I live in Indianapolis and have been helping investors here for years, and have several here myself.

One of the biggest costs you have to look at in any town is taxes, and this is one of the reasons Indianapolis has remained on top of many people’s best cities to invest in, but you have to be careful-many parts of town vary greatly in the property tax category-mostly due to the township or school system where it is located. In fact legislation was recently passed that limits property taxes at 2% of the homes assessed value, which is relatively easily disputed, and I would recommend everyone with property anywhere look into having their assets reassessed as soon as they take ownership. In indianapolis this can even be done online through a private company that specializes in this.

You can do it yourself by following the instructions on the assessors site:

http://www.indy.gov/eGov/County/Assessor/Marion/Appeals/Pages/HowtoAppeal.aspx

A couple of the best townships with low entry pricing, low taxes, and low tenant turnover are Lawrence TWP, Warren TWP, Wayne TWP, and Decatur TWP. I would highly recommend staying out of center TWP as the homes are much older, tenants are much more transient, and vandalism rates are higher.

Many of these areas have a few other good points worth touching on:

Most of these homes were built in the 1950’s or later, and are one story on a crawl or slab. This significantly lowers the cost of rehab when it needs to be done between tenants, or when larger maintenance issues need to be addressed such as plumbing, HVAC, or wiring repairs must be made. Nearly all of these homes are walled with drywall vs. many older homes walled with plaster-again making repairs easier.

Another great point about these areas is the newer construction generally has a larger lot, private drive, newer connections to municipal sewer systems, and many have attached garages. All these thins add up to savings on rehab AND higher rental rates which equals higher rates of return.

I think anyone who is advertising 16% returns on buy to let properties is hiding some very key information that will negatively effect ROI. While local investors may be able to achieve these rates with some success, there are costs associated with absentee ownership of rentals that must be factored in, not to mention vacancy rates, management fees, cost for repairs between tenants, etc. If you set your expected ROI this high you run the risk of getting taken for a ride–it doesn’t pass the smell test and I would expect there are unaccounted for costs backloaded into the deal. You want all those costs to be incurred in the acquisition to get to a true ROI.