I need advice on how I should rent my property to not lose money

Shaun Eidsen · 2026-09-26T12:54:22-07:00

Hey everyone, my name is Shaun. I’m newer to real estate investing and could really use some advice from investors with more experience.I recently purchased a property through a wholesaler in Indianapolis in the 46221 ZIP code. The property was marketed as a row house with D-3 multifamily zoning. It’s currently a 5-bedroom home, and at some point a second kitchen was added, but the property was never officially converted into a duplex.I purchased it with the plan of renovating it, converting it into a duplex, and using the BRRRR strategy. Unfortunately, after purchasing it, I found out from the city that due to changes in the regulations and the size of the property/lot, they will not allow it to be converted into a duplex.Obviously, this puts a pretty big dent in my original projected rents and refinance strategy.My current plan is to pivot by removing the second kitchen and potentially converting that space into a sixth bedroom since there is plenty of room. I'm hoping the additional bedroom will help both the rental income and ARV.My biggest question is: What would you do with this property to maximize cash flow while still keeping it as a long-term investment?I’m considering several options:Traditional long-term rentalSection 8 / Housing Choice VoucherMid-term rentalShort-term rentalRenting by the roomPossibly leasing the property to an operator that provides senior care, transitional housing, or another type of group housing, assuming zoning and licensing allow itMy goal is definitely to buy and hold rather than sell. I’m just starting out, and I’d really like to avoid turning my first major value-add project into a losing deal.If anyone has experience with larger 5–6 bedroom rentals in Indianapolis, especially around the 46221 area, I’d really appreciate hearing what strategy has worked for you. I’d also love to hear from anyone who has dealt with a similar situation where the original multifamily conversion plan fell through and you had to pivot.Any advice, ideas, or lessons learned would be greatly appreciated. Thanks

Greg ScottPro Member

Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes

1w

The 46221 zip code covers a lot of territory, from near downtown to South of the airport in farmland. The best advice might be different from submarket to submarket.

A 5-6 bedroom house is an oddball. Most special-needs group homes or senior care facilities want a maximum 3 occupants, so a 3 or 4 bedroom house is ideal. You won't get as much value from a 5 or 6 bedroom.

Assuming you are really blocked by the city from converting it to a duplex, you may maximize revenue through shared housing. Padsplit is a popular platform. I have some friends that have done that, but I have no experience with it.

You also may want to talk with an attorney specializing in this field that there isn't some path to converting the house to a duplex. In my experience, the city might tell you "no" but in reality, it can be done with the right paperwork, money, and effort.

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Jules Aton

MD/DC · Member since 2024 · 1k+ posts · 1k+ votes

1w

Hopefully some of our Indiana gurus will assist with recs. I would encourage you to consider sunk cost fallacy as you embark on this journey. Unfortunately some learning experiences require higher tuition than others. I wish you all the best.

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Ashish AcharyaBusiness Member

CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes

6d

Shaun, I’d compare the options based on what actually leaves you with the best net cash flow, not which one produces the highest gross rent.

A six-bedroom setup might look attractive on paper, but if renting by the room means higher utilities, more turnover, more management, more wear and tear, and additional licensing or zoning requirements, the extra revenue can disappear pretty quickly.

Same with STR or MTR. They can potentially produce more income than a traditional long-term rental, but only if the local demand, regulations, furnishing cost, utilities, cleaning, and management still leave enough margin afterward.

Since the duplex plan is no longer available, I’d also make sure the refinance assumptions are updated. If the property will legally remain a single-family home, I’d want to know what a renovated 5–6 bedroom single-family property actually appraises for in that area before spending more money on the sixth bedroom.

I'd probably model the LTR, room-by-room, MTR, and STR scenarios side by side using realistic expenses, then eliminate anything that zoning or licensing won't allow.

From the tax side, the strategy can matter too. A traditional rental and a short-term rental can have very different participation and loss-treatment rules, so I’d factor that in before making the final decision.

Feel free to DM me, I'd be happy to send over our BRRRR Analyzer and a few rental-tax resources so you can compare the different paths before putting more money into the property.

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Diana KhanPro Member
Attorney · 10451 Mill Run Cir #755 Owings Mills, MD 21117 · Member since 2024 · 403 posts · 163 votes
6d
Quote from @Ashish Acharya:
Shaun, I’d compare the options based on what actually leaves you with the best net cash flow, not which one produces the highest gross rent.
A six-bedroom setup might look attractive on paper, but if renting by the room means higher utilities, more turnover, more management, more wear and tear, and additional licensing or zoning requirements, the extra revenue can disappear pretty quickly.
Same with STR or MTR. They can potentially produce more income than a traditional long-term rental, but only if the local demand, regulations, furnishing cost, utilities, cleaning, and management still leave enough margin afterward.
Since the duplex plan is no longer available, I’d also make sure the refinance assumptions are updated. If the property will legally remain a single-family home, I’d want to know what a renovated 5–6 bedroom single-family property actually appraises for in that area before spending more money on the sixth bedroom.
I'd probably model the LTR, room-by-room, MTR, and STR scenarios side by side using realistic expenses, then eliminate anything that zoning or licensing won't allow.
From the tax side, the strategy can matter too. A traditional rental and a short-term rental can have very different participation and loss-treatment rules, so I’d factor that in before making the final decision.
Feel free to DM me, I'd be happy to send over our BRRRR Analyzer and a few rental-tax resources so you can compare the different paths before putting more money into the property.
@Shaun Eidsen, I’ve seen buyers get into a similar situation where the property was marketed one way, but after closing they found out the legal use did not match the plan they had underwritten.
Before I spent more money turning the second kitchen into another bedroom, I would slow down and get very clear on what the city will actually allow. I’d want to see the zoning and use history, permits, occupancy limits, and whether any of the strategies you are considering would require a different approval or license. I would also have someone review the purchase and assignment documents to see exactly how the property was represented to you when you bought it. That may or may not change anything, but I would want to understand it before putting more money into the next plan.
I’d be glad to stay connected, @Shaun Eidsen. The duplex plan falling through does not automatically mean the property is a bad hold, but I would want the legal use completely clear before deciding which rental strategy makes the most sense.
[email protected]240-266-0291
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Jaron WallingPro Member

Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes

6d

Like stated above "I'd probably model the LTR, room-by-room, MTR, and STR scenarios side by side using realistic expenses". Some investors are finding success with rent-by-the-room. The CF is is amazing but the PM is challenging. You could try that for a few years and see how it goes.

Check out the Rental Income Podcast. I think there was a guest on there who went into detail on strategy.

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Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

6d

There's really not much of a value add for properties with more than 3 bedrooms - except for luxury properties!

What percentage of families need that many bedrooms?
- Not a high percentage

Of the percentage that need that many bedrooms, the majority are probably Section 8 tenants.
- The challenge with that is how well will they take care of the property?
- You'll probably also have a lot of S8 tenants with 3-bed or 4-bed voucher, applying for your 5-bed or 6-bed house - they always want MORE.

So, your best option would be to still pursue the conversion to duplex or some of the other strategies suggested.

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I need advice on how I should rent my property to not lose money

I need advice on how I should rent my property to not lose money

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