ROOK
REAL ESTATE DEAL ANALYSIS & FINANCIAL MODELING
Indy Scattered-Site SFR Portfolio — Value-Add
“Eighteen homes, one yield engine — mark below-market rents to market on turn.”
§1 · Investment Highlights
Why this deal, in six lines
18 scattered-site homes · $177,778 / home
6.78% in-place cap in an affordable yield market
Rent reset + light renovation lifts NOI 28%
13.7% LP IRR · 2.23x equity multiple
Dual exit: portfolio sale or individual retail
Landlord-favorable Indiana, no rent control
§2 · Executive Thesis
Aggregate affordable single-family rentals and reset below-market rents on turnover
The deal in brief. An 18-home scattered-site single-family rental portfolio in the Indianapolis MSA, acquired at a 6.78% in-place cap with a value-add thesis of marking below-market rents to market on turn plus light renovation. The deal returns a 13.71% LP IRR and 2.23x equity multiple over a 7-year hold, with dual portfolio/retail exit optionality.
Cash-Flow Yield
Indianapolis is a yield market; the portfolio delivers a 6.78% going-in cap and a growing distributable coupon through the hold.
Rent Reset
Below-market in-place rents are marked to market on lease turnover, lifting NOI ~28% to stabilization.
Scale & Liquidity
Aggregated single-family homes can exit individually (retail) or as a portfolio to an institutional SFR/BTR buyer — dual exit optionality.
§3 · Headline Returns — Base Case
Base-case returns, clearing the institutional hurdle
LP IRR
13.7%
Hurdle ≥ 10%
LP Equity Multiple
2.23x
7-year hold
Project IRR
14.0%
> LP IRR
DSCR · Year 3
1.37x
stabilized
Entry Cap
6.78%
in-place
Exit Cap
6.75%
disposition
§4 · Value Creation
A rent reset and light renovation lift blended NOI to $277K
Below-market in-place rents reset to market as leases turn; blended NOI rises from $216,885 to $246,638 stabilized — a 28% lift on an affordable, dual-exit basis.
| NOI bridge | Year 1 | Year 3 (stab.) | Year 7 (exit) | Lift |
|---|---|---|---|---|
| Net Operating Income | $216,885 | $246,638 | $277,592 | +28% |
Capital Stack — total project cost $3,394,000 · 70.0% loan-to-cost
Sources & Uses
| Uses | Amount |
|---|---|
| Purchase Price | $3,200,000 |
| Closing & Acquisition | $64,000 |
| Light Renovation (turns) | $90,000 |
| Reserve | $40,000 |
| Total Uses | $3,394,000 |
| Sources | Amount |
|---|---|
| Senior Debt | $2,376,000 |
| LP Equity | $916,200 |
| GP Co-Invest | $101,800 |
| Total Sources | $3,394,000 |
§5 · Scenario Matrix — Six Capital & Exit Cases
The same acquisition under six structures — base, upside, downside, all-cash, refinance-and-hold, and early exit
One asset, modeled six ways: the base case, an upside and a downside stress, an unlevered all-cash case, a cash-out refinance-and-hold, and an early exit. The spread frames the risk envelope around the base case.
| Scenario | Structure / Exit | LP IRR | LP EM | Project IRR | DSCR | Hold |
|---|---|---|---|---|---|---|
| Base Case | Levered 70% LTC · sell Year 7 · exit 6.75% | 13.7% | 2.23x | 14.0% | 1.37x | 7-yr |
| Upside | Income +4% · exit 6.50% · Year 7 | 16.1% | 2.52x | 16.9% | 1.42x | 7-yr |
| Downside / Stress | Income -5% · exit 7.25% · Year 7 | 9.5% | 1.77x | 9.1% | 1.30x | 7-yr |
| All-Cash (unlevered) | No debt · sell Year 7 · exit 6.75% | 9.5% | 1.73x | 9.1% | n/a | 7-yr |
| Refinance & Hold | Cash-out refi Year 3 · hold to Year 10 | 14.1% | 2.72x | 14.5% | 1.28x | 10-yr |
| Early Exit | Levered · sell Year 5 · exit 6.75% | 13.3% | 1.78x | 13.4% | 1.37x | 5-yr |
Read-through. Even the downside stress and the unlevered all-cash case hold positive double-digit-adjacent returns, while the refinance-and-hold compounds the multiple over a longer hold — the deal is resilient, not leverage-dependent.
§6 · Replacement-Cost Arbitrage — Cost-to-Build vs. Acquisition
Acquired below the cost to build it new
Replacement-cost-new indicates a $4,070,000–$5,760,000 band (mid $4,980,000), before any value for the in-place income or operating platform. At $3,200,000 the buyer acquires -36% versus mid replacement cost — structural downside protection independent of the income thesis.
| Component | Low | Mid | High | Basis |
|---|---|---|---|---|
| Land (18 lots) | $650,000 | $810,000 | $970,000 | $/lot, infill residential |
| Structures (18 homes, ~27,000 SF) | $3,240,000 | $3,920,000 | $4,460,000 | $120–$165/SF replacement cost new |
| Site / yard improvements | $180,000 | $250,000 | $330,000 | Replacement cost new |
| Total Replacement Cost (new) | $4,070,000 | $4,980,000 | $5,760,000 | Sum, undepreciated |
| Acquisition Price | $3,200,000 | $3,200,000 | $3,200,000 | Rook primary offer |
| Acquisition vs. Replacement Cost | $-870,000 (-21%) | $-1,780,000 (-36%) | $-2,560,000 (-44%) | Green = below replacement (value); red = above |
Why it matters. Buying below the cost to reproduce the physical asset is a floor under value that rises with construction inflation over the hold.
§7 · Market Overview
Indianapolis: a cash-flow SFR market as appreciation cools nationally
Executive Summary. Indianapolis is a core single-family-rental yield market: affordable home basis, steady employment, and landlord-favorable Indiana law support cash-flowing scattered-site portfolios. SFR cap rates have normalized to the high-6% to low-7% range in yield markets as appreciation has cooled.
Cap-Rate & Yield Environment. National SFR cap rates rose to ~7.3% in late 2025; yield-focused Midwest markets like Indianapolis clear ~6.5–7.25% in suburban submarkets, versus 4–5% in appreciation markets. The basis-to-rent relationship favors cash flow over appreciation.
Rent & Occupancy. Single-family rent growth has moderated to low-single-digits in 2026 after the pandemic surge; build-to-rent occupancy held near 94.9%. Below-market in-place rents on older scattered stock create a mark-to-market opportunity on turnover.
Implication for the Subject. The portfolio buys below-market in-place rents at a 6.78% cap in a stable yield market; the return is earned through the rent reset, light renovation, and management efficiency, with dual portfolio/retail exit liquidity.
Cap-Rate Framework
| Indianapolis (Tier 2/3) Single-Family Rental | Stabilized | Value-Add / In-Place |
|---|---|---|
| SFR — appreciation market | 4.00 – 5.00% | — |
| SFR — yield market (Midwest/Southeast) | 6.50 – 7.25% | 6.75 – 7.50% |
| Build-to-rent (stabilized) | 5.25 – 6.25% | — |
| Subject — Indianapolis yield-market portfolio | 6.75% exit | 6.78% in-place |
§8 · Highest & Best Use
The maximally productive use
Value-add rental hold + rent reset
~13.7%
Maximally productive — cash yield plus mark-to-market.
Hold as-is (no reset)
~9–10%
Harvests in-place yield only.
Immediate retail break-up sale
~contingent
Higher gross/home but transaction-cost and timing drag.
§9 · Valuation — Triangulated CMA
Reconciled at $3.35M; we enter at $3.2M with dual-exit optionality
Low
$3.0M
cost-floor weighted
Midpoint
$3.35M
reconciled opinion
High
$3.6M
retail-sum weighted
Income approach (50%) · Sales comparison (40%) · Cost/BPO (10%). Rook primary offer $3.2M.
Comparable Sales — illustrative composites
| # | Status | Location | Detail | $/home | Cap | Adj. Note |
|---|---|---|---|---|---|---|
| 1 | Sold | Indianapolis, IN | SFR portfolio, 22 homes | $158K/home | 6.9% | Similar; no adj. |
| 2 | Sold | Indianapolis, IN | Scattered SFR, 14 homes | $169K/home | 6.5% | Newer; −4% adj. |
| 3 | Sold | Greenwood, IN | SFR portfolio, 30 homes | $152K/home | 7.2% | Older; +3% adj. |
| 4 | Active | Indianapolis, IN | SFR portfolio, 16 homes | $165K/home | 6.7% | Direct comp. |
| 5 | Sold | Lawrence, IN | Scattered SFR, 12 homes | $160K/home | 6.8% | Comparable. |
§10 · Financial Projections
NOI, levered cash flow, and coverage
| Year | EGI / Revenue | NOI | Levered CF | DSCR |
|---|---|---|---|---|
| Year 1 | $347,016 | $216,885 | $62,445 | 1.40x |
| Year 2 | $370,818 | $231,761 | $51,546 | 1.29x |
| Year 3 | $394,620 | $246,638 | $66,423 | 1.37x |
| Year 4 | $406,459 | $254,037 | $73,822 | 1.41x |
| Year 5 | $418,652 | $261,658 | $81,443 | 1.45x |
| Year 6 | $431,212 | $269,508 | $89,293 | 1.50x |
| Year 7 | $444,148 | $277,592 | $97,377 | 1.54x |
Sensitivity — LP IRR by price × exit cap
| Price \ Exit Cap | 6.25% | 6.50% | 6.75% | 7.00% | 7.25% |
|---|---|---|---|---|---|
| $2,944,000 | 18.3% | 17.5% | 16.7% | 15.9% | 15.1% |
| $3,072,000 | 16.9% | 16.0% | 15.2% | 14.4% | 13.6% |
| $3,200,000 | 15.5% | 14.6% | 13.7% | 12.8% | 11.9% |
| $3,328,000 | 14.1% | 13.2% | 12.2% | 11.2% | 10.2% |
| $3,456,000 | 12.7% | 11.6% | 10.6% | 9.5% | 8.5% |
Green ≥ 10% · Yellow 6–10% · Red below. Base case shaded center.
§11 · Annual Distributions to LP & GP
How the European waterfall splits each year's distributable cash
| Year | Distributable | To LP | To GP |
|---|---|---|---|
| Year 1 | $62,445 | $56,200 | $6,244 |
| Year 2 | $51,546 | $46,391 | $5,155 |
| Year 3 | $66,423 | $59,780 | $6,642 |
| Year 4 | $73,822 | $66,440 | $7,382 |
| Year 5 | $81,443 | $73,298 | $8,144 |
| Year 6 | $89,293 | $80,363 | $8,929 |
| Year 7 | $1,878,441 | $1,658,522 | $219,919 |
| Total | $2,303,412 | $2,040,996 | $262,417 |
§12 · LP Waterfall — European Structure
An 8% preferred to the LP — the GP promotes only above a 13% LP IRR
| Tier | Mechanics | Split (LP / GP) |
|---|---|---|
| 1 · Return of Capital | Pro-rata to LP & GP | 100% capital |
| 2 · Preferred Return | 100% to LP until 8% LP IRR | 8% pref |
| 3 · First Promote | To a 13% LP IRR | 80 / 20 |
| 4 · Second Promote | To a 17% LP IRR | 70 / 30 |
| 5 · Residual | Thereafter | 65 / 35 |
Outcome. LP 13.7% IRR / 2.23x · GP 16.2% IRR / 2.58x (promote earned only above the hurdles) · Project 14.0% IRR. LP and GP distributions reconcile to total distributable to the dollar.
§13 · Risk Register
Per-home condition, insurance, and the rent reset
| Risk / Exposure | Adverse Impact | Mitigant |
|---|---|---|
| Per-home condition / deferred maintenance | −$120K to −$320K | Scattered vintage; PCA per home. |
| Achievable market rents (rent reset) | −$90K to −$250K | Reset assumption drives stabilized NOI and exit. |
| Insurance cost / catastrophe exposure | −$60K to −$160K | SFR insurance has risen materially. |
| Property-tax reassessment on transfer | −$50K to −$140K | Indiana caps; verify per-parcel. |
| Turnover / collections (bad debt) | −$40K to −$120K | Scattered-site management intensity. |
§14 · Asset Inventory
Component value — Cost / Bpo Approach
| Component | Value | Basis |
|---|---|---|
| 18 Homes — aggregate as-is value | $2,880,000 | $160,000/home BPO (yield market) |
| Light renovation value-add (in place) | $90,000 | Turn-cost capitalized |
| Portfolio aggregation premium | $130,000 | Scale / management efficiency |
| Operating reserve | $40,000 | Capitalized reserve |
| Total | $3,140,000 | — |