So they illustrated an example where if you put in $250K in fund 1, and in five years your money would double (this assumes that you re-invested your distributions back in).

On the risk mitigation front, no matter the market or how strong it looks, I always assume that it will crash the day after I close escrow, and if that would put me into serious financial trouble, I'm not closing ... and as your example on PHX and your buddy's 4-plexes illustrates, cash flow is not some magic wand that single handedly makes you immune from any and all risks (as some newbies seem to think), though it is an important part of the equation, and the quality of that cash flow is every bit as important as the quantity.

As @George C. illustrated, sometimes trying to conceal or blend-in the cover over the breaker panel is best.  

I can agree the book is a story to illustrate a concept and is not a how to.

It would be much better to have the one @Kimberly T. illustrated above.

For ease of illustration assume you have 700,000 of gain from a sale of one million.  

The following diagram should help illustrate the point:

These numbers are for illustrative purposes only. 

Reason being that it helps to illustrate your willingness to negotiate and helps to identify mutually beneficial concessions.

My normal markup is greater than my illustration here.