Fictional case study
Charlotte Triplex — Renovation-Heavy Value Add
4500 Queen City Road, Charlotte, NC — Fictional
Fictional educational example
This property, address, and every number below are fictional and provided only for education. Nothing here is an active listing or investment advice.
Property overview
- Property type
- Triplex
- Units
- 3
- Fictional address
- 4500 Queen City Road, Charlotte, NC — Fictional
- Learning focus
- Renovation deal
Purchase and financing assumptions
- Purchase price
- $525,000
- Down payment
- 20% ($105,000)
- Loan amount
- $420,000
- Interest rate
- 7.00%
- Loan term
- 30 years
- Amortization
- 30 years
Income assumptions
- Monthly base rent
- $5,100
- Monthly other income
- $200
- Vacancy
- 6%
- Credit loss
- 1%
Expense assumptions
- Annual operating expenses
- $22,000
- Expense ratio
- 37.19%
Upfront cash breakdown
- Down payment
- $105,000
- Closing costs
- $12,000
- Initial renovation and repairs
- $45,000
- Total cash required
- $162,000
- Kitchen improvements: $20,000
- Roof work: $15,000
- Unit turns and paint: $10,000
Calculated results
Calculated with the shared PropertyU financial engine from the assumptions above.
- Gross potential income
- $63,600
- Effective gross income
- $59,148
- Annual NOI
- $37,148
- Monthly mortgage payment
- $2,794.27
- Annual debt service
- $33,531.25
- Annual cash flow
- $3,616.75
- Monthly cash flow
- $301.40
- Cap rate
- 7.08%
- Cash-on-cash return
- 2.23%
- DSCR
- 1.11
- LTV
- 80.00%
- Break-even occupancy
- 87.31%
Strengths
- Three income-producing units
- Positive projected cash flow
- Renovations may improve the property's condition
Risks
- Requires approximately $162,000 upfront
- Low cash-on-cash return despite positive cash flow
- Renovation cost overruns could weaken the deal
- DSCR has a limited safety cushion
Missing information to verify in a real deal
- Actual signed leases
- Verified rent roll
- Insurance quote
- Property inspection report
- Utility bills
- Contractor estimates
- Local rental comparables
Beginner takeaway
A renovation deal may improve a property, but the additional cash invested can reduce the return on that cash.
Renovation deal
Fictional example for education only. Results depend entirely on the assumptions shown and are not investment, lending, tax, or legal advice.