Guide to House Hacking in Indianapolis, Indiana

Are you looking to implement house hacking in Indianapolis?

The largest and probably best well-known city in Indiana, if you find yourself looking at buying a house or moving to Indianapolis and want to know what the house hacking market there looks like, you’ve come to the right place!

Like any city, the largest city in Indianapolis has options, but is it a good market for house hacking or should you be looking at another option?

In this post, we’re going to give you all the information you need to do it.

We’ll look at whether Indianapolis is in a landlord or tenant-friendly state, the six demographic data points we use to analyze a market, and the house hacking strategies that might work well in this market.

Indianapolis: Tenant Friendly, or Landlord Friendly?

Indiana is a state that tends to be landlord-friendly as opposed to tenant-friendly.

There are very few if any limitations on security deposit amounts, a fast “cure to eviction” process, and a large amount of time to investigate the property fully before returning any unused portion of the safety deposit.

Indiana is also one of the few states that doesn’t have laws allowing tenants to make repairs and deduct it from rent or withhold rent for any reason.

Indianapolis doesn’t add any major laws or regulations to change this, following the state guidelines on such matters, which means Indianapolis should be considered a very landlord friendly city.

Indianapolis Demographic Data Analysis

Using the 6 demographic benchmarks for analyzing a real estate market, we’ll take a look at how the city of Indianapolis compares against the basic benchmarks that we use to determine whether a market is good for investing in real estate in general and house hacking in particular.

When looking at the numbers, this is how Indianapolis compares to our benchmarks:

According to the metrics we analyze, Indianapolis actually looks like a strong pass.

While job growth, property value growth, and crime change all hit the benchmarks we want to see, when we look at population growth, income growth, and crime level, all three fall short of what we need to see.

Even the crime change numbers don’t look as good considering it would take many consecutive years of drops like that to fall to the under 500 crime level that is a standard we’re looking for in cities.

Overall, Indianapolis is a city we’d likely pass on from an outside investment perspective, but what if your new job is in Indianapolis, you have family there, or for some other reason you need to make a house hack work specifically in Indianapolis?

There are some steps you can take to make sure you’re on the right side of any investment property or house hack in Indianapolis. Let me show you how!

6 Strategies for House Hacking Indianapolis

Indianapolis might not be the ideal market, but it still offers opportunities for the savvy house hacking investor.

Here are six important strategies to embrace when looking at house hacking in Indy.

Look at Multi-Unit Properties in Indianapolis

Duplexes and triplexes tend to not only be cheaper than standalone family houses according to mean prices, but they are noticeably cheaper on average until looking at actual apartment complexes of 5+ structures at which point the prices are high as expected.

This makes duplexes, triplexes, and other similar multi-unit properties extremely popular for house hacking investments in Indianapolis as one or two rent payments often cover the full mortgage and possibly even cash flow to boot.

There’s a healthy number of these spread throughout Indianapolis, giving plenty of options to look for the right property for house hacking all across the city.

What Is the Short-Term Rental (STR) Potential in Indy?

Huge. Because Indiana went the opposite way of most states and their “Short Term Rental Regulations” in H.B. 1025 was basically an overarching set of laws that doesn’t allow for regulation or restriction of short-term rentals.

There are some areas that are grandfathered in (take special care to see if the suburb of Carmel, Indiana is enforcing the rules they were trying to pass prior to the state bill passing), but for the most part this makes Indiana incredibly friendly to rental services like Airbnb, Vrbo, and others.

Because the local suburbs can’t restrict you, that makes Airbnb and short-term rental options an excellent idea for Indianapolis when you have a good location.

The Extra Bedroom House Hacking Strategy

There’s no reason a single family home owner can’t get into house hacking.

Looking for a college student who just wants some place quiet off campus, a work friend looking for a temporary place to live while saving for their own home, or even looking at hosting a foreign exchange student via a program that gives a housing allowance can all be good ways to make an extra bedroom pay for itself.

The extra bedroom is a classic, and if you have a 3 or 4 bedroom house as long as you can find reliable renters who get along, it can work extremely well.

Creating Rental Space from a Single Family Unit

A spare bedroom isn’t the only way to create a rental space. Do you have a garage you don’t use? Insulate and create a garage apartment.

Or use it to rent storage to someone. It’s not the same as rent but it’s a low maintenance way to get another $50-100 a month from space you’re not using.

Use Creative Financing Options for House Hacking Indianapolis

Even if a conventional bank loan is an option for you, it’s always good to look at alternative options to see if you can get a better interest rate, money lumped in for necessary repairs or upgrades, or more favorable cash flow.

Using a VA loan for house hacking is one such creative option, as is using an FHA loan program to only need 3.5% down instead of the conventional 10-20%.

If you’re really looking for a deal, see if you can find a seller willing to take a financing deal where they finance the sale.

Basically they become the bank, charging an interest rate, you take over the property and any maintenance or running that needs to be done.

You get the property and can negotiate a favorable deal while they still make the sale but also collect on interest during the life of the contract.

Here are the mean prices for homes in Indianapolis, Indiana:

• All housing units: $193,499
• Detached houses: $198,739
• Townhouses & attached units: $157,783
• 2-Unit Structures: $115,909
• 3 & 4-Unit Structures: $109,137
• 5+ Unit Structures: $252,421

The mean rent for a place in Indianapolis was $908 last year, which is important to keep in mind when running the numbers on our free house hacking calculator.

Look to House Hack Indianapolis Suburbs

We’ll go into this more in the neighborhood section below, but the crime numbers and population look much better when leaving the city of Indianapolis and looking at what the various suburbs have to offer.

These communities are much safer according to statistics, feature many of the nicer neighborhoods in the “Greater Indy Area,” and in some areas also offer a higher average rent.

All excellent points for house hackers who find themselves needing to find property in this area! This is one of those rare times where sprinting to the suburbs can make a lot of sense.

Should I Airbnb House Hack Indianapolis?

Absolutely. If you can find a property that makes sense for short-term rentals then house hacking via Airbnb or Vrbo makes perfect sense since the local rules are so friendly towards it, and as of this post don’t even require a special permit, taxes, or other upfront fines or payments.

In addition to this, Indianapolis is home to two professional sports franchises in addition to major tourist attractions and annual events that cause the town to be flooded with tens of thousands of visitors.

That is an excellent backdrop for having an Airbnb property.

What Is the Short-Term Rental (STR) Potential?

Indianapolis is a great city when it comes to short-term rental house hacking potential.

Not only is it home to the NFL’s Colts and the NBA’s Pacers, but major events like the Indy 500 annual race or the GenCon gaming convention all bring in tens of thousands of visitors.

During actual one-time events like the Indy 500 or GenCon can also shoot the Airbnb prices for those multiple days through the roof because of the high demand, making it incredibly profitable to go the Airbnb route.

If you have extra rooms going the short-term rental route is a great way to go, and during an event just a few days of rentals can be worth more than a full-time renter.

House hacking a multi-unit property with Airbnb in mind makes a lot of sense.

Indianapolis Neighborhood Investment Overview

Indianapolis struggles as a whole when it comes to crime, safety, and that causes many problems when finding quality properties to house hack.

The best way of dealing with this seems to be to look at the suburbs and neighboring cites that could be considered part of the “Greater Indianapolis Area” and to look at house hacks there when possible, as this map using city-data’s information shows:

So let’s look at the Indianapolis neighborhood and the best suburbs, sleeper communities, and nearby areas that are likely to offer better (and safer) house hacking options but are still near enough to the main city of Indianapolis to be considered part of the greater area.

Best Indianapolis Neighborhoods (by safety)

• Broad Ripple
• Crooked Creek
• Downtown Indianapolis
• Meridian Hills
• Fountain Squre
• Delaware Trails

A little more investigation matters when it comes to which of these neighborhoods is best as Broad Ripple is best for families with mostly single house homes while Downtown Indianapolis is great for young professionals.

While there are crime concerns there are still good neighborhoods that will have house hacking deals that can be profitable.

Worst Indianapolis Neighborhoods

Honestly, there are many to choose from, but this shortlist are the worst, least safe Indianapolis neighborhoods according to crime statistics.

• Haughville
• Bos
• Concord
• Tuxedo Park
• Midtown

Best IndianapolisSuburbs For House Hacking

• Carmel (one of the safest cities in the entire state)
• Zionsville
• Fishers
• Brownsburg
• Noblesville

Many investors will find several nearby suburbs much more appealing than Indianapolis itself, and these suburbs are seriously worth a look if you don’t mind a bit of a commute to the city itself.

Should You House Hack in Indianapolis, Indiana?

Overall Indianapolis is not a great market for house hacking right now.

It failed 3/6 of our demographic points, and even one of the “passes” is crime rate going down, but the city still fails overall crime numbers so it’s hard to see that point as a win.

If you are looking for a place to invest, I would look at other cities or if your heart is set on Indy, consider the suburbs listed which are much safer and offer more stability with property prices and demand.

However, by following the tips in this article you can still pull over the best possible Indianapolis Indiana house hack.