Indianapolis offers something rare: small apartment buildings at prices where the rent can still cover a DSCR payment, plus a state tax cap that keeps rental property taxes predictable.
In short: LendingStreet finances 5 to 8 unit rental buildings across Indianapolis and Marion County with DSCR loans qualified on rent, not tax returns. Loans start at $150,000 with no stated maximum, and the standard minimum DSCR is 1.0x. Indiana caps property taxes on residential rentals at 2% of gross assessed value, so the tax line is easier to estimate than in many states. Registering with the city's rental registry is a must.
Older brick buildings of four to eight units are common in Fountain Square, Bates-Hendricks, Herron-Morton Place, Mapleton-Fall Creek and the Near Eastside, many built in the early 1900s. Irvington, Garfield Park and Haughville have lower prices and more renovation needs.
Broad Ripple and Butler-Tarkington have small buildings that rent to students and young professionals at higher rents. Suburban Lawrence, Beech Grove and Speedway offer 1960s and 1970s brick garden buildings.
| Area | Typical stock | Investor note |
|---|---|---|
| Fountain Square, Bates-Hendricks | Early 1900s brick buildings | Strong rents, older systems |
| Near Eastside, Irvington | Mixed older stock | Value-add, renovation needs |
| Broad Ripple, Butler-Tarkington | Small walk-ups | Higher rents, student demand |
| Lawrence, Beech Grove, Speedway | 1960s-1970s garden buildings | Workforce tenants |
Indiana's constitutional property tax caps limit the bill to 1% of gross assessed value for a homestead, 2% for residential rental property and 3% for most other property. A five to eight unit apartment building generally falls in the rental category. Local rates can bring the actual bill below the cap, but rarely above it.
Assessments are trended annually toward market value, so a building bought well above its current assessment will usually see its value rise over the next year or two. Budget near 2% of your purchase price to be safe. Indiana has no real estate transfer tax.
This example is illustrative and not a quote. An investor buys an eight-unit early-1900s brick building near Fountain Square for $760,000. Taxes are budgeted close to the 2% rental cap on the purchase price. Gross rent is $7,800 a month, an average of $975 for each of the 8 units, and the monthly budget includes $1,150 in taxes and $420 in insurance.
A $570,000 loan (75% LTV) carries estimated principal and interest of about $3,986, a full payment near $5,556 and a ratio of about 1.40x. Dropping to 70% LTV, or $532,000, brings the payment to about $5,290 and the ratio to about 1.47x; the investor needs $38,000 more cash.
The 2% cap makes the tax line predictable. The bigger risk here is deferred maintenance on an old building, which does not show up in the DSCR but does affect real returns.
| Item | 75% LTV | 70% LTV |
|---|---|---|
| Purchase price | $760,000 | $760,000 |
| Loan amount | $570,000 | $532,000 |
| Down payment | $190,000 | $228,000 |
| Estimated principal and interest | $3,986 | $3,720 |
| Property taxes (monthly) | $1,150 | $1,150 |
| Insurance (monthly) | $420 | $420 |
| Total monthly payment | $5,556 | $5,290 |
| Gross monthly rent | $7,800 | $7,800 |
| DSCR | About 1.40x | About 1.47x |
The City of Indianapolis requires landlords to register rental properties with the city, and the program supports code enforcement and tenant protections. Confirm the building is registered and that there are no open code violations.
Indiana law also sets rules for security deposits and landlord-tenant procedures. Use a property manager familiar with Marion County courts if you are investing from out of state.
Many Indianapolis buildings predate 1930, with older boilers, knob-and-tube wiring in places and lead paint risk. Owner-paid heat is common in buildings without separate furnaces. Ask for utility bills, separate meters and the age of the roof and boiler.
Insurance carriers may limit coverage on older wiring or roofs. Get quotes before committing.
Central Indiana winters are cold enough that a failed boiler in January becomes an emergency. Set aside reserves for mechanical systems, and consider whether separating heat into individual units would let tenants pay their own gas over time.
Rents in the near-downtown neighborhoods have risen as the city added jobs in health care, logistics and life sciences, while suburban new construction adds competition. Buildings that are walkable to downtown, Mass Ave and the medical campuses tend to rent fastest and hold value best.
Appraisers lean on recent leases in comparable small buildings. In neighborhoods where most rentals are single-family homes or doubles, there may be few true five to eight unit comparables, so bring your own lease data from nearby buildings with similar unit sizes and finishes.
Townships outside Center Township, such as Wayne, Warren and Lawrence, have different school districts and tax rates, so two buildings at the same price can carry different bills even under the same 2% cap.
Because the Indianapolis building has eight units or fewer, the file is reviewed under residential DSCR guidelines. Income comes from the rent roll and the appraiser's market rent opinion, and the payment side includes principal, interest, taxes and insurance. Personal income documents are not part of the qualification.
Program basics: $150,000 minimum with no stated maximum, up to 80% LTV on purchases, up to 75% LTV on cash-out, a 1.0x standard minimum ratio, a 620 minimum credit score and 30-year terms. On five to eight units, maximum LTV is frequently below the headline numbers and varies by program, so plan your down payment conservatively.
Tell us the address, unit count, rents and what you want the loan to do, using the form below or (877) 298-1001. Our investor loans are business-purpose loans on non-owner-occupied property. The financing team runs the ratio at a few loan amounts so you can see the tradeoff between leverage and DSCR. See also our Indiana 5-8 unit DSCR page.
Yes. Residential rental property is capped at 2% of gross assessed value, compared with 1% for a homestead.
Yes. Landlords must register rental properties with the city. Confirm registration and code status before closing.
No. Indiana has no real estate transfer tax, though buyers file a sales disclosure form.
Many near downtown date to the early 1900s. Inspect boilers, wiring, roofs and lead paint risk.
Yes. Marion County is divided into townships with different school districts and local rates. The 2% rental cap is the ceiling, but the actual bill depends on where the building sits, so pull the exact parcel record.
Yes, up to 75% LTV on a cash-out refinance, often lower on 5-8 units. Seasoning requirements vary by program, and the rent must still cover the new payment.
Not with our DSCR program. Properties with 1 to 8 units are financed as residential investment property, qualified on rent. Nine units and up is commercial.
Yes. LLC borrowers are standard on our DSCR loans, and you sign for the loan personally as part of the process.
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