Investing In Indiana Real Estate: The Good, Bad & Ugly – IFS
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Investing In Indiana Real Estate: The Good, Bad & Ugly – IFS

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The Pros, Cons & Gotchas Of Investing In Indiana Real Estate

Investing in Indiana real estate can be a great financial move. It is considered one of the best states for doing business. It can be far easier for investors to get started and grow their investments here than many other destinations. Here are the benefits you should be claiming, as well as what can really throw a wrench in your plans if you aren’t careful.

The Indiana Real Estate Market

Indiana’s famous miles of corn fields are dotted with many small towns and medium sized cities. According to Zillow, Indiana is one of America’s hottest property markets. Average home prices rose 6.6% in 2019 and are forecast to rise almost another 5% in 2020. This is in stark contrast to the declines being experienced in once hot coastal cities like New York. The average home value was $148,500 in late 2019. Median asking price per square foot are just over $100. Here real estate investors will find single family homes, duplexes, multifamily apartment buildings and industrial property.

The Good

This may not be one of the most famous destinations on the planet, but that has also helped keep local housing very affordable. This is a fantastic opportunity for investors from all over the country and the world. Homes here are more than four times cheaper than in Seattle on average. Renters and home buyers get so much more for their money here.

This is great for helping investors to get started. Many are priced out of their home markets. They can also invest here to spread risk. You can buy four or six properties here for the cost of one home in California and other high priced markets.

While house prices are more modest here, they are also more insulated from the roller coaster other boom and bust markets experience.

All of this has helped attract many businesses to the state. Here they find above average skilled labor. Yet, can pay more affordable wages due to the modest housing costs.

Indiana is also recognized as one of the better US states for landlords. Laws tend to favor landlords over tenants. It is relatively easy to increase the rent, or terminate leases and evict if renters are not performing. Nolo reports no caps on the amount of security deposits or state rent control laws.

The Bad

Some of Indiana’s main advantages are also its Achillies heel. The stable housing market and gradual appreciation mean less exciting jumps in house prices. Even if that is a plus which provides more safety to investors. Rents are also affordable. Around $1,100 per month on average according to Zillow. Or almost 30% cheaper than the national average. That gives investors lots of room to grow and increase rents over time. Though more modest per unit cash flow for now.

Taxes are low, but there are state income taxes and property taxes.

It snows here. That may be pretty for Christmas, but poses some additional maintenance concerns for property owners. You’ll be shoveling snow instead of cutting the grass in the winter. Foundation cracks and roof leaks can be made much worse by melting snow.

The Ugly

As with just about everywhere else, landlords and sellers are expected to disclose any property defects or potential problems to renters and buyers. This especially applies to hidden defects. Among these items are mold, homes previously used as meth labs, asbestos, lead pipes, radon gas, flooding and bed bugs.

This is good when you are making new acquisitions. Just make sure you have inspected, fixed and disclosed any issues when it’s your turn to lease or sell them.

Roof, foundation and crawl space issues are not uncommon. Especially in older homes. Always have properties inspected before buying. Get quotes on the work before closing so that you can renegotiate with the seller to cover these expenses.

If this was neglected when you purchased the property, understand that these problems can get worse fast. Odors, warped wood and high moisture levels can be indicators of bigger issues in the basement or crawl space. Make sure you find a reliable team who is responsive, shows up, and delivers accurate quotes. Fix things things right the first time to add more value to the property and avoid repeating the process.

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