Indianapolis is one of the top 10 housing markets positioned for growth this year, according to Realtor.com.
Criteria used to compile the list included healthy local economies, low unemployment rates, a higher share of science, technology, engineering, and mathematics (STEM) jobs, and projected home sales and price growth.
But it's not just the capital of Indiana offering potential opportunities for rental property investors. In many of the best rental markets in Indiana, both home prices and rent growth increased by double digits year over year.
In Indiana, home sale prices have increased by more than 16% over the past year, while median rents for 3-bedroom homes in some cities grew by 30% or more. Here are 10 Indiana cities in which to consider purchasing an investment property, including some where renters occupy more than 50% of the households.
Key takeaways
- Indiana is home to nearly 6.8 million people and has added almost 302,000 new residents since 2010.
- Home values in Indiana increased by 16.2% over the past year, while median rent prices for 3-bedroom homes in some markets have grown 30% or more year over year.
- Some of the cities in Indiana where more residents rent than own include Evansville, Lafayette, and Bloomington.
>>Explore Roofstock's Indiana investment properties.
Why consider investing in Indiana?
Many of the rental markets in Indiana have median listing home prices of less than $200,000, making the state an affordable place to purchase an investment property. In addition, according to the state's development corporation, Indiana ranks second in the U.S. for the lowest property tax rates, is the #1 state for manufacturing, and is the fifth-best state for business.
Over the past 10 years, the population grew by 4.7%, with more than 300,000 new residents moving to Indiana for a lower cost of living and a better quality of life. As a result, population and job growth in Indiana are helping to keep the demand for housing and rental property solid and steady.
In Indiana, median home prices increased by more than 16% year over year, with nearly half of the homes listed for sale going under contract for above list price. The state may also be a good choice for investors looking for a rental property in college towns, including South Bend, Evansville, and Bloomington.
10 great rental markets in Indiana for investment properties
Low inventory combined with rising home prices are 2 factors driving the demand for rental properties in Indiana. According to Redfin, as of March 2022, the median sales price of homes in the state grew by 16.2% year over year, while the number of homes for sale plummeted by more than 37%.
Here are 10 cities in Indiana to consider for an investment property, using Redfin and Realtor.com for housing market data, Zumper for rent data, CensusReporter for population and income information, and the United States Census Bureau for 10-year population growth.
Indianapolis
Why are so many people moving to Indianapolis? According to the Indy Chamber, the answer is because “Indy’s got it.” People who choose to settle in the region are looking for a great place to live, a better quality of life, or to be on the ground floor of the city’s up-and-coming tech scene:
- Population: 869,387
- Population growth: 8.2%
- Median sale price: $222,250
- Change in sale price (year over year): 20.1%
- Days on market: 5
- Median rent (3-bedroom home): $1,482
- Change in rent price: 10%
- Renter-occupied households: 44%
- Median household income: $50,813
Gary
Gary is located about 25 miles from the Chicago Loop and is sometimes thought of as a more affordable suburb of Chicago. Zillow notes that over the past 5 years, values of single-family homes in Gary have grown by 216% and have nearly doubled in price over the past 2 years alone:
- Population: 75,486
- Population growth: -14.0%
- Median sale price: $125,000
- Change in sale price (year over year): 83.8%
- Days on market: 51
- Median rent (3-bedroom home): $1,000
- Change in rent price: 0.0%
- Renter-occupied households: 45%
- Median household income: $31,315
Fort Wayne
Located in northern Indiana, Fort Wayne is within a day’s drive of major metro areas like Cleveland, Cincinnati, Indianapolis, Chicago, and Milwaukee. The city is the fastest-growing metro in the Great Lakes region and has seen more than $3.2 billion in private capital investments since 2014, according to Metro Chamber Alliance:
- Population: 268,378
- Population growth: 4.0%
- Median listing price: $185,000
- Change in list price (year over year): 12.1%
- Days on market: Not available
- Median rent (3-bedroom home): $1,250
- Change in rent price: 37%
- Renter-occupied households: 37%
- Median household income: $51,454
South Bend
South Bend is located in northern Indiana, near the Indiana-Michigan border, and home to just over 102,000. There are several institutions of higher education in the region, including the University of Notre Dame, making South Bend a good place to consider for investors looking for a rental property in a college town:
- Population: 102,686
- Population growth: 2.3%
- Median listing price: $154,900
- Change in listing price (year over year): 19.2%
- Days on market: Not available
- Median rent (3-bedroom home): $1,250
- Change in rent price: 2%
- Renter-occupied households: 45%
- Median household income: $42,657
Evansville
Evansville is the largest city in southern Indiana and the business and cultural hub of the region. The city is home to the University of Evansville, the University of Southern Indiana, and the Indiana University School of Medicine – Evansville, making it a good option for investing in college rental property:
- Population: 118,414
- Population growth: 0.0%
- Median listing price: $158,900
- Change in listing price (year over year): 9.6%
- Days on market: Not available
- Median rent (3-bedroom home): $1,125
- Change in rent price: 6%
- Renter-occupied households: 50%
- Median household income: $42,623
Lafayette
Lafayette is located in northwestern Indiana, between Indianapolis and Chicago. The city is another good option to consider for investing in college town rental property, as much of the area's economy centers around Purdue University:
- Population: 72,556
- Population growth: 5.4%
- Median listing price: $199,900
- Change in listing price (year over year): 14.2%
- Days on market: Not available
- Median rent (3-bedroom home): $1,250
- Change in rent price: 6%
- Renter-occupied households: 59%
- Median household income: $46,925
Elkhart
Located in Northern Indiana along the Indiana-Michigan border, Elkhart is a short distance from South Bend, Chicago, and Indianapolis. The city is nicknamed the “RV Capital of the World” and the “Band Instrument Capital of the World” after its 2 major industries:
- Population: 52,657
- Population growth: 5.8%
- Median listing price: $185,000
- Change in listing price (year over year): 18.6%
- Days on market: Not available
- Median rent (3-bedroom home): $1,300
- Change in rent price: 50% (based on limited data)
- Renter-occupied households: 41%
- Median household income: $40,101
Terre Haute
Terre Haute is located in southwestern Indiana, near the Indiana-Illinois border. The city is home to numerous colleges and universities, including Indiana State, Ivy Tech Community College, and Rose-Hulman Institute of Technology:
- Population: 60,690
- Population growth: -4.0%
- Median listing price: $129,900
- Change in listing price (year over year): 18.2%
- Days on market: Not available
- Median rent (3-bedroom home): $1,000
- Change in rent price: 16%
- Renter-occupied households: 45%
- Median household income: $37,299
Bloomington
Bloomington is home to Indiana University Bloomington, which, with a student body of more than 45,000, is Indiana University’s largest campus. The city is located in south-central Indiana, about midway between Indianapolis and Louisville, Kentucky:
- Population: 84,691
- Population growth: -1.5%
- Median listing price: $295,000
- Change in listing price (year over year): 13.7%
- Days on market: 14
- Median rent (3-bedroom home): $1,500
- Change in rent price: 0%
- Renter-occupied households: 65%
- Median household income: $41,354
Michigan City
Nicknamed “Michiana,” Michigan City is located between Chicago and South Bend along the shore of Lake Michigan. The city receives a fair amount of tourism in the summer months from residents of northern Indiana and Chicago, making Michigan City a place to consider for purchasing short-term rental property:
- Population: 31,191
- Population growth: 1.9%
- Median sale price: $165,000
- Change in sale price (year over year): 29.4%
- Days on market: 31
- Median rent (3-bedroom home): $1,250
- Change in rent price: 30%
- Renter-occupied households: 46%
- Median household income: $44,930
>>Explore Roofstock's Indiana investment properties.
