Cash on Cash in the Indianapolis area
Rental Property Investor · Member since 2025 · 28 posts · 14 votes
Cash on Cash in the Indianapolis area
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Nick GiulioniPro Member
Rental Property Investor · Carmel, IN · Member since 2016 · 1k+ posts · 615 votesMatthew — what you’re seeing lines up with what a lot of us are underwriting in Indy right now.
For stabilized B-class small multifamily, I'm generally seeing ~5–6% CoC at today's pricing and debt, assuming conservative reserves and realistic management/CapEx. Deals showing 7%+ in B areas are either:
- priced very aggressively (often off-market),
- lightly underwritten, or
- relying on short-term assumptions that don’t hold long-term.
In most cases, 7%+ CoC in today's environment is coming from one of three places:
- C-class risk (which you’re already avoiding),
- Value-add execution (rent bumps, expense cleanup, operational inefficiencies),
- Creative structure (seller carry, rate buy-downs, lower leverage, or higher equity checks).
Personally, we’ve adjusted expectations on initial cash-on-cash in B areas and focus more on:
- durability of the asset,
- rent growth over 24–36 months,
- and total return rather than Year-1 cash flow optics.
If you're underwriting clean, long-term B-class assets at 5–6% CoC and they still make sense after stress-testing, that's not a miss — that's the current market. Hitting higher numbers almost always requires taking on execution risk, not just market risk.
Curious how aggressive you’re being on rent growth and expense ratios — that’s where I see the biggest variance between 5% and 7% on paper.
4 Replies
- 8moNick GiulioniPro MemberRental Property Investor · Carmel, IN · Member since 2016 · 1k+ posts · 615 votes
Matthew — what you’re seeing lines up with what a lot of us are underwriting in Indy right now.
For stabilized B-class small multifamily, I'm generally seeing ~5–6% CoC at today's pricing and debt, assuming conservative reserves and realistic management/CapEx. Deals showing 7%+ in B areas are either:
- priced very aggressively (often off-market),
- lightly underwritten, or
- relying on short-term assumptions that don’t hold long-term.
In most cases, 7%+ CoC in today's environment is coming from one of three places:
- C-class risk (which you’re already avoiding),
- Value-add execution (rent bumps, expense cleanup, operational inefficiencies),
- Creative structure (seller carry, rate buy-downs, lower leverage, or higher equity checks).
Personally, we’ve adjusted expectations on initial cash-on-cash in B areas and focus more on:
- durability of the asset,
- rent growth over 24–36 months,
- and total return rather than Year-1 cash flow optics.
If you're underwriting clean, long-term B-class assets at 5–6% CoC and they still make sense after stress-testing, that's not a miss — that's the current market. Hitting higher numbers almost always requires taking on execution risk, not just market risk.
Curious how aggressive you’re being on rent growth and expense ratios — that’s where I see the biggest variance between 5% and 7% on paper.
- 8moNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
- 8moFrank PyleBusiness MemberSpecialist · USA · Member since 2024 · 279 posts · 130 votes
I’m seeing the same thing in Indy right now. Clean B class small multis at today’s rates usually underwrite more like 5 to 6 cash on cash on day one unless you’re bringing a lot of cash, getting seller financing, or finding something mispriced. The 7 plus stuff tends to show up in C class or it is really a value add where the return is after rent bumps, expense cleanup, and tighter management.
If you want to stay B class, I’d sanity check three spots that move the needle fast. Property taxes and insurance are biting people, and a lot of pro formas are light there. Then make sure the rent comps are truly apples to apples and that you are not assuming perfect occupancy with no concessions.
Are you modeling stabilized cash on cash after a 12 to 18 month plan, or only day one? What price range, expected rents, and financing terms are you using so I can sanity check where the ceiling is coming from?
- Rental Property Investor · Member since 2025 · 28 posts · 14 votes8mo
Quote from @Frank Pyle:
I’m seeing the same thing in Indy right now. Clean B class small multis at today’s rates usually underwrite more like 5 to 6 cash on cash on day one unless you’re bringing a lot of cash, getting seller financing, or finding something mispriced. The 7 plus stuff tends to show up in C class or it is really a value add where the return is after rent bumps, expense cleanup, and tighter management.
If you want to stay B class, I’d sanity check three spots that move the needle fast. Property taxes and insurance are biting people, and a lot of pro formas are light there. Then make sure the rent comps are truly apples to apples and that you are not assuming perfect occupancy with no concessions.
Are you modeling stabilized cash on cash after a 12 to 18 month plan, or only day one? What price range, expected rents, and financing terms are you using so I can sanity check where the ceiling is coming from?
Thanks for the insights. To answer your first question: I’ve been focusing almost exclusively on Day 1 cash flow. My philosophy is to ensure the deal is 'in the green' from the jump, but it sounds like I might be missing the forest for the trees by not weighting the 12–18 month stabilized outlook more heavily for these B-class assets.
To your point about a sanity check:
- Price Range: I’m looking in the $200k–$350k range.
- Financing: I’m modeling a standard 30-year fixed.
- Rents: I am being very conservative—typically pricing my expected rents below the current market average to ensure the numbers still work in a worst-case scenario.
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