2825 E Michigan St

Indianapolis city (balance), IN 46201

$140,000B

3 bd · 4.0 ba · 1,064 sqft · Built 1923 · MultiFamily · Active · 17 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,797/mo
• Mortgage (P&I): −$734
• Tax + insurance: −$274
• HOA: −$0
• Vac / Maint / Mgmt: −$377
• Net cashflow: $412/mo
• Annual: $4,941/yr
• Cap rate: 9.82%
• Cash-on-cash: 12.60%
• DSCR: 1.56
• 1% rule: 1.28%
• Cash to close: $39,200

Investor read

• This is a 2 × 2-bed/?-bath units multifamily listed at $140k.
• At list price, monthly cash flow is $412 ($5k/yr) — positive. Per door: $206/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $140k).
• It's been on market 17 days — a 2% lower offer ($138k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $138k (1.5% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $968 of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads: area grade B — affects rentability + tenant quality, not the cash-flow math above.
• Indianapolis Public Schools (urban): math 14% / reading 20% proficiency, ranked #286 of 301 in IN (top 95%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 77% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: built in 1923 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+7.3%/yr); 483 active listings in the ZIP; 40 comparable units currently listed for rent nearby; rentals at typical pace (median 25d on market — plan ~3-4 weeks tenant-placement turnaround); 40% of comp listings sitting > 30 days — soft ceiling on asking rent; 1,906 units permitted in Marion County in 2024 (621 in 5+ unit buildings).
• Marion County population projected at +18% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 3 sale attempts since 12y ago with the ask held roughly flat each time — persistent listings suggest the price (not the market) is what's stuck; bring a comps-based counter.
• At projected returns (-3.0% appreciation + 7.3% rent growth), your $39k cash investment doubles in ~7 years — after that, you're playing with house money.
• Cap rate 9.8% vs local median 4.4% in Indianapolis city (balance) — top-decile yield for the area; either an underpriced asset or a hidden risk that comps aren't pricing in. Stress-test before assuming the spread holds.
• This rent runs 44% of the median local income ($49k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

Questions for listing agent

• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• Built in 1923 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• What's the average days-on-market for RENTAL listings here right now (not sales)? A rising rental-DOM trend means longer vacancies and softer asking-rent achievability than the comps imply.
• What's the recent tenant-quality profile in this submarket — average credit score on applications, eviction rate, late-payment / NSF rate, and stable-employment percentage? A property-management company in the area should have these aggregated.
• How much new apartment / multifamily construction is in the pipeline within 1–3 miles? Heavy new supply (>2% of stock underway) typically softens rents 12–24 months out; light construction supports rent growth.