Fictional case study
Tuscaloosa Student Rental — High Occupancy Risk
800 Crimson Avenue, Tuscaloosa, AL — 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
- Single-family student rental
- Units
- 1
- Fictional address
- 800 Crimson Avenue, Tuscaloosa, AL — Fictional
- Learning focus
- Negative cash flow
Purchase and financing assumptions
- Purchase price
- $350,000
- Down payment
- 25% ($87,500)
- Loan amount
- $262,500
- Interest rate
- 7.25%
- Loan term
- 30 years
- Amortization
- 30 years
Income assumptions
- Monthly base rent
- $3,200
- Monthly other income
- $0
- Vacancy
- 8%
- Credit loss
- 2%
Expense assumptions
- Annual operating expenses
- $16,000
- Expense ratio
- 46.30%
Upfront cash breakdown
- Down payment
- $87,500
- Closing costs
- $8,500
- Initial repairs
- $5,000
- Total cash required
- $101,000
Calculated results
Calculated with the shared PropertyU financial engine from the assumptions above.
- Gross potential income
- $38,400
- Effective gross income
- $34,560
- Annual NOI
- $18,560
- Monthly mortgage payment
- $1,790.71
- Annual debt service
- $21,488.55
- Annual cash flow
- -$2,928.55
- Monthly cash flow
- -$244.05
- Cap rate
- 5.30%
- Cash-on-cash return
- -2.90%
- DSCR
- 0.86
- LTV
- 75.00%
- Break-even occupancy
- 97.63%
Strengths
- Larger down payment lowers the loan amount
- Student housing may have concentrated seasonal demand
- Relatively limited repair budget
Risks
- Negative projected cash flow
- DSCR below 1.00
- Break-even occupancy is very high
- Leasing season and tenant turnover could create added risk
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 larger down payment does not automatically make a property profitable.
Negative cash flow
Fictional example for education only. Results depend entirely on the assumptions shown and are not investment, lending, tax, or legal advice.