CASE STUDY 01 · SYNTHETIC / EDUCATIONAL
A duplex can pass the story and still fail the mandate.
This worked screen follows a fictional Richmond-area duplex from investor goal to first constraint, then tests what would have to change. It is designed to show the method—not advertise a property or promise a return.
01 / PROPERTY OR SCENARIO
A two-unit rental that looks close enough to investigate.
The working scenario is a duplex offered at $325,000, with two occupied units and $2,700 in combined modeled monthly rent.
On a quick read, it has the shape of a plausible small rental acquisition. The screen becomes useful only after the investor’s liquidity, coverage, and diligence rules are made explicit.
02 / INVESTOR GOAL
Buy durable cash flow without using the last dollar of liquidity.
The fictional investor is looking for a long-term rental, plans to use conventional financing, and cares more about a resilient first year than an optimistic appreciation story.
03 / CRITERIA
Write the rules before the listing gets persuasive.
04 / ASSUMPTIONS
Make every modeled input visible.
| Input | Working value | Treatment |
|---|---|---|
| Purchase price | $325,000 | Scenario fact |
| Down payment | 25% | Investor assumption |
| Interest / amortization | 7.0% / 30 years | Illustrative assumption |
| Combined monthly rent | $2,700 | Unverified estimate |
| Vacancy / maintenance / CapEx | 5% / 8% / 5% of rent | Investor assumptions |
| Management | 8% of rent | Investor assumption |
| Tax, insurance, owner-paid utilities | $525 / month combined | Rounded estimates |
| Closing costs / immediate work | $9,750 / $10,000 | Rounded estimates |
05 / DEALLENS ANALYSIS
Start with the first material constraint.
Choose a scenario to see how the decision changes. Each result uses the same investor Criteria and makes the altered input explicit.
- Working price
- $325,000
- Modeled monthly rent
- $2,700
- Post-close reserves
- $11,500 / $15,000 minimum
- Modeled DSCR
- 0.91
- Modeled cash flow
- −$148 / month
Post-close reserves miss the investor’s minimum by $3,500.
Coverage and cash flow also fail. The first constraint gives the investor the first precise question.
06 / WHAT CHANGES THE RESULT
Price helps liquidity. Evidence changes the income case.
At $310,000, reserves clear—but coverage still does not. Only when the lower price is paired with documented rent of $3,250 does the initial screen clear all three financial rules.
That does not make the property a completed investment decision. It makes it worthy of deeper diligence under this investor’s stated Criteria.
07 / DUE DILIGENCE
A clear screen is the start of diligence, not the end.
- Verify leases, rent roll, deposits, concessions, and payment history.
- Inspect structure, roof, mechanicals, utilities, drainage, and deferred maintenance.
- Obtain actual tax, insurance, utility, maintenance, and capital-expenditure history.
- Confirm zoning, permitted use, title, survey, flood exposure, and material municipal requirements.
- Re-run financing with a current lender quote and loan-specific reserves.
08 / INVESTMENT LESSON
Do not ask whether the property is “good.” Ask which rule it meets, which rule it misses, and what evidence could change that conclusion.
The durable asset is not a score. It is a decision record that keeps facts, estimates, assumptions, Criteria, and open diligence separate.