Indy Cash Flow Reality Check Which Numbers To Trust VS Ignore

[Brooke Newport]

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?

[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