How to analyze deals?

[Shon Drennan]

Hello i'm new to investing. I've been doing the prep work of saving money, researching, reading, and just learning about real estate investing. Im wanting to start analyzing deals but i'm not sure what to look for, how to price things, what comps are actually comparable, or what not to do or develop bad habits. Is there any good starting advice for someone new to start to analyze deals? Thanks

[Phil Olinger]

1. Real Estate Agent: Interview a handful of real estate agents. Also be prepared and ask questions in this process, a friend or buddy isn't going to cut it. Pick someone who meets what you want to have done.... Do 3 or more interviews. Ask them to help you develop a process to analyze real estate deals. Ask each of them to send you their deal analysis software. This may help you judge them based on that type of software they use, also see if you connect and are on the same page. It is hard to find real estate agents who will help you do investing, all agents will help do a deal, but an agent that is active and aware of good deals are hard to find, some agents will lose patience or be out of the game if it takes you a bit to pull the trigger. Just be aware.

2. Funding (mortgage): Call multiple banks and just get some pre-cursory numbers. So if you are thinking of doing a Cash out refinance and mortgage or a HELOC. If you are just doing a straight down payment and mortgage on a primary residence, This will help you decide on price points that you are comfortable with.

3. Deal Analysis: Pick one of those real estate agents from your interview process and then have them set up search parameters and then just take the first home in the search that they send you and type it into an excel sheet and analyze the deal. Make a pact with yourself to have x number of deals analyzed daily, or weekly or whatever works best for you. Just by doing this you will get a feel for your market and what is a deal and where you want your numbers to be. Once a house, fits the numbers you have set based on; down payment, reserves, taxes, HOA, Cap Ex, and mortgage, then you can download something from here to do a deep dive, I found a good rental deep dive tool on another housing website, and do a deep dive on the numbers and see if it is really worth it. It will add in additional set of criteria to think about. Just repeat this process over and over and then go see the homes that meet your paper criteria. Decide if that is what you want or alter your expectations.