Is Indiana Land a Good Investment?

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Is Indiana Land a Good Investment?

Bart Waldon

Blanketing over 23 million acres of farmland, woodlands and rural residential holdings, Indiana offers abundant land investment opportunities to those able to discern emerging high-potential locations primed appreciating over strategic longer-term holds. While commodity cropland and mass-produced housing development sites directly serve basic human sustenance needs through harvesting established markets, speculative plays betting on infrastructure connectivity expanding suburban reach and agricultural technology breakthroughs increasing yields on currently marginal lands likely surprise upside windfalls down the road. For instance, Hoosier State non-irrigated cropland has seen nominal per acre values inflate 150% since 2000 vaulting from approximately $2,250 toward current midpoints averaging $5,650 for premium parcels reaping advancements once considered taboo dismantling naysayers. Have patience and faith - the best stewards nature’s bounty.

Why Indiana Land Can Represent a Strong Investment 

Cost of Living and Land Prices 

Compared to coastal states, Indiana’s cost of living is nearly 15% below the national average, making it an affordable place to live and run a business. This also means land prices can be lower than other parts of the country. Investors focused on land values rather than development may be able to acquire parcels at attractive valuations. However, it’s important to research prices in specific counties and cities before making assumptions.

Pro-Business Tax Policies 

Indiana tax rates are lower than surrounding states. The state corporate tax rate is under 5% and there is no inventory tax. Low business taxes make Indiana attractive for companies looking to expand or relocate. If this business growth continues, demand for commercial land could rise and boost values. However, tax policies can change over time which underscores the need for careful evaluation before investing based on current incentives.

Economic and Population Growth 

Over the last decade, Indiana’s population has grown nearly 4% reflecting an influx of new residents. Major employers like Salesforce, Amazon and Roche Diagnostics have expanded operations across Indiana, bringing high-wage jobs in fields like tech and life sciences. With sustained job growth, demand for residential, retail and industrial land may go up. Investors should focus on high-growth regions and confirm growth plans rather than state-level trends.

Infrastructure Access 

Indiana’s centralized location, coupled with access to major highways, airports and railways means enhanced connectivity for transport and logistics. For investors looking at farmland or parcels suitable for warehouses and distribution centers, proximity to Indianapolis International Airport and interstate access could be advantageous. However, as with other factors, not all Indiana land offers the same access and localization will impact actual demand.

Robust Agricultural Sector 

Over half of Indiana’s land area is occupied by more than 57,000 farms generating over $11 billion in annual economic production. Crop farming represents the majority of agricultural output. Rising commodity prices and export demand for products like soybeans and corn could increase farmland profitability. However, many uncertainties from weather fluctuations to global supply chain instability can quickly impact the economics of crop production.

Reasons for Caution When Investing in Indiana Land
While the reasons above make a case for Indiana land investment, there are also risks to consider.

Susceptibility to Natural Disasters 

The geographical features that support Indiana's agriculture also make it prone to floods which can severely damage land and reduce property values. Investors should assess not just current valuations but also the actual soil quality, any weaknesses like erosion and how past flooding may impact long term viability or require added maintenance costs. Every prospective parcel merits in-depth inspection.

Rural Population Decline 

Over 30% of Indiana’s population lives in rural areas which have seen a long term decline. This shrinks the pool of potential buyers for agricultural land or residential development outside urban hubs. Localized research is required to ensure any investment thesis tied to population trends is valid. Simply assuming rural demand based on state growth could prove misguided.

Regional Variations 

Indiana has a diverse economic profile with industries concentrated in different cities and clusters across the state. Some regions like Gary have seen depressed valuations from industrial decline, while others benefit from expansion in sectors like technology services. While costs may seem appealing, land values ultimately depend on area-specific supply and demand dynamics. Investors need in-depth diligence.

Tax Implications 

Indiana offers incentives for business investors and some of the lowest property tax rates in the U.S. However, land can have different classes of assessment for tax purposes making it essential to understand criteria for undeveloped, agricultural or commercial land. Assessment values and property taxes owed can vary considerably and may factor into investment payback calculations.

Tips for Investing in Indiana Land For both local and out-of-state investors interested in purchasing Indiana land, some keys to success include:

  • Research metro area dynamics for population growth, economic health indicators and infrastructure development plans rather than relying on aggregate state data.
  • Hire not just an inspector but talking to knowledgeable local professionals like civil engineers, agricultural extension agents or commercial real estate brokers to provide market color.
  • Carefully determine the tax implications based on land classifications and intended use, factoring this into the return projections.
  • For land being acquired for speculation or resale purposes, use conservative assumptions given the slower sales process for vacant land listings.

Should You Invest in Indiana Land in 2023?

Favorable Attributes for Investment

Indiana has several attractive qualities that make farmland and other real estate investment appealing in 2023. The state has a strong agricultural industry, ranking in the top 10 for crop and livestock production. This includes corn, soybeans, hogs and dairy. With high commodity prices and export demand, Indiana farmland continues to see stable income potential. Outside of agriculture, Indiana also boasts a growing tech and life sciences sector, a central U.S. location with transport access, and business-friendly corporate tax rates under 5% - all factors that strengthen the case for investors considering land across the state.

Remaining Risks and Unknowns

At the same time, Indiana is not immune from market instability whether in agriculture or the broader economy. Floods and soil erosion remain persistent issues that can diminish land productivity. Rural populations continue to decline, reducing the pool of buyers for properties outside major urban areas. A global recession could also cool demand from manufacturing and warehousing firms even with Indiana's high infrastructure connectivity. The crosscurrents of rising inflation and interest rates also introduce uncertainty around land valuation growth and investor returns.

Key Takeaway

With both supportive macros but also risks that temper outlooks, Indiana presents a balanced profile for land investors entering 2023. Optimal investment likely depends on localized trends more than statewide generalizations. Factors like infrastructure improvements, density zoning changes and city development plans could all shift demand dramatically even within the same metro area. Conducting in-depth due diligence around economic health and market viability in specific Indiana sub-regions remains imperative before making any land plays in 2023. Areas experiencing construction booms or facing environmental remediation needs can make for widely divergent cases.

Final Thoughts

On paper, Indiana offers some compelling advantages whether lower land prices, pro-business policies or progress in thriving economic sectors that should stimulate demand for real estate. However, statistics at a state level risk overlooking weakness in certain geographies so localized diligence is vital. Ultimately there is potential in Indiana land plays but also cause for selectivity and caution to ensure investments pencil out based on the micro-economic situation. Proper upfront research and planning remains key to navigate the complexities of the market and emerging opportunities.

Frequently Asked Questions (FAQs)

Is Indiana land cheaper to buy than other states?

Indiana does have a relatively low cost of living compared to national averages, ranking 38th in the country. This translates into property valuations and land prices that can be 15-20% cheaper than land costs in some coastal states or metro regions seeing high growth and inward migration.

What types of land investment do best in Indiana?

Agricultural land has potential due to Indiana's sizable farming industry focused on commodities like corn, soybeans and hog production. However, growth sectors like warehousing and distribution centers around logistics hubs have also driven demand for industrial land plots suitable for these commercial facilities.

Which areas of Indiana make sense to target?
While research is needed to identify promising pockets of growth, Central Indiana including cities like Indianapolis and surrounding suburbs have demonstrated strong population and employment expansion in recent years, boosting associated land demand.

What risks should an investor be aware of?

Risks that can dampen Indiana land prospects include declining rural populations that shrink the buyer pool, susceptibility to floods and soil erosion which increases maintenance costs, and economic weakness still plaguing former manufacturing hubs with depressed valuations.

Does land sell fast in Indiana if an investor looks to flip?

Vacant land has intrinsically low demand and usually sells much slower than existing homes or developed investment properties, sometimes taking 12-24 months to find buyers even in strong markets. Conservative assumptions should be made for offloading land compared to quicker flips with residential units or commercial buildings.

About The Author

Bart Waldon

Bart, co-founder of Land Boss with wife Dallas Waldon, boasts over half a decade in real estate. With 100+ successful land transactions nationwide, his expertise and hands-on approach solidify Land Boss as a leading player in land investment.


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