Skip to content
PropertyU

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

  • Unit 1 — 3 bed / 1.5 bath$2,050 / mo
  • Unit 2 — 2 bed / 1.5 bath, month to month$1,950 / mo
Monthly base rent
$4,000
Monthly other income
$450
Annual gross potential income
$53,400
Vacancy
5%
Credit loss
1%
Effective gross income
$50,196

Expense assumptions

  • Property taxes$5,200
  • Insurance$2,100
  • Repairs and maintenance$2,400
  • Property management$4,020
  • Utilities$1,800
  • Landscaping and snow removal$600
  • Trash$480
  • Licensing and permits$300
  • Reserves / CapEx$1,800
  • Snow removal and pest control$1,300
Annual operating expenses
$20,000
Expense ratio
39.84%
Annual NOI
$30,196

NOI = effective gross income − operating expenses. Debt service is not an operating expense, which is why NOI is the same whether the property is financed or not.

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%

Hold and exit assumptions

These carry over to Deal Lab so you can test a different hold period or exit cap rate.

Hold period
5 years
Annual rent growth
3%
Annual expense growth
2%
Exit cap rate
7.5%
Selling costs
6% of sale price

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

Experiment with this deal

Deal Lab opens with every assumption above prefilled as your own working copy. Change the rent, vacancy, expenses, interest rate, renovation budget, or exit cap rate and the results recalculate. The practice deal itself never changes.

Back to Deal Library

Fictional example for education only. Results depend entirely on the assumptions shown and are not investment, lending, tax, or legal advice.