Indiana, also known as the Crossroads of America, is the hub for more interstate highways than any other state. This creates significant advantages for logistics & distribution operations in Indiana. Logistics and supply chain management are major industries in Indiana. The state’s central location provides ready access to national and international markets.
As a real estate firm that specializes in finding out of state properties for our clients for the purposes of 1031 exchanges and investment, we are constantly researching rental properties in different markets. For some reason, Indianapolis consistently comes up as the highest cash-flowing market for rentals in all real estate categories, but especially for single family homes. Net rents are consistently in the 8-12% range, which is very high for such a large metropolitan area.
The city of Indianapolis has a population of 853,173, which makes it the 14th largest city in the US. The larger Metropolitan Area has a population of 1,971,274 and when including the adjacent towns of Carmel and Muncie, it’s 2,372,570 – making it the 26th largest combined statistical area in the US, according to Wikipedia. It’s the second largest population in the Midwest next to Chicago, which is a 3-hour drive from Indianapolis.
Indianapolis is the State Capital of Indiana and home of the Indy 500 & 2-Time Super Bowl Winning Indianapolis Colts. But most interestingly, for our purposes of real estate investing, is the fact that Indianapolis is very centrally located. Literally 70% of America’s population (approx. 324,000,000 people) is within one day’s drive. In fact, the State Motto is “The Crossroads of America”, which is the nickname for the city as well. If you look at a map, you’ll see there are no less than 4 Major Interstate Freeways intersecting through the city, giving it easy access to most of the US.
Indianapolis functioning as a major distribution and transportation hub dates all the way back to the Civil War, when the Union used the city as a logistics hub and key military base for the Union soldiers staging for the war before travelling South. As a matter of fact, the population of the city doubled during this period from 1860-70 from all the transportation and military activity. This tradition of being a center for logistics, distribution and transportation (rail, ships, air and truck) has continued through till today.
Indianapolis is home to FedEx’s 2nd largest worldwide air hub as well as FedEx’s 3rd in total railroad freight.
Interestingly enough, Indianapolis is far from landlocked. It has a major shipping port and is ranked 7th in the nation for volume of waterborne shipping. It’s the hub for the only statewide shipping system in the US that has direct access to two of America’s coasts.
Indianapolis has 24 colleges & universities and is ranked by Forbes as the 9th top city for creating tech jobs, having that category grow by over 50% in the last decade. It’s overall unemployment rate is only 3.9% as of Dec 2016 versus the national average of 4.7%. It’s also ranked the #1 City for doing business by CNBC.
With a healthy median income of $54,322, that may seem low to someone in California or New York, but it’s just under the national average of $55,775. According to Zillow.com the median home prices in the metro area are $137,300, less than half the national median home price with 93.3% of homes considered “affordable”. Home prices have appreciated 5.5% in the last year. This makes Indianapolis the #1 ranked city for affordability by CNN.
All of these strong economic factors gives this city a very stable market and makes it high on our list of markets for purchasing investment property.