Brookline Commons (Demo)

A 1980s-vintage 24-unit in a stable Columbus submarket trading at $110,000 per unit, roughly 15% below recent comparable sales. In-place rents average $1,000 against a market of $1,125, so the upside comes from turning units at renewal rather than from aggressive market rent growth. At a 7.0% going-in cap with a 1.38x DSCR, the deal covers debt comfortably even if the lease-up of renovated units takes longer than planned.

Payroll and insurance are the two expense lines most likely to run above underwriting; a 10% overrun cuts cash-on-cash by roughly a point. The exit assumes a 7.25% cap — a 50 basis point move costs about 250 basis points of IRR. Interior renovation costs of $6,500 per unit assume no plumbing surprises in a building of this age.

Five-year hold. Rent growth 3% per year, expense inflation 3.5%, vacancy 6%. 75% LTV at 6.35% fixed, 30-year amortization, no interest-only period. Renovation of 12 units at $6,500 each, funded from reserves. Exit at a 7.25% cap on year-five NOI with 2% cost of sale.