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Real Estatemultifamilyduplexnegative-cash-flowDenver

Denver Duplex — 2 Units

$420,000Denver, COShared Mar 1, 2026by DealForge

Investment Score

0/ 100

Weak

Significant risk. Cash Flow is critically weak. Consider walking away.

Score Breakdown

Cap Rate
15
Cash-on-Cash
0
DSCR
0
IRR
0
Cash Flow
0
Expense Ratio
46

Walk Away

This property doesn't cover its debt at $420,000. Unless you can negotiate substantially lower or bring more cash down, the numbers don't work.

What Does the Property Actually Produce?

Gross rental income: $34,800/yr + $600 other income. After 6.0% vacancy, effective gross income is $33,276. Operating expenses total $16,232 (48.8% of EGI). Net Operating Income: $17,044/yr. ✓ Expense ratio in normal range.

What Do Rational Buyers Pay?

For this small multifamily (2–20 units) property in Denver, CO, comparable cap rates run 5.0%–8.0%. • Benchmark basis: national average cap rate range for small multifamily properties, based on historical asset-class benchmarks. Not adjusted for local market conditions — actual rates in your area may differ. Based on the $17,044 NOI: • At 8.0% cap: $213,050 • At 5.0% cap: $340,880 Asking price is $420,000 (4.1% cap rate). ⚠ The cap rate is below the typical range — you'd be paying a premium.

Debt Test (Sleep-at-Night Rule)

Down payment: 20.0% → $84,000 Loan: $336,000 @ 7.2% for 30 years Annual debt service: $27,369 NOI ($17,044) − Debt ($27,369) = -$10,325/yr cash flow DSCR: 0.62x 🚫 DSCR below 1.0 — the property doesn't cover its debt. This is a cash drain.

Key Metrics

NOI

$17,044

Cap Rate

4.06%

Cash-on-Cash

-10.07%

DSCR

0.62

Annual Cash Flow

-$10,325

Monthly Mortgage

$2,281

5-Year ROI

-17.82%

IRR

-3.18%

Share This Analysis

Denver Duplex — 2 Units
Market: Denver, CO
Purchase price: $420,000
Cap rate: 4.06%
DSCR: 0.62
Cash-on-Cash: -10.07%
Cash flow: -$10,325/yr
Score: 0/100
Verdict: Walk Away
Full analysis: dealforgehq.com/share/example-denver-duplex-analysis

Copy with a discussion prompt — ready to post

Financing Terms

Loan Type

conventional

Down Payment

20%

Interest Rate

7.2%

Loan Term

30 years

Full Analysis

What Does the Property Actually Produce?
Gross rental income: $34,800/yr + $600 other income. After 6.0% vacancy, effective gross income is $33,276. Operating expenses total $16,232 (48.8% of EGI). Net Operating Income: $17,044/yr. ✓ Expense ratio in normal range.
What Do Rational Buyers Pay?
For this small multifamily (2–20 units) property in Denver, CO, comparable cap rates run 5.0%–8.0%. • Benchmark basis: national average cap rate range for small multifamily properties, based on historical asset-class benchmarks. Not adjusted for local market conditions — actual rates in your area may differ. Based on the $17,044 NOI: • At 8.0% cap: $213,050 • At 5.0% cap: $340,880 Asking price is $420,000 (4.1% cap rate). ⚠ The cap rate is below the typical range — you'd be paying a premium.
Debt Test (Sleep-at-Night Rule)
Down payment: 20.0% → $84,000 Loan: $336,000 @ 7.2% for 30 years Annual debt service: $27,369 NOI ($17,044) − Debt ($27,369) = -$10,325/yr cash flow DSCR: 0.62x 🚫 DSCR below 1.0 — the property doesn't cover its debt. This is a cash drain.
Exit Analysis (5-Year Hold)
Future value: $475,191 (2.5%/yr appreciation) Remaining loan balance: $316,949 Selling costs: 6.0% → $28,511 Net sale proceeds: $129,731 Cumulative cash flow: -$45,498 over 5 years Total profit: -$18,267 Equity multiple: 0.82x ROI: -17.8% | IRR: -3.2%
Risk Flags
• Negative cash flow after debt service • Cap rate (4.1%) below market range — paying a premium • Cash-on-cash return of -10.1% is below typical targets (8-12%)
My Straight Answer
This property doesn't cover its debt at $420,000. Unless you can negotiate substantially lower or bring more cash down, the numbers don't work.

Benchmarks used in this analysis (cap rates, SDE multiples, expense ratios) are derived from national averages by asset class and business type, drawing on industry data sources such as CBRE, Marcus & Millichap, BizBuySell, and IBBA market reports. These are broad benchmarks — they are NOT specific to your local market. Actual cap rates, multiples, and pricing in your area may differ significantly based on local supply/demand, population trends, economic conditions, and comparable sales. Always validate with local comps, broker opinion, and an independent appraisal before making an offer.

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Disclaimer: This analysis is for informational purposes only and does not constitute financial, legal, tax, or investment advice. All projections are estimates based on user-provided inputs. Conduct independent due diligence before making financial decisions.

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