Running The Numbers On New Potential Deals
New member here, looking for some clarification. I've been reading a lot, listening to the Bigger Pockets Podcast, and getting to the point where I want to start looking at potential deals.
I hear a lot about "running the numbers" on potential deals, but what does that exactly mean? Lets take for example a multi-family property that's going to be a buy and hold. Does running the numbers mean looking at the potential sale price, and comparing that to
- Monthly expenses
- What class of home it is
- What class of environment is the deal
- Potential cash flow
Running those numbers, and seeing if it is a potentially good deal, or am I completely misunderstanding this concept?
Any clarification, and even some examples would be great!
Thank you all!