Indy Cash Flow Reality Check Which Numbers To Trust VS Ignore

Indianapolis, Indiana
Out of State Investing
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Indy Cash Flow Reality Check Which Numbers To Trust VS Ignore

Brooke Newport
Real Estate Broker · Indianapolis, IN · Member since 2026 · 21 posts · 11 votes

In Indy you need to trust the rent and expense numbers you can verify yourself and ignore the pro forma fluff.

If someone is pitching 1400 rent on a place that last leased for 1150, I'm underwriting at 1150 until I see signed comps. Same with taxes and insurance. Pull the actual tax bill and get a real insurance quote. Quick check is rent minus PITI minus 10 percent maintenance minus 8 percent management. If that's not at least a couple hundred bucks a month, the deal is thin.

I work with a lot of out of state investors buying long term rentals here and the ones who win are conservative on rent and aggressive on expenses. The appreciation story is nice but cash flow keeps you in the game.

What price and rent are you seeing and are you using current taxes or the pre sale tax number?

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Kenny GendreauPro Member
Member since 2026 · 21 posts · 17 votes
7mo

@Brooke Newport 

Hey Brooke great post! I've shared a little about what I've been doing below:

  • Target Strategy: 30-Year Conventional, 25% Down, $50k All-in Budget (more if great deal)
  • Property Type: Duplex/Triplex only (No SFH).
  • Year Built: Prefer 1940–1970 (Brick 1950s side-by-sides are the "Gold Standard").
  • Condition: Turnkey or "Lipstick" only. No major structural, foundation, or gut renos.
  • Location: Within 5-10 mins of Downtown/Mass Ave/Fountain Square (46203, 46201, 46219, 46208).

The "Stress Test" Math (The Non-Negotiables) Before I call it a "Profit," I pull all of this off the top:

  1. 25% Reserve Bucket: (10% Management + 5% Maintenance + 5% CapEx + 5% Vacancy).
  2. Tax Stress: 2.4% of the purchase price (To account for 2027 reassessments/referendums).
  3. Utilities: Separate meters preferred. If master-metered for water, a RUBS addendum is a requirement.

I use the local info on county sites for property tax. If the property is vacant, I factor in some "burn time". I know the 25% reserve bucket depends on current condition of the property but do you see anything else you would adjust from above? Also, any additional zip codes you think I can/should add to my search? Any insight is appreciated. 

Thanks,

-Kenny

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  • Jay TolugantiPro Member
    Investor · Clearwater, FL · Member since 2025 · 226 posts · 79 votes
    7mo

    Can you give some examples of deals you approved and how much investors purchased them for? Also, are there any public resiurces you recommend to check the rent, taxes abd insurance so that investors can filter deals before bringing them to you?

    0Reply
  • Brooke Newport
    OP
    Real Estate Broker · Indianapolis, IN · Member since 2026 · 21 posts · 11 votes
    7mo

    Hi Jay,

    Most of the deals we approve pencil because the numbers work on day one, not because the story sounds good.

    As a simple example, say someone buys at 220k with 20 percent down and the rent is 2000. If PITI is around 1450, management 200, maintenance 200, you are basically at break even before vacancy. That is thin but workable if it is a strong area with rent growth. The ones that get easy approvals are more like 250 to 300 a month in true cash flow after all expenses and at least six months reserves.

    For rent I like Rentometer and checking active comps on Zillow. For taxes go straight to the county property appraiser site. For insurance in Florida you really need a local broker quote because it can swing the deal fast.

    What price and rent are you underwriting right now so we can run a quick numbers check?

    ~Brooke Newport

    1Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    7mo

    How are you accounting for Property Class-Tenant nonperformance risks?

    [email protected]248-209-6824
    Logical Property Management4.9458 Reviews
    WebsiteView Page
    0Reply
    • Brooke Newport
      OP
      Real Estate Broker · Indianapolis, IN · Member since 2026 · 21 posts · 11 votes
      7mo
      Quote from @Drew Sygit:

      How are you accounting for Property Class-Tenant nonperformance risks?

      Hi Drew,

      I price it in before I ever make the offer. If it is C class with rougher tenant base I underwrite higher vacancy and more turns, not just the standard 8 and 10 percent.

      On a 170k Indy rental at 1500 rent, if PITI is 1150 and you run 10 percent management, 12 percent maintenance, and 8 to 10 percent vacancy for C class, you are at 1500 minus 1150 minus 150 minus 180 minus say 135 vacancy and that is basically zero. That tells me the deal only works if I buy it cheaper or it is really B minus with strong screening.

      In better B areas I might use 5 percent vacancy and lighter turn costs because tenant profile is different and collections are stronger. The class drives the expense load, not just the rent.

      Are you seeing more B or C inventory at the price point you are targeting and what vacancy rate are you currently plugging in?

      ~Brooke Newport

      0Reply
    • Drew SygitBusiness Member
      Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
      7mo
      Quote from @Brooke Newport:
      Quote from @Drew Sygit:

      How are you accounting for Property Class-Tenant nonperformance risks?

      Hi Drew,

      I price it in before I ever make the offer. If it is C class with rougher tenant base I underwrite higher vacancy and more turns, not just the standard 8 and 10 percent.

      On a 170k Indy rental at 1500 rent, if PITI is 1150 and you run 10 percent management, 12 percent maintenance, and 8 to 10 percent vacancy for C class, you are at 1500 minus 1150 minus 150 minus 180 minus say 135 vacancy and that is basically zero. That tells me the deal only works if I buy it cheaper or it is really B minus with strong screening.

      In better B areas I might use 5 percent vacancy and lighter turn costs because tenant profile is different and collections are stronger. The class drives the expense load, not just the rent.

      Are you seeing more B or C inventory at the price point you are targeting and what vacancy rate are you currently plugging in?

      ~Brooke Newport


       We run:

      Class A: 5% vacancy, 0% nonperformance

      Class B: 5% vacancy, 5% nonperformance

      Class C: 10% vacancy, 10% nonperformance

      Class D: 15% vacancy, 15% nonperformance (sometimes total of 40%!)

      [email protected]248-209-6824
      Logical Property Management4.9458 Reviews
      WebsiteView Page
      0Reply
  • Kenny GendreauPro Member
    Member since 2026 · 21 posts · 17 votes
    7mo

    @Brooke Newport 

    Hey Brooke great post! I've shared a little about what I've been doing below:

    • Target Strategy: 30-Year Conventional, 25% Down, $50k All-in Budget (more if great deal)
    • Property Type: Duplex/Triplex only (No SFH).
    • Year Built: Prefer 1940–1970 (Brick 1950s side-by-sides are the "Gold Standard").
    • Condition: Turnkey or "Lipstick" only. No major structural, foundation, or gut renos.
    • Location: Within 5-10 mins of Downtown/Mass Ave/Fountain Square (46203, 46201, 46219, 46208).

    The "Stress Test" Math (The Non-Negotiables) Before I call it a "Profit," I pull all of this off the top:

    1. 25% Reserve Bucket: (10% Management + 5% Maintenance + 5% CapEx + 5% Vacancy).
    2. Tax Stress: 2.4% of the purchase price (To account for 2027 reassessments/referendums).
    3. Utilities: Separate meters preferred. If master-metered for water, a RUBS addendum is a requirement.

    I use the local info on county sites for property tax. If the property is vacant, I factor in some "burn time". I know the 25% reserve bucket depends on current condition of the property but do you see anything else you would adjust from above? Also, any additional zip codes you think I can/should add to my search? Any insight is appreciated. 

    Thanks,

    -Kenny

    1Reply
    • Brooke Newport
      OP
      Real Estate Broker · Indianapolis, IN · Member since 2026 · 21 posts · 11 votes
      7mo
      Quote from @Kenny Gendreau:

      @Brooke Newport 

      Hey Brooke great post! I've shared a little about what I've been doing below:

      • Target Strategy: 30-Year Conventional, 25% Down, $50k All-in Budget (more if great deal)
      • Property Type: Duplex/Triplex only (No SFH).
      • Year Built: Prefer 1940–1970 (Brick 1950s side-by-sides are the "Gold Standard").
      • Condition: Turnkey or "Lipstick" only. No major structural, foundation, or gut renos.
      • Location: Within 5-10 mins of Downtown/Mass Ave/Fountain Square (46203, 46201, 46219, 46208).

      The "Stress Test" Math (The Non-Negotiables) Before I call it a "Profit," I pull all of this off the top:

      1. 25% Reserve Bucket: (10% Management + 5% Maintenance + 5% CapEx + 5% Vacancy).
      2. Tax Stress: 2.4% of the purchase price (To account for 2027 reassessments/referendums).
      3. Utilities: Separate meters preferred. If master-metered for water, a RUBS addendum is a requirement.

      I use the local info on county sites for property tax. If the property is vacant, I factor in some "burn time". I know the 25% reserve bucket depends on current condition of the property but do you see anything else you would adjust from above? Also, any additional zip codes you think I can/should add to my search? Any insight is appreciated. 

      Thanks,

      -Kenny


       Hey Kenny,

      Your 25 percent reserve bucket is solid for those 1950s brick side by sides in 46203 and 46201, but I would stress test the debt too not just the ops.

      On a 50k all in with 25 percent down you are around 37.5k loan. At say 7.5 percent your PITI is probably 350 to 450 a month depending on taxes and insurance. If each side rents for 900 that is 1800 gross. Pull 25 percent for reserves and you are at 1350. Subtract 400 PITI and you are near 950 before any surprises. That works on paper but only if taxes really stay near 2.4 percent and you are not underestimating insurance.

      One tweak I would add is a rent stress test at 10 percent below market and see if you still clear at least 200 per door per month after PITI and reserves. If it does not hit that, I pass.

      For zips I would also scan 46218 and parts of 46205 but block by block. Some pockets are solid long term holds, some are not.

      What are you seeing for real rents on current leases in those areas and what purchase prices are you actually getting accepted at right now?

      ~Brooke Newport

      0Reply
  • Kenny GendreauPro Member
    Member since 2026 · 21 posts · 17 votes
    7mo

    @Brooke Newport 

    I appreciate the Stress the Debt advice, but I have to be realistic about the 2026 inventory. I’ve crunched the numbers and analyzed almost every active duplex in these ZIPs, and expecting $200 profit per door ($400 total) after a 25 percent reserve and a 2.4 percent tax stress just isn't what the market is giving right now.

    With P&I alone sitting near $750 a month on a $150k purchase (at 7 percent interest), the math gets squeezed fast. Most of the clean properties I’m seeing are lucky to clear $150 total across both doors once you bake in professional management and the 2027 tax reassessment.

    To hit that $400 net profit goal after a 10 percent rent haircut, the asking prices on the MLS would need to be reduced significantly—we're talking $30k to $50k lowball offers—which retail sellers aren't entertaining in the current low-inventory environment. I'm focusing on the $100–$200 total profit "Safe Base Hits" that actually pencil out today without needing a major rehab.

    Since you mentioned 46218 and 46205, do you have any current examples of properties—on or off-market—that actually pencil out to anything near $400 a month net profit using those conservative stress test numbers? I'd love to see what a Pass looks like in your model.

    0Reply
  • Frank PyleBusiness Member
    Specialist · USA · Member since 2024 · 279 posts · 130 votes
    7mo

    You are right to underwrite Indy off what you can prove and that last leased at 1150 vs a promised 1400 is the exact trap I see. The one number I would add to your quick check is vacancy because a 5 percent haircut on 1150 is another 60 bucks a month that pro formas love to forget. On the tax side I always assume post sale taxes and I sanity check it by taking the current assessed value and applying a conservative ratio because the pre sale number is almost always a lie once it reassesses.

    Action step today is pull the exact tax bill from the county site and run a real insurance quote with replacement cost so you are not guessing. If you take 1150 rent minus PITI minus 10 percent maintenance minus 8 percent management minus 5 percent vacancy and you still have 200 plus left, you are probably looking at a real deal in Indy.

    Are you seeing sellers use the pre sale tax number on flips in the 160 to 220 range, and what neighborhoods are you buying in where they are claiming 1400 rent?

    [email protected]317-501-3467
    Frank Pyle at ExP Realty
    WebsiteView Page
    NEXA Lending- Investors Edge Concierge
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  • Kenny GendreauPro Member
    Member since 2026 · 21 posts · 17 votes
    7mo

    Hey @Frank Pyle why 8% and not 10% for property management? 

    0Reply
    • Frank PyleBusiness Member
      Specialist · USA · Member since 2024 · 279 posts · 130 votes
      7mo
      Quote from @Kenny Gendreau:

      Hey @Frank Pyle why 8% and not 10% for property management? 

      I use 8 percent because that is what I am actually seeing quoted on solid long term rentals right now, and I would rather underwrite to a real number than pad it just to feel conservative. On a place renting for 1500 a month the difference between 8 and 10 percent is 30 bucks, which is 360 a year, so it usually does not make or break the deal. If 30 a month flips your cash flow from positive to negative, the deal was already too thin. I would rather stress test vacancy and maintenance harder than bump management for no reason. What rent range and market are you running numbers on right now?

      If you want to share the rent PITI and your management quote I can run a quick underwriting check with you and see how tight it really is.


      [email protected]317-501-3467
      Frank Pyle at ExP Realty
      WebsiteView Page
      NEXA Lending- Investors Edge Concierge
      View Page
      0Reply
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