Need advice on strategy pivoting!

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

2d

Shaun, I'd resist the urge to force the original BRRRR plan now that the duplex conversion is off the table. At this point, I'd treat the property like a fresh underwriting exercise and compare each legal use based on what it can actually produce today. The biggest mistake would be spending more money on a sixth bedroom or another layout change before you know whether that improvement meaningfully increases rent, value, or refinance proceeds.

For a property like this, I'd compare the long-term rental, room-by-room rental, MTR, STR, and any group-housing option that is actually allowed under zoning and licensing. The winning strategy may not be the one with the highest gross rent; it's the one that gives you the best combination of net cash flow, management burden, renovation cost, and refinance potential.

I’d also get very clear on your post-renovation value under the new legal use. If the original refinance assumptions were based on a duplex comp set, those numbers may no longer be relevant. You’ll want the appraisal strategy to line up with what the property legally is, not what you originally intended it to become.

From the tax side, keep track of what you're spending on repairs versus improvements because the treatment can be different, and if you pivot into STR or another more active use, the participation and depreciation rules can change too.

Feel free to DM me, I'd be happy to send over our BRRRR Analyzer so you can model the different renovation, rent, refinance, and cash-left-in-the-deal scenarios before committing to the next move.

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Kerry Noble JrPro Member

Investor · Indianapolis, IN · Member since 2018 · 2k+ posts · 1k+ votes

1d

Yeap the last option.......transitional housing/veterans/home health care etc

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John Leland

Specialist · I give advice - [email protected] - I focus on states where investing is profitable, reasonably safe & secure · Member since 2026 · 46 posts · 8 votes

1d

Quote from @Shaun Eidsen:

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 rental
Section 8 / Housing Choice Voucher
Mid-term rental
Short-term rental
Renting by the room
Possibly leasing the property to an operator that provides senior care, transitional housing, or another type of group housing, assuming zoning and licensing allow it

My 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

The 46221 looks stable so that is a plus. Treat it like a brand new purchase looking for a purpose. I prefer to have the purpose before the purchase, but things are what they are. If you are comfortable with the concept of rent by the room, that may be a good choice. Under the circumstances, I would do what ever I can to keep the liability risks low.

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Andres MartinPro Member

Real Estate Agent · Indianapolis, IN · Member since 2021 · 51 posts · 36 votes

9h

@Shaun Eidsen, thanks for laying this out so clearly, and sorry the conversion didn't work out. That's a tough spot to be in, but you have options. @Ashish Acharya makes the point I'd start with: treat this as fresh underwriting, and don't spend on a sixth bedroom until you know it actually moves rent or value.

A few things I'd add from the Indianapolis side:

Get the legal use confirmed in writing. Ask the city (the Department of Business and Neighborhood Services) what's permitted on that parcel, including whether the second kitchen and the bedroom count can stay. Zoning and use rules can be tricky to pin down, and a written answer gives you something solid to plan around. It also decides which of your options are even available, especially rent-by-the-room and group housing.
Rent doesn't scale evenly with bedrooms. 5+ bedroom homes have a much smaller pool of tenants than 3-4 bedrooms, and the comps for a refinance appraisal are thin too, so a sixth bedroom may add less to ARV than you'd hope. I'd want to see real rent and sale comps for 5+ bedroom homes nearby before pricing that in.
If you look at Section 8, check the Indianapolis Housing Agency's payment standard for that bedroom count and ZIP, and make sure the layout would pass inspection. Large-family demand is real, but the rent cap can land lower than expected.
@Kerry Noble Jr 's group-housing idea could definitely work, but I'd confirm zoning and licensing before building around it, and vet the operator's track record and lease terms carefully. One tenant paying the whole rent is great until it isn't.
I'd take short-term rental off the list for a house like this. Mid-term rentals mostly follow hospital and employer demand, and the biggest cluster near 46221 is downtown: IU Health Methodist and University Hospital, Riley, Eskenazi, and the VA medical center. It would only make sense if the house is a short commute to those, and 46221 is a big ZIP, so it depends on where in it the house sits.

John's point on keeping liability low matters most if you go by-the-room: solid leases, insurance that fits the use, and clear house rules.

One honest note: my experience is mostly inside the 465 loop, and the southwest side outside of it isn't a market I know well. I'd lean on someone who has actually rented 5+ bedroom homes in that area for real rent numbers. I'm happy to answer any Indianapolis questions you may have. Good luck with it.

[email protected]317-778-8382

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Need advice on strategy pivoting!

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