What is your favorite metric for analyzing deals?

[Roy Palmer]

Wondering what everyone's go-to metric is for analyzing the value of a potential investment property? 

[Chris Martin]

For most of my investment career, the general formula was/is: 

#1 Net Income, assuming full leverage at current market rates, after non-cash expenses, should be greater than $0. #2 Acquire at a discount to a 1004 comparable sales valuation, generally at 20% or more. 

This is an old example, but should get the point across:
100K single family acquisition on 130K valuation, 82.5K improvement, 17.5K land

Depreciation is $3,000 per year ($82,500 / 27.5) or $250 per month. At a (mortgage) rate of 6%, P+I payment on $100K is $600, interest roughly $550 per month. taxes and insurance $100 per month, reserves about $100 per month, repairs and vacancy about $100 per month, and Property Management and incidentals about $100 per month. 

Adding it up: if we could get $1200 per month in rent or more, we would acquire the property.

It may be hard to believe now, but in strong buyer's markets we could achieve these numbers in the Raleigh NC metro market on a regular basis.