406 S Butler Ave

Indianapolis city (balance), IN 46219

$121,000C-

1 bd · 1.0 ba · 1,344 sqft · Built 1930 · SingleFamily · Pending · 20 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,285/mo
• Mortgage (P&I): −$635
• Tax + insurance: −$256
• HOA: −$0
• Vac / Maint / Mgmt: −$270
• Net cashflow: $124/mo
• Annual: $1,485/yr
• Cap rate: 7.52%
• Cash-on-cash: 4.38%
• DSCR: 1.20
• 1% rule: 1.06%
• Cash to close: $33,880

Investor read

• This is a 1-bed/1.0-bath single-family listed at $121k.
• At list price, monthly cash flow is $124 ($1k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($1k rent vs $121k).
• It's been on market 20 days — a 2% lower offer ($119k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $119k (1.5% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $837 of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads: area grade C — 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 1930 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising (+2.6%/yr); 140 active listings in the ZIP; 22 comparable units currently listed for rent nearby; rentals at typical pace (median 24d on market — plan ~3-4 weeks tenant-placement turnaround); 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.
• 4 sale attempts since 18y ago; this cycle's ask has dropped $14k (10%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Current owner paid $16k; list at $121k implies a 681% gain — meaningful room to come down on a strong offer.
• Cap rate 7.5% 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.

Questions for listing agent

• Built in 1930 — 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 for-sale + rental construction is in the pipeline within 1–3 miles? Heavy new supply typically softens prices + rents 12–24 months out; constrained supply supports both.