Indianapolis is making real estate news. It’s been named one of Best Markets for Real Estate Investments in 2019 by Forbes and was cited by Zillow as having the fastest increase in home value growth in the nation. Below, take a look at some of the key drivers that make this an attractive market for real estate investors.
1. Growing population, a trend expected to continue
While many Midwestern cities are experiencing population loss, Indianapolis and the surrounding counties have logged 7.4% growth since 2010.1 A study by the Indiana Business Research Center projects that the city will continue to drive the state’s population growth, with 10-30%+ increases in the metro area between 2015 and 2050.
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2. Strong job market
Indianapolis is experiencing lower-than-average unemployment and steady job growth, led by tech, health care, pharmaceutical and sports industries.2 These opportunities are attracting well-educated employees to the market, including millennials and Gen Xers who tend to be comfortable with a renter lifestyle. The influx of new grads and people relocating for work is feeding the area’s active rental market.
3. Diverse economy and central location
Following loss of manufacturing companies during the 2008 recession, Indy’s economy has re-emerged as more diverse. Fortune 500 giants Eli Lilly (pharma) and Anthem (insurance) are balanced by manufacturers Rolls-Royce Corp and Cummings, as well as data companies Salesforce and Angie’s List.3 Indy's central location — at the nexus of six major interstates — has always favored logistics and distribution, and the world’s second largest FedEx operation is located at the Indianapolis International Airport.4
4. High yields, affordable prices, and steady rent increases
The potential for high yields, a track record of steady rent increases, and the affordability factor (Indy is one of the nation’s top three most affordable markets) makes Indianapolis an attractive market for real estate investors.
Gross rental yields,5 an indicator of the annual return an SFR investor is likely to receive, are especially attractive in Indianapolis. The average national gross rental yield is 8.5%, and the gross rental yield in Indianapolis is 10.9%, according to John Burns Real Estate Consulting.
5. Growing presence of out-of-state investors
The amount of capital coming into Indianapolis from out of state has been trending up for the last three years — 21.8% in 2016, 21.6% in 2017 and 16.4% in 2018.6 This underscores investor confidence in the Indianapolis market.
Learn more about the Indianapolis real estate market from local experts.
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Sources: 1: US Census Bureau as reported in Bloomberg 10/9/18. 2: Indiana Business Review, 2018. 3: Forbes, 2018. 4: Indiana Business Journal, 2018. 5: Gross rental yield is calculated as the annual rent as a percentage of the property’s purchase price. (Formula: annual rent divided by purchase price multiplied by 100 = gross annual yield); 6: Roofstock data.