How I Analyze a Residential Deal in 5 Minutes

If you're an active buyer of residential investment properties in today's market, you're most likely looking at a lot of deals every day. In order to look at all of these, you must be able to weed out the bad and make offers on the good. By being able to evaluate deals in a short period of time, you're gaining a competitive advantage over the people who are a little slower. You can look at more deals quicker, and make more offers in a shorter period of time. Here are the steps I take to evaluate a single family home in a minimal amount of time so I am able to sort the deals and make more offers than my competitors. 

1. Pull sales comps and find the After Repair Value (ARV) 

To do this quickly, I use recently sold properties from Zillow that have the same specs as the subject property I'm looking at. I find the average price per square foot of the comparables and multiply that by the square footage of the subject property to find it's ARV. It's important to note Zillow is not as accurate as the MLS, but it does give you a good starting point. 

2. Estimate repairs

If the pictures are already online, I look at the property and I can usually get within a +/-$5,000 range of the repair cost. If not, I will have one of my contractors take a quick look at the property and give me a rough estimate. 

3. Run rental comps 

In order to have all of the numbers I need for my simple analysis, I need to know what the property will rent for. I try to be conservative when I estimate this and usually I can come up with this in a few seconds since I know my market very well. 

4. Run a simple analysis 

I throw the numbers into a simple spreadsheet that will show the cash on cash returns with an 80% LTV and the net cash flow after all expenses (I shoot for a 15% cash on cash return and $200 NCF with at least 20% equity after repairs). Creating a sheet like this is very simple, you can find several here on BiggerPockets as well that are a bit more extensive. You can tailor it using your own assumptions as well. This analysis will tell me if I want to make an offer on the property or not. If I do, it will tell me how much I can pay for the property assuming the repair costs. It's important to always look at these deals from a conservative frame. 

Looking at potential deals this way will save you lots of time and make you more efficient. It's especially important if you have high lead generation. Whether you wholesale properties or are a buy and hold investor, this will help you sort out deals quicker and give you an advantage over your competition. If you have investors or are a wholesaler selling a deal, doing this will make you look more competent and professional.