Property seems to be in semi-good condition but we would like to perform some renovations on our unit (upgrade kitchen).

But I never perform the calculations on any higher percentage.

The seller will have to put trust in you and you will need to have confidence in yourself that you can perform.

If its crucial work I imagine you could find a hungry GC that will perform essential work.

They still impact the performance of the property.

This is because of the next language from USPAP, the Uniform Standards of the Professional Appraisal Practice, which all licensed appraisers performing mortgage appraisals must follow:Standards Rule 1-5When the value opinion to be developed is market value, an appraiser must, if such information is available tothe appraiser in the normal course of business:(a) analyze all agreements of sale, options, and listings of the subject property current as of the effectivedate of the appraisal; and(b) analyze all sales of the subject property that occurred within the three (3) years prior to the effective dateof the appraisal.Comment: See the Comments to Standards Rules 2-2(a)(viii) and 2-2(b)(viii) for corresponding reportingrequirements relating to the availability and relevance of information.USPAP requires the appraiser to "analyze" any current agreement of sale (a pending WB-11 for instance) during the development of the valuation (called the Appraisal in USPAP, different from the Appraisal Report).

@Matt Higgins Thanks for the extra boost in confidence over finding a renter.

If you can get this property to perform at a 6 cap and you are in a B-A hood, then probably good, if you are in a C-D, then I think you are asking for a lot more headache than it's worth.

@Ray TroundayWhen I plug this into my performing note calculator spreadsheet, I get an IRR of 21.4% which is close to the yield you calculate above. 

Get some STR reports to see how the markets have done and are projected to perform.