Indianapolis, IN Midwest value market with strong logistics and life sciences employment; excellent landlord laws. This report covers current market conditions, the full investment arithmetic on a median-priced rental, and where Indianapolis ranks against the 19 other metros tracked here.
Current Market Snapshot
Investment Analysis
With a gross yield of 6.5% and a median price of $250,000, Indianapolis sits firmly in cash flow territory. A typical 2-bedroom property rents for approximately $1,354/month based on HUD Fair Market Rent data.
The affordability index of 120 indicates housing is accessible for median-income households — a healthy foundation for sustained demand.
Market Temperature: Hot
With a median DOM of 25 days and approximately 5,100 active listings and fierce competition, Indianapolis's market is currently classified as hot. Low inventory is supporting seller leverage; buyers should move decisively on well-priced properties.
The Numbers on a Median-Priced Rental
Buying the median Indianapolis home at $250,000 with 20% down takes $57,500 in cash — a $50,000 deposit plus roughly $7,500 in closing costs at 3% — and leaves a $200,000 loan. At 7.0% over 30 years that is $1,331/month in principal and interest.
On those assumptions the median Indianapolis rental produces a 3.0% cap rate and falls roughly $706 a month short of covering debt service. Cash-on-cash return on the $57,500 invested is -14.72%, and the debt service coverage ratio is 0.47× — below 1.0×, meaning the property cannot service its own debt at 20% down — this is an appreciation play, not a cash flow one. On a rent basis, you need $2,188 a month to break even — 62% above the $1,354 HUD benchmark.
Rate and Rent Sensitivity
Financing cost dominates the outcome. One percentage point on the mortgage rate moves monthly cash flow by more than a 10% swing in rent does:
| Mortgage Rate | P+I Payment | Monthly Cash Flow |
|---|---|---|
| 6.0% | $1,199/mo | -$574/mo |
| 7.0% | $1,331/mo | -$706/mo |
| 8.0% | $1,468/mo | -$843/mo |
| Rent Scenario | Monthly Rent | Cap Rate | Monthly Cash Flow |
|---|---|---|---|
| HUD FMR − 10% | $1,218/mo | 2.45% | -$821/mo |
| HUD FMR | $1,354/mo | 3.0% | -$706/mo |
| HUD FMR + 10% | $1,489/mo | 3.55% | -$591/mo |
How Indianapolis Ranks
Among the 20 metros covered here, Indianapolis is 2nd by gross rental yield and 19th most expensive. Its 6.5% yield sits above the 5.15% median of the set, and its $250,000 price sits below the $390,000 median. The price-to-rent ratio is 15.4× and the price-to-income ratio is 3.9× against a median household income of $64,000.
The metros closest to Indianapolis on gross yield are Kansas City, MO (6.3%), Columbus, OH (6.2%), San Antonio, TX (5.9%). If Indianapolis is on your list, those are the markets whose numbers you should be holding it against — not the national average.
What Has to Be True for Indianapolis to Work
A median-priced rental here consumes $8,472 a year in cash. That is not automatically a bad deal: the same loan repays $2,032 of principal in year one, so the true first-year drag is about $6,440. To break even on the cash line alone the property has to appreciate 3.39% a year, against the +3.5% the metro has actually posted over the past twelve months. Hold it five years and amortisation alone builds $11,737 of equity — the question is whether you can fund the shortfall for that long without selling at the wrong moment.
Key Data Points
| Metric | Value |
|---|---|
| Median Sale Price | $250,000 |
| YoY Price Change | +3.5% |
| Median Days on Market | 25 days |
| Active Listings | 5,100 |
| Est. 2BR Fair Market Rent | $1,354/mo |
| Gross Rental Yield | 6.5% |
| Median Household Income | $64,000 |
| Affordability Index | 120 |
| Price-to-Rent Ratio | 15.4× |
| Price-to-Income Ratio | 3.9× |
| Gross Rent Multiplier | 15.4 |
| Cap Rate (45% expense basis) | 3.0% |
| Cash Flow at 20% Down | -$706/mo |
| Cash-on-Cash Return | -14.72% |
| Break-Even Rent | $2,188/mo |
Getting Live Data via API
ZipMarketData provides live data for all ZIP codes within the Indianapolis, IN metro. Use the /market-stats endpoint with any Indianapolis ZIP code for the most current figures — or run the same analysis without writing code in the dashboard.