Every property in the Lineage marketplace comes with a pro forma. Here's how to read it.
A pro forma is a financial projection. It shows what a property is expected to earn, what it will cost to own, and what returns you can anticipate — all under a specific set of assumptions. It is not a guarantee. It is not a promise. It is a model, and the quality of the model depends entirely on the quality of the assumptions behind it.
Every property in the Lineage marketplace includes a detailed pro forma. Some investors glance at the cash-on-cash return and move on. Others dig into every line. This guide teaches you to do the latter — to evaluate not just the numbers, but the assumptions that produced them.
The top of every pro forma starts with your upfront investment — the cash you need to close. This is the denominator in most return calculations, so getting it right matters.
The asking price for the property. In the Lineage marketplace, this typically falls between $150K and $350K. The purchase price is set by the seller and verified against comparable recent sales in the area.
For DSCR loans — the most common financing vehicle for investment properties — expect to put down 20–25%. On a $200K property, that's roughly $40K.
Title, escrow, lender fees, insurance premiums, and prepaid items. Budget $5K–$7K on a typical purchase.
A flat $749 fee that covers your transaction from contract through close.
Add it all up and you're looking at roughly $50K–$55K in total out-of-pocket capital on a $200K property. This is the number that matters for calculating your cash-on-cash return.
What to question:Is the purchase price supported by comps? A good pro forma uses comparable recent sales to justify the price. An appraisal ordered during the loan process will verify this independently — but you should sanity-check it before you get that far.
The income section of the pro forma tells you how much money the property is expected to generate. For single-family rentals, this is straightforward — it's rent.
The expected monthly rental income. Lineage verifies this against current market rents using comparable properties within the immediate area. If a property is already occupied, the in-place rent is used.
Monthly rent multiplied by 12. Simple math, but it's the starting point for everything that follows.
No property stays rented 100% of the time. Tenants move out, turnovers take a few weeks, and occasionally a unit sits longer than expected. A 5% vacancy allowance is standard and accounts for roughly 2–3 weeks of vacancy per year.
Gross rental income minus the vacancy allowance. This is the realistic income figure used to calculate everything downstream.
What to question: Is the projected rent realistic? Check comparable rentals within one mile of the property. If the pro forma shows $1,500/month but similar homes in the area are renting for $1,350, the income projection is too aggressive and every return metric downstream will be inflated.
The expense section is where most pro formas reveal their quality. Anyone can make a property look good by underestimating costs. A reliable pro forma accounts for everything.
Principal, interest, taxes, and insurance — bundled into one monthly payment. This is almost always the largest single expense line. It's driven by your loan amount, interest rate, property taxes, and homeowner's insurance premium.
Professional property management typically runs 8% of collected rent. On a $1,500/month property, that's $120/month. This covers tenant placement, rent collection, maintenance coordination, and lease enforcement. Even if you plan to self-manage initially, a good pro forma includes this line — because most investors eventually hire a PM.
Money set aside each month for routine repairs — a leaky faucet, a broken garage door opener, HVAC servicing. Budget 5–8% of monthly rent depending on the age and condition of the property.
Larger, less frequent expenses like a new roof, HVAC replacement, or water heater. These are separate from maintenance because they're bigger-ticket items that happen on longer cycles. A pro forma should reserve for these monthly even though the expense hits every 10–20 years.
If the property is in a community with a homeowner's association, monthly dues apply. Not all properties have HOAs, but when they do, the fee should appear as a line item. This is non-negotiable and non-optional.
The sum of everything above. Compare this to your effective gross income to see what's left over.
What to question:Are maintenance assumptions realistic for the property's age? A newer build (under 10 years) can reasonably use 5%. An older property — especially one with original mechanicals — should be closer to 8–10%. If a pro forma on a 1985 build shows 3% maintenance reserves, the returns are overstated.
This is where the pro forma pulls everything together into the metrics that matter. These are the numbers you'll use to compare properties, evaluate risk, and make a decision.
Effective gross income minus total expenses. This is what lands in your bank account each month. For properties in the Lineage marketplace, typical monthly cash flow ranges from $100 to $400.
Monthly cash flow multiplied by 12. On a property netting $250/month, that's $3,000 per year in passive income.
Annual cash flow divided by your total cash invested. This is the single most useful metric for comparing how hard your money is working. If you invested $50K and the property generates $3,600/year in cash flow, your cash-on-cash return is 7.2%.
Net operating income (NOI) divided by the purchase price. NOI is your income after operating expenses but before mortgage payments. Cap rates in Lineage markets typically fall between 6% and 8%. Cap rate tells you about the property's earning power independent of how you finance it.
Net operating income divided by your annual debt service (mortgage payments). A DSCR above 1.0 means rent covers the mortgage. A DSCR of 1.2 or higher means there's meaningful cushion — the property earns 20% more than it needs to cover the loan. Lenders typically require a minimum DSCR of 1.0 to qualify for financing.
Cash flow is only one piece of the picture. Total return includes four components: monthly cash flow, long-term appreciation, mortgage principal paydown (your tenant is paying down your loan balance), and tax benefits (depreciation, deductions, and pass-through advantages). A property with modest cash flow can still deliver strong total returns when you factor in all four.
Not every pro forma is honest. Some are built to sell a deal rather than represent it accurately. Here's what to watch for.
When you're evaluating multiple properties, don't compare on a single number. Each metric tells a different part of the story.
Cash-on-cash return tells you which property puts more cash in your pocket relative to what you invested. Cap rate tells you which property earns more relative to its price, regardless of financing. DSCR tells you which property has more cushion between what it earns and what it owes. Total cash invested tells you which property requires more capital upfront.
Higher cash-on-cash is generally better — but it's not the only factor. A property with slightly lower returns but a newer roof, newer HVAC, and fewer deferred maintenance issues might be the smarter buy. The best investment is the one where the numbers are solid and the assumptions are conservative.
Every property in the Lineage marketplace comes with a full pro forma — transparent, detailed, and built on verified assumptions. If you want someone to walk through the numbers with you line by line, your Investment Consultant is there for exactly that.
Book a Wealth Plan session and we'll review real pro formas together.