Fictional case study
Philadelphia Duplex — Stable but Modest Returns
123 Maple Street, Philadelphia, PA — 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
- Duplex
- Units
- 2
- Fictional address
- 123 Maple Street, Philadelphia, PA — Fictional
- Learning focus
- Stable cash flow
Purchase and financing assumptions
- Purchase price
- $400,000
- Down payment
- 20% ($80,000)
- Loan amount
- $320,000
- Interest rate
- 7.00%
- Loan term
- 30 years
- Amortization
- 30 years
Income assumptions
- Monthly base rent
- $4,000
- Monthly other income
- $450
- Vacancy
- 5%
- Credit loss
- 1%
Expense assumptions
- Annual operating expenses
- $20,000
- Expense ratio
- 39.84%
Upfront cash breakdown
- Down payment
- $80,000
- Closing costs
- $9,350
- Initial repairs
- $10,000
- Total cash required
- $99,350
Calculated results
Calculated with the shared PropertyU financial engine from the assumptions above.
- Gross potential income
- $53,400
- Effective gross income
- $50,196
- Annual NOI
- $30,196
- Monthly mortgage payment
- $2,128.97
- Annual debt service
- $25,547.62
- Annual cash flow
- $4,648.38
- Monthly cash flow
- $387.37
- Cap rate
- 7.55%
- Cash-on-cash return
- 4.68%
- DSCR
- 1.18
- LTV
- 80.00%
- Break-even occupancy
- 85.30%
Strengths
- Positive projected cash flow
- Reasonable cap rate
- Two rental units reduce dependence on one tenant
Risks
- DSCR has a limited safety cushion
- Repairs or vacancy could quickly reduce cash flow
- The deal requires nearly $100,000 upfront
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 property can produce positive cash flow and still have limited room for unexpected problems.
Stable cash flow
Fictional example for education only. Results depend entirely on the assumptions shown and are not investment, lending, tax, or legal advice.