NOI Workout Analysis
The Value-Add Math
Pre-Loaded Property Inputs
Units
37
Current Rent
$1,350/unit/mo
Market Rent
$1,550/unit/mo
Renovation Cost
$600,000
Aurora Class C averages ~$1,540/unit. Deferred maintenance and submarket competition keep current rents below market.
The Full Math
Gross Rent Increase
$7,400
/mo increase (37 units × $200)
Annual NOI Lift
$88,800
/year
Current NOI
$341,820
New NOI
$430,620
NOI Lift
+$88,800
Cap Rate Valuation
Current Value
$5,400,000
New Value
$8,612,400
Cap Rate Used
5.00%
Net Equity Created
$2,612,400
New value $8,612,400 minus $5,400,000 purchase price minus $600,000 renovation
New Property Value
$8,612,400
– Purchase Price
–$5,400,000
– Renovation Investment
–$600,000
= Net Equity Created
$2,612,400
You invest $600K in renovation and create $2.61M in equity. That's a 4.35x multiple on your renovation dollars.
Renovation ROI
535.4%
Cash-on-Cash Return
7.9%
DSCR
1.43x
Value-Add Thesis
Why Aurora?
Aurora is the fastest-growing municipality in Colorado — 80,000 residents added in the last decade. Class C stock is below replacement cost at $145K/unit. Colony House has deferred maintenance that masks its real NOI; a $600K renovation program addresses deferred items while unlocking $200/unit/month in rent growth. That combination is rare in Denver metro right now.
Denver Metro Market Context
Denver metro occupancy sits at 94.6%. Rent growth has averaged 4.8% annually for the last 3 years. Aurora specifically is outpacing the metro average. $88.8K NOI lift is conservative — deferred maintenance resolution alone adds occupancy-driven NOI above the rent normalization floor.