Indy 4-plex BRRRR quick case study + rent/DSCR guardrails

[Frank Pyle]

Sharing a quick Indy 4-plex BRRRR example and a couple of guardrails I'm using when I look at deals here.

Recent 4-plex structure (Indianapolis):

• Purchase: $190K

• Rehab: ~$55K (mix of systems + interior turns, no heavy structural)

• All-in: ~$245K

• ARV: appraised just over $310K

• Rents: 4 x $1,050 = $4,200/mo

• Taxes/insurance/PM/maintenance: coming in around $1,600–$1,700/mo all-in

• DSCR refi: 75% LTV, rate in the high-7s, DSCR ~1.30–1.35

A few takeaways that might help other Indy/BRRRR folks:

1. Buy box discipline matters more than the “deal story.”
   On paper there were “bigger upside” options, but they required $80K+ rehab and more vacancy risk. Keeping the total rehab in that $50K–$60K range on a small multi has been a sweet spot lately for staying financeable and on schedule.

2. Stress-test DSCR before you ever offer.
   I underwrite assuming:

   • Slightly lower rents than pro forma

   • Slightly higher taxes/insurance than current
     If DSCR is still ≥1.20–1.25 at refi using those conservative numbers, I get a lot more comfortable. If it's only penciling at 1.05–1.10 with rosy assumptions, I pass.

3. Rent-comp sanity checks > fancy spreadsheets.
   For this one, I:

   • Pulled BP + Zillow/Zumper comps

   • Cross-checked with a local PM on what they’re actually getting leased

   • Looked at whether any of the comps were offering big concessions
     That kept the pro forma honest and made the DSCR numbers much less of a guess.

4. Plan your refi timeline around rehab + lease-up reality, not the best-case.
   If you underwrite assuming a 6-month refi but your contractor really works on a 9-month timeline, build your cash plan around the 9.

Curious how others are stress-testing DSCR and rents on Indy small multis right now. What DSCR floor are you all using to stay comfortable on a BRRRR exit?

[James Jones]

Great breakdown, Frank. Totally agree with the guardrails you laid out. DSCR deals get dangerous fast when investors underwrite with best-case rents and today's unrealistically low expense assumptions.

A couple things we’ve been doing in Memphis that line up with your approach:

• We stress-test at 1.20–1.25 DSCR using actual operating data from our portfolio, not just pro forma. If it only pencils at 1.05 with rosy assumptions, we don't touch it.

• On small multis, keeping rehab in that $50K–$60K range has been the sweet spot for financing and timeline predictability just like you mentioned. Anything above that tends to break the BRRRR.

• Rent comps matter more than spreadsheets. We cross-check BP + Zillow + our PM's actual leased units before we underwrite a single number. Removing the guesswork keeps our exit DSCR honest.

Curious what you're seeing in Indy on DSCR floors. Most of our lenders are sitting around the 1.15–1.20 requirement right now depending on seasoning and rent stability.

Always appreciate posts like this. Real numbers, not theory.