Hermance Capital
Indianapolis, Indiana
A logistics-driven secondary metro at the literal crossroads of the Midwest — deep in the kind of 1985–2010, B/C workforce housing we buy. It's one of our three active markets, and we're sourcing here now. It's also the market in our set where the near-term data warrants the most discipline. Here's the honest picture.
Why Indianapolis
Indianapolis is the largest city in Indiana and one of the most logistically central metros in the country — a distribution and advanced-manufacturing hub with a diversified employment base spanning life sciences, healthcare, insurance and financial services, and a large government and university presence. That diversity is what keeps a market's rent roll stable through a cycle, rather than tying it to a single employer or industry.
For a value-add buyer, the appeal is the housing stock and the basis. The metro has a deep inventory of 1980s–2000s garden-style apartments — exactly the B/C vintage our business plan is built around — at a cost per door well below coastal and gateway markets. Rent-to-income sits near the middle of our set, which leaves room for modest, earned rent growth after a light reposition, rather than requiring aggressive assumptions to pencil.
What we're watching
We don't hide the soft spots in our own markets. Two things keep our underwriting tight here:
Employment. The May 2026 preliminary read showed jobs down 1.1% year-over-year — the weakest in our tracked set. One preliminary month is not a trend, and BLS revises these figures, but it's a number we're watching closely rather than explaining away.
Supply. The metro delivered roughly 6,000 units in 2025 and starts doubled that year, so new supply is re-accelerating into that softer demand backdrop. More competition for renters means less pricing power in the near term.
Our response isn't to leave — the relationships and deal flow here are real — it's to underwrite tighter: more conservative rent and occupancy assumptions, more patience on price, and a hard look at each submarket's specific supply picture rather than the metro average. If the fundamentals keep softening, we adjust or step back. Markets earn their place continuously.
How this fits our box
We're looking for 20–50 unit, B/C, 1985–2010-vintage value-add communities in the $2M–$8M range, priced so a light reposition clears our gates: positive leverage from day one, at least $100 per unit per month in real cash flow, and debt-service coverage we won't stretch to hit. Every sponsor calls their underwriting conservative; we’d rather show you the gates than claim the adjective.
Sources & caveats
Jobs — BLS Current Employment Statistics (metro), May 2026 preliminary, subject to revision. Population — U.S. Census Vintage 2025 CBSA estimates (2024→2025). Rent-to-income — Zillow NRAR (May 2026); back-series was rebased and isn't comparable to pre-2026 values. Supply — broker/research reports, Q2 2025–Q2 2026. This page is general market information, not investment advice or an offer of securities, and describes the metro rather than any specific property. Refreshed quarterly.
Sourcing in Indianapolis?
If you broker or own 20–50 units in the metro, or you're an investor curious how we read a softening market — let's talk. No pitch.
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