Believe it or not, I almost became a lawyer. And, it was while studying law at Indiana University’s McKinney Law School that I met one of my now closest friends, Jacob. Of course, that was many moons ago. Since then, I’ve been buying and renovating investment property in Indianapolis and he’s been talking about doing the same. We always have a good laugh at that. But, last week, our ribbing took a more serious turn. He wants to leave the field of law altogether. So, he asked me whether he should buy an investment property and start building his real estate investment business part-time. While that decision would have to be up to him, I could certainly make a case for starting somewhere and that our home of Indianapolis is as good a place as any.
The Case for Buying Investment Property in Indianapolis
As can be expected, Indianapolis suffered a heavy blow during the housing crisis. Automotive production and manufacturing jobs were already on the decline by 2008. Between 2008 and 2010, Indianapolis lost another 21,000 jobs across all non-farm sectors, according to the U.S. Department of Housing and Urban Development (HUD). Migration into the city slowed as well and, subsequently, home sales followed. When stricter lending guidelines were implemented after the crash, reports HUD, sales continued to drop—by 31% at the height of the downturn. And, 25% of the sales that did occur were of distressed homes.
This, of course, created favorable circumstances for investors like me who had the means and time to see the market through. Though lower than most regions across the country, the number of distressed homes that hit the market here during the housing crash was substantial. For those who took the long view and focused on the advantages of real estate as an investment over the volatility of the stock market, the flood of distressed inventory provided opportunity. Once-ignored, and even avoided, neighborhoods that were full of dilapidated or abandoned houses, like Holy Cross and Herron Morton, became ripe for revitalization.
I bought single-family homes as investment properties in these and other areas that did more than just increase my portfolio holdings and ROI. These investments created jobs, helped to restore property values, and attracted newcomers to old neighborhoods. Over time, the Circle City’s unemployment rate dropped to an impressive 2.8%, according to the Bureau of Labor Statistics. Eventually, foreclosure inventory diminished and median home sales prices rose—by 5% each year through 2013. And, that trend has continued. In the first quarter of 2018, foreclosure activity plummeted by more than 50%, according to the MIBOR Realtor® Association and, in the last 12 months, home sales prices increased another 11% to $173,500.
However, these numbers don’t reflect every Indianapolis homeowner’s situation. Foreclosures still account for a significant portion of the real estate market, indicating that many homeowners are still under serious financial duress. This is, in large part, due to the collateral damage left by the bubble bursting. Also, housing appreciation statewide has been slower post-crash than many regions of the country, leaving many underwater homeowners still gasping for air. And, the loss of automotive and manufacturing jobs in Indianapolis, specifically, put a huge dent in the economy—and in the wallets of the people who depended on them. If other distressing life events, like divorce, illness, or death, are then added to the mix, paying for a home and its upkeep can simply become untenable and their property falls into foreclosure.
But, in deciding whether to buy investment property or not in Indianapolis, bear in mind that foreclosure sales do not always make the best investment deals. Foreclosed homes, whether from the Marion County Sheriff’s Sale or online, tend to be in terrible shape, which can overextend your renovation budget and undermine your potential returns—especially if you don’t buy at the right price. The stiff investor and lender competition you’ll sometimes find there, coupled with the poor condition of these properties, can make buying a foreclosure auction home a risky prospect. You could end up getting bid up or shut out.
Luckily, the average time to foreclosure has jumped to more than 1,000 days nationwide, according to ATTOM Data Solutions. This means that the opportunity to approach distressed homeowners before they’re foreclosed on by the lender and still purchase their home at below market value is greater than ever. You’ve got a better chance of getting the home before it becomes a major fixer too, which will help to keep your repair costs low and your potential returns high. To do this, however, you’ll need a real estate investor lead generation system that helps you find distressed homeowners when they want to be found.
The Most Promising Source for Investment Property Leads
Early on, I decided to change my life’s course and not settle for anything less than a career I loved. For me, that was investing in real estate. So, after I dropped out of law school, I poured my heart into it. But, not everyone comes to this field as early I did. I’m of the belief, however, that it’s never too late. So, when Jacob decided he finally wanted to put his money where his mouth is and buy investment property in Indianapolis too, I promised to help him in any way that I could.
I started by recommending he become an independently owned and operated HomeVestors® franchisee. It’s simply one of the easiest ways to get distressed homeowner leads. Because of HomeVestors’ nationally-known “We Buy Ugly Houses®” ad campaign, distressed homeowners come directly to local franchisees, like me. You can get started part-time or full-time—a consideration of particular importance for professionals, like Jacob, who are transitioning from other fields. After hearing that, the case was closed in Jacob’s mind.
If you’re looking for a promising source of investment property leads in Indianapolis for 2018, there’s no time to argue. Contact HomeVestors today to hear about your local franchise options.
Each franchise office is independently owned and operated.
HomeVestors of America® is the nation’s only real estate investing franchise, providing wonderful business opportunities to real estate and investment professionals across the nation.