Indiana’s real estate investment landscape is shifting—and savvy investors are taking notice. While primary metros like Indianapolis and Fort Wayne continue to see growth, it’s the secondary markets—think places like Kokomo, Shelbyville, and Greencastle—that are attracting a new wave of attention. At the center of this trend is the Build-to-Rent (BTR) model, a strategy gaining serious traction across the Hoosier state.
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What Is Build-to-Rent?
Build-to-Rent refers to purpose-built, newly constructed homes or communities that are designed specifically for rental. Unlike traditional flips or scattered-site rentals, BTR properties are often part of professionally managed developments, offering tenants a high-quality rental experience—think single-family homes with yards, attached garages, and modern finishes.
Why Investors Love BTR in Indiana’s Secondary Cities
✅ 1. Lower Land Costs
Smaller towns in Indiana still offer affordable, development-ready land, especially compared to larger cities or out-of-state hotbeds like Nashville or Denver. This makes the numbers work for new construction while preserving investor returns.
✅ 2. High Rental Demand
Many of these towns are home to stable employers, colleges, or hospitals but lack new housing stock. Residents want modern rental options without the cost of ownership. In towns like Richmond or Marion, 3-bedroom rentals with new finishes are in short supply—creating strong rent potential and low vacancy.
✅ 3. Fewer Regulatory Barriers
Permitting in secondary Indiana markets is often faster and less restrictive than in major urban centers. That means quicker project starts, fewer zoning conflicts, and reduced holding costs during construction.
✅ 4. Strong Tenant Retention
Tenants in build-to-rent homes stay longer. These aren’t short-term apartment renters—they’re families, professionals, and retirees looking for the space of a home with the flexibility of renting. In places like Lebanon or Columbia City, average BTR lease terms often exceed two years.
Real Numbers: What You Can Expect
Let’s say you build a 3-bed, 2-bath ranch-style home in Greensburg or Peru for around $210,000 all-in. With comparable new rentals going for $1,600–$1,800/month, you’re looking at a cap rate of 7–8%, depending on taxes and management. That’s competitive with value-add strategies—but without the renovation risk.
Communities Leading the Way
- Logansport is seeing development interest along SR-25 with infill housing grants supporting small BTR projects.
- Warsaw benefits from the orthopedic industry and a solid middle-income workforce—ideal for 2–4 unit BTR builds.
- Mooresville is becoming a popular commuter town for Indianapolis, with rising demand for rental housing in quiet suburban neighborhoods.
Incentives & Support
Indiana is embracing this trend. Programs like READI 2.0, Homes for the Future, and local TIF districts are helping cover infrastructure costs—making BTR even more financially viable. Thrive West Central, for example, supports water/sewer expansion for eligible developments in Vigo, Clay, and Parke counties.
Bottom Line
Build-to-Rent is no longer just a Sun Belt phenomenon—it’s a powerful, profitable model right here in Indiana. For investors who understand the local landscape and act before larger players move in, BTR in secondary markets represents an opportunity to scale intelligently and sustainably.
Ready to explore off-market land, builder partnerships, or eligible incentives? I can help you find the right town and the right strategy to make your next build-to-rent project a success.
📞 Contact me today to learn more.
Sources:
- Indiana Uplands Housing Study (2023) – Highlights the demand for rental housing and lack of new inventory in rural and secondary markets.
→ Source: Indiana Uplands Housing Study – Regional Opportunity Initiatives - READI 2.0 Grant Program – Indiana’s state funding initiative that supports infrastructure and housing projects in underserved areas.
→ Source: Indiana Economic Development Corporation – READI - Thrive West Central – Offers planning, funding, and development support for rural housing infrastructure, especially in counties like Vigo, Clay, and Parke.
→ Source: Thrive West Central
