Tips for Deal Analyzing

[Crit Tyson Williams]

Hey BP, 

I am currently analyzing multiple deals in my area every week, including single family and duplexes. Each time I get more and more insight on my local market as well as continually get more sound in quickly understanding how each individual property looks as an investment. My only hiccup is not having total clarity in how tight my numbers are for the properties I am looking at. Little aspects such as rehab budget, insurance, and closing costs could be more or less than what I originally underwrite. How do I improve my analyzing and get tighter numbers? I really appreciate your feedback and I'd love to hear any other great tips that young investors such as myself need to know. Thanks!

[Micheal Briscoe]

I'd suggest talking to lenders (local banks/credit unions) about what you can get pre-approved for. I'm assuming you're looking at potentially househacking your first deal, FHA financing, etc. It's not the only way, but may be your easiest way to get started. Once the lender looks at your finances, they'll issue you a pre approval with an attached fee sheet showing what you can expect to pay at closing (fees, prepaids, etc).

For reference, I closed one @ 5.25 / 20% down with Gateway in July.  Have a preapproval from Weokie for 4.875 / 15% down as 'investment' loans.  Multifamily (2-4) requires 25% down.  Those stipulations change if you're doing owner occupied.  

For insurance, you can PM me and I'll pass my brokers info to you.  Once you get a feel for one property, you can gauge most in the same area.  If you're looking out of state, expect #'s to change dramatically.  I couldn't believe how much more expensive some areas in Texas are.  

For contracting cost, you can contact some local contractors and have them ball park a few of the more common rehab items, such as flooring, painting, window replacement, etc.  There's two portions to everything you need done, labor $ and material $.  Spend some time in Home Depot and Lowe's and you can figure out material cost.  Scott Trench's book on estimating rehab costs was helpful as well.  

Feel free to reach out.  I'm in Edmond as well.  I'm only a step or two ahead of you at the moment, but still learning all the time.  Good luck!