Newbie looking for Deal Anaysis Mentorship
New to Real Estate 路 Beaufort, NC 路 Member since 2022 路 8 posts 路 3 votes
Newbie looking for Deal Anaysis Mentorship
Most Popular Reply
Joe VilleneuvePro Member
Plymouth, MI 路 Member since 2013 路 13k+ posts 路 19k+ votesQuote from @Anna Kate Kingston:
Hey Andres - thank you so much for replying! I feel confident in collecting comps, determining a conservative ARV, and have a general knowledge of the components to factor into acquisition and holding costs. I need a bit of guidance when it comes to running to numbers to analyze as a flip vs. LTR vs. STR.
Gathering comps that apply to a property for a REI is much different than doing so for a homeowner buying their home. When done correctly, there really isn't a conservative number you arrive at. That number is very specific, as well as the area (micro-market) where that number applies.
These are just some of the things that go into Market Analysis. Market Analysis is much more important than property analysis. It's the market that determines what the property is worth, and the worth is restricted to a specific geographical area on a map. At some point, across the street, that same exact house has a different value.
Market Analysis is so important to a REI that out of the time that REI spends each day doing REI, 80-90% of that time should be spent doing MA.
10 Replies
- Real Estate Agent 路 Los Angeles, CA 路 Member since 2022 路 137 posts 路 106 votes4y
Are there any specific parts of the "deal analysis" you feel you need the most support with? Any parts you feel really confident with?
- New to Real Estate 路 Beaufort, NC 路 Member since 2022 路 8 posts 路 3 votes4y
Hey Andres - thank you so much for replying! I feel confident in collecting comps, determining a conservative ARV, and have a general knowledge of the components to factor into acquisition and holding costs. I need a bit of guidance when it comes to running to numbers to analyze as a flip vs. LTR vs. STR.
- 4yJoe VilleneuvePro MemberPlymouth, MI 路 Member since 2013 路 13k+ posts 路 19k+ votesThat means you need guidance on applying different strategies to properties to see if a deal can be made.
Quote from @Anna Kate Kingston:
Hey Andres - thank you so much for replying! I feel confident in collecting comps, determining a conservative ARV, and have a general knowledge of the components to factor into acquisition and holding costs. I need a bit of guidance when it comes to running to numbers to analyze as a flip vs. LTR vs. STR.
Gathering comps that apply to a property for a REI is much different than doing so for a homeowner buying their home. When done correctly, there really isn't a conservative number you arrive at. That number is very specific, as well as the area (micro-market) where that number applies.
These are just some of the things that go into Market Analysis. Market Analysis is much more important than property analysis. It's the market that determines what the property is worth, and the worth is restricted to a specific geographical area on a map. At some point, across the street, that same exact house has a different value.
Market Analysis is so important to a REI that out of the time that REI spends each day doing REI, 80-90% of that time should be spent doing MA. - Investor 路 Ashburn, VA 路 Member since 2020 路 140 posts 路 145 votes4y
@Anna Kate Kingston I am happy to walk through a deal analyzer with you on Zoom if you'd like to do this! Let me know if you're interested.
- Rental Property Investor 路 Somewhere over the Rainbow 路 Member since 2021 路 1k+ posts 路 1k+ votes4y
Quote from @Anna Kate Kingston:
Hey Andres - thank you so much for replying! I feel confident in collecting comps, determining a conservative ARV, and have a general knowledge of the components to factor into acquisition and holding costs. I need a bit of guidance when it comes to running to numbers to analyze as a flip vs. LTR vs. STR.
Ok - couple of things:
I would first pick a strategy - LTR, STR, Flip etc. You need to narrow down EXACTLY one strategy that you want to do first. No problem with inexperience, but make it easy on yourself and simplify for the first one until you understand what you're doing. You can do analysis all day but NOTHING compares to real life experience and actually buying a property. LTR is going to be the simplest, least risky and most straight forward. A flip is more advanced as far as funding and what you DON'T know (rehab costs, holding costs, contractors, contacts for the work you need done etc). STR is going to be more expensive (generally) and more risky due to the cost. You also have regulations, different lending terms (vacation home or investment ptoperty?) etc.
As far as exit strategies you really have 2: hold or sell
Do you have a spreadsheet you use to run numbers? Can you make your own? This would ensure you understand the numbers and what effects what
Rehab costs you will learn on time, whatever you come up with now...double it and add 5-10k. That will be pretty accurate until you understand the costs and do more of these
I'm sensing some "analysis paralysis" as well. You're a real estate investor. Run your numbers (have a good realtor that can double check you, if you want - I personally don't cause I find my numbers are generally more conservative and accurate and I actually care more), be confident in them and make an offer. That's really all there is to get started.
Once you get started - see what you did well, what needs to change, educate and move forward
- 4yJared HottleBusiness MemberReal Estate Agent 路 Cedar falls IA Waterloo, IA 路 Member since 2020 路 902 posts 路 549 votes
Are you looking to invest in your area or are you looking in longer distance markets? What strategy do you like the most from your reading and research? (flips, long-term rental, STR, househack, BRRR) Definitely having multiple exits is very smart of you but going in with conviction on one strategy and pivoting later if needed is the best I think
Jared Hottle Real Estate59 Reviews - Investor 路 San Rafael 路 Member since 2020 路 376 posts 路 274 votes4y
@Anna Kate Kingston, welcome to BiggerPockets and congratulations on doing the work!
If you have not thought about and set your goals yet, I would start with that. Once you understand that, as Jeremy said above, I would pick a strategy/lane and stick with it. Real estate takes time and it will take time and transactions before you become proficient in any one strategy. If you look at all the options and chase the shiny object, you will likely get nowhere.
In either case, I would be happy to look at, walk and talk you through any and all deal analyses you want. We spend a few hours each week giving back to the community and I love to analyze deals 馃榾
If you want to chat more, do not hesitate to reach out, connect, and DM me. Happy to help!
- New to Real Estate 路 Beaufort, NC 路 Member since 2022 路 8 posts 路 3 votes4y
Wow! Thank you all so much for taking the time to give such insightful and knowledgeable responses.
@Joe Villeneuve - Roger that on the importance of Market Analysis. I've focused on two geographic areas to which I have concrete ties, and will continue to lean into researching the markets. My father was an appraiser, so he definitely instilled the importance of "location, location, location!" into me.
@William Harvey - I would be beyond grateful to have any one-on-one time you have available over Zoom! I'm a quick study, but definitely feel the need to review the process of deal analysis alongside a seasoned investor. I'll reach out via DM.
@Jeremy Horton - You hit the nail on the head. I've reached the point of paralysis due to the number of avenues available to investors in this industry & your advice to stick to one strategy at first is wise and needed. I have a self-created spreadsheet that I've been using to analyze (I found using pre-made ones like those available on BP left me feeling like I likely forgot to consider a component), but am reaching out to have a seasoned investor to verify my numbers and workflow. Thank you for your takes on the main strategies - my inclination has been to start with flips to raise funds and gain experience with the rehab process before taking on being a landlord. I'm an interior architect by trade, so I've had experience with CA. I will take your advice to heart to feel confident in my numbers and start jumping in.
@Jared Hottle - I'm focusing on Philadelphia (I'm 20 minutes outside of the city) and coastal NC as I have a friend ready to GC for projects together down there. I've gotten caught up on the shear number of potential exit strategies, as I can see myself doing a combo of many (besides househacking, as my husband and I just settled into our first home last year). I began by focusing on flips, but found myself getting distracted by not knowing how to analyze the same properties to run as LTR/ STR in case something happens and I need to pivot.
@Nathan Murith - Thank you! Happy to be here and already overwhelmed by how helpful the community is. Roger that on yours and Jeremy's advice to pick a lane initially. I would absolutely love to schedule a time to take you up on your offer to work through a few potential deals - you have my utmost appreciation!
- 4yNicholas L.Pro MemberFlipper/Rehabber 路 Pittsburgh 路 Member since 2018 路 6k+ posts 路 5k+ votes
these are very different strategies... STR vs LTR vs flip. you said you're househacking. that's great! why not just post very specific questions here in the forum or this thread, and see what happens?
i hereby promise to respond if you post a specific question!
and, i'll tackle one thing you said - "start with flips to raise funds and gain experience with the rehab process before taking on being a landlord."
"flipping to raise funds" is going to be very, very, very difficult for a new investor in the current market environment. Hopefully other experienced BPers will chime in with their opinions but, fortunately or unfortunately, the best way to raise funds is your W2 job. contractors are booked up, materials are expensive, good deals are tough to find, the list goes on.
if you want to flip to flip - that's great. but flipping to generate cash is going to be very, very tough.
that one's free =)
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