however, and once spring hit we saw things go back a pretty "normal" competition level. Luckily I'm not seeing the craziness that was 2020 and 2021 such as offers 50K over asking, waived inspection and appraisal contingencies, etc but you still have to put your best foot forward.
- Currently, most deals we are getting under contract are at least at asking and maybe 5K-10K over at most. I have been having some success negotiating seller paid closing costs to help with rate buy down as well.
- If you see a property that makes sense, I encourage you to get an offer in ASAP. I'm seeing a lot of properties go in 24 hours or less after hitting the market.
- The suburbs and areas with desirable school districts are HOT. If you're looking to purchase in these types of neighborhoods be prepared to act quickly and competitively. Owner Occupants are trying to scoop these houses up too so you'll have to make your offer appealing.
- Anderson, IN has been a very successful area for my investor clients. It's a city of around 55,000 about 40 minutes north east of Indianapolis and price to rent ratios are better than what you will find in Indy when taking into account area and tenant quality. I would consider it a working class town and we have seen great rental demand and had great leasing experience there with the roughly 35 properties that we manage. I've also seen solid appreciation for the homes we've helped purchase in Anderson as well.
- When dealing with inspection negotiations, I have found that sellers respond better if we ask for concessions as opposed having the seller complete repairs prior to closing. We have contractors who can get us estimates for inspection items and we use that to negotiate.
A couple more pieces of advice I would like to leave you with:
- Make sure your Agent is knowledgeable about rental properties and what it takes to get them rent ready. "Rent Ready" for a tenant and "Move in Ready" for an owner occupant are two completely different things. Your property can be in pretty good shape and easily need another 5K-10K to get it where it needs to be from a rental standpoint. We have had numerous Clients come to our property management team that were told their property was in great shape and basically move in ready only to have our property manager walk it and have a list of 20+ things they find that should be done before placing a tenant. It can obviously be a blindside and wreck your initial calculations for your ROI.
This is not to say you can expect an Agent to catch everything and we are by no means inspectors or contractors, but anyone helping you purchase a rental property should have a basic understanding of rental standards to put out a good product that will attract a good tenant.
- Lastly, if you are looking at real estate as a long term buy and hold strategy, you have to look beyond just cash flow. It's absolutely an important metric, but it's not the end all be all and it's not how you build wealth with real estate. There are 4 other key aspects to consider when analyzing deals and they are - tax savings, principal paydown/equity building, appreciation, and inflation hedging.
I recommend getting a good CPA that is experienced in the real estate niche to help you put some of these puzzle pieces together.
Think about the big picture and your goals when it comes buying rental real estate or you may be passing by on some solid opportunities!
I would love to hear YOUR experiences and other tips you may have to share about your successes or mistakes!
Please feel free to DM me if you have any follow up questions or would just like to connect :)
