505 W 40th St

Indianapolis city (balance), IN 46208

$150,000B

5 bd · 4.0 ba · 3,744 sqft · Built 1915 · MultiFamily · Active · 412 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,576/mo
• Mortgage (P&I): −$787
• Tax + insurance: −$250
• HOA: −$0
• Vac / Maint / Mgmt: −$751
• Net cashflow: $1,788/mo
• Annual: $21,461/yr
• Cap rate: 20.60%
• Cash-on-cash: 51.10%
• DSCR: 3.27
• 1% rule: 2.38%
• Cash to close: $42,000

Investor read

• This is a 5-bed/4.0-bath multifamily listed at $150k. Condition is rated poor.
• At list price, monthly cash flow is $2k ($21k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($4k rent vs $150k).
• It's been on market 412 days — a 12% lower offer ($132k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $132k (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $1k 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 1915 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+6.4%/yr); 279 active listings in the ZIP; 2 comparable units currently listed for rent nearby; 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; this cycle's ask has dropped $100k (40%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• At projected returns (-3.0% appreciation + 6.4% rent growth), your $42k cash investment doubles in ~3 years — after that, you're playing with house money.
• Cap rate 20.6% 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.
• At $3,576/mo this rent would consume 71% of the median local household income ($60k/yr) (locally 978% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• It's been on market 412 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Have any recent inspections been done? Can we get a copy of the seller's disclosures and any deferred-maintenance estimates?
• Built in 1915 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Why hasn't it sold? Are there any deal-killer items the seller is aware of (foundation, flood, title, zoning, code violations)?
• 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.

Repairs flagged (vision-AI assessment)

• Major: exterior siding — Significant damage and peeling
• Major: paint — Peeling and deteriorating
• Major: roof — No photos, but given the exterior condition, likely in poor shape