Running The Numbers On New Potential Deals

[Andrew Gammon]

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!