Quick Analysis Method

[Anthony Doukas]

I am analyzing 3 properties a day from the MLS. I was looking for a little feedback on my overall method for quickly screening property deals when trying to decide if I should do a deeper dive. I was especialy looking for feedback on quickly estimating expenses. This whole process takes about 15 min per property for me now that I have done it a bunch. Most properties on the MLS don't come close when using this process, but I have been told to expect that.

Verify Sale Price: Quick look at Zillow for what has sold that is similar in the last 3 - 6 months. 

Est. Mortgage: I run a quote from my broker through an app and 

Tax & Insurance: I pull tax data from the county website and run a quick insurance quote for those numbers

Est. Fair Martket Rent: I pull from the MLS listing and also look at some comps from Zillow that are up for rent at the time and are in similar condition

Prop Manager: I assume 11% total. 10% for month to month expense and 1% extra for added costs of getting a new renter in place. 

Repairs & CapEx: I have been told 5 - 15% is reasonable and I assume 10% almost always since I don't really know much.

Vacancy: I usually assume 8% which equates to 1 month vacant per year. Obviously going to work hard to make that much less. 

Lawn / Snow: I assume $100 / month for lanscaping generally. 

Water: If water is included, I usually assume $50 / unit. 

I also do a quick look at crime overview for the town (assuming it isn't a huge city) on the free version of neighborhood scout and the high school for the property. I also do a quick google search for starbucks and whole foods in the area for indicators of higher income. 

If after all this the prop cash flows $100 / month / door or more, has > 8 - 10% CoCRoI, and schools and crime are reasonable I put it in the que to do a deeper dive and possibly make an offer. 

Thank you in advance for your thoughts and feedback. 

[Joe Villeneuve]

Only 3 properties a day? 90% of the time you spend each day on REI should be spent analyzing "markets"...not properties. By analyzing markets, you'll be analyzing every property in that market at the same time.'

Verify Sale Price:  What do you define as "similar".  Also, what you are looking to do is define micro-markets.  MM are defined as markets that are the same (10% either way) of eachother that form a tight geographical area.  This is also how you define the Rental MMM.  Note that the two don't always overlap.

Eliminate all the estimates and percentages (all guesses).  You want to define accurately...or why bother?

Crime is important, but schools are not.  Schools are important to families but not to singles or starters.  In any case, they usually increase taxes which not all of the previously mentioned people are willing to pay.  In any case, you will know if they are based on the rental and sold comps, so just stick with them as your guide.

If you property, after all of this, only CF's at $100/month, what you have is negative CF just waiting to happen.