How to get better at analysis

[Elaine C.]

I'm very new to REI and I'm having trouble understanding how to think about the numbers and evaluate a property. I have it on my "business plan" to run numbers for 50 potential properties, but that won't help me if I can't determine if I'm doing it correctly. What is the best way to get your numbers "checked"?

I have read the advice of joining a local REIA in my area (Seattle). There are a few. Does anyone have recommendations or thoughts on which of them are the most active.

Thanks in advance!

[Jake Alger]

Hi Elaine,

It can definitely be a daunting task analyzing properties, especially if you're new to the process. Having a feel for the numbers is something many investors rely on and usually comes from years of experience. When practicing, don't worry so much about becoming accurate with the numbers, be more concerned with learning the process and calculations. The ARV will perhaps be the easiest and closest thing to which you'll have data for. Look at what's selling around the property you're analyzing. Find similar properties (what we call comps or comparables) based on square footage, lot size, bedrooms, bathrooms, age, etc. and use those as your ARV.

Networking within a group is great, but ultimately the numbers you're analyzing will come from experience and will be situational (every deal is different).  Perhaps reaching out to an investor who's "been there, done that," or looking at other deals people post in the forums would be of some help as well.  You'll be able to see "averages" for some of the costs such closing costs, etc.

I know you're new to the process, but when the time comes, an investor friendly real estate agent will also provide services in helping identify properties that'll work for your strategy, risk tolerance and level of experience.

I'm happy to help in any way I can with questions.  Feel free to reach out.