Real Estate Investing Basics

A Quick Story About Improving Deal Analysis from Weeks to Minutes

Expertise: Business Management, Real Estate Marketing, Real Estate Investing Basics
25 Articles Written

I just finished reading The Power of Habit by Charles Duhigg. It’s a fantastic book that I recommend to anyone. And I really do mean anyone. You can be a Fortune 500 CEO or a young 20-something living in your parents’ basement and still get tremendous value out of this book.

Don’t worry. I’m not writing a book review this week. We’re not here for book reviews. The reason I’m jazzed about this book is because an “ah-ha” moment went off after I had a great chat with a real estate developer I respect and admire (paired with finishing this book).

Our chat focused on this developer’s business–mainly how he dealt with uncertainty and grew his company over the years. One thing that struck me was how quickly he analyzes deals and decides if they are worth his time or not. Time (or the lack of) is a HUGE problem in our industry because we’re constantly faced with mountains of data, no data at all, new deals, old deals, and many other opportunities fighting for our attention.

There’s a common understanding on BiggerPockets that one must look at and scrutinize close to 100 potential deals before finding one that works. Given the sheer magnitude of information available (and sometimes lack of information) for potential deals, understanding how to use one’s time is always a priority for anyone starting out, looking to take on more projects, or venturing into a new niche.

Our need to hit home runs while mitigating risk is constantly challenged because of the increasing availability of information and new opportunities on the horizon. How many times have you received an email, phone call, or note about a hot new property or a compelling investment and not known where to start or whether to move on?

Have you ever marveled at how quickly some are able to dismiss opportunities at the drop of a hat while others turn and toil over the smallest details?

These were questions I wanted to uncover in my chat because they are common hurdles I’ve observed for several years now among many in the industry.

How to Deal With Uncertainty and Speed Up Analysis

So I simply asked my developer friend about his first few deals and how he dealt with the uncertainty and chaos. I then followed up with questions about how he developed his due diligence process to the point where it becomes automatic.

Here’s his answer.

“It’s automatic now because it’s a habit. I looked at my first deal for over a week. I underwrote it, analyzed it, and lifted up as many rocks as I could find before deciding to move forward. It was intimidating and I had no clue if it would work out. Then, after working through the process again and again, I gained new information on what makes a deal work well. After building more projects, I now know have a clearer sense for my cost per square foot range and what products sell at what prices. Over time you start to focus on what really matters in a development and forget about the smaller aspects. They all matter, but not always at the start of a project. This allows me to analyze initial deals in minutes and hours instead of days and weeks. But it all begins with starting the habit and taking your time, but knowing it’ll improve over time.”

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We’re going short and sweet this week. The answer above might be old news to some and might help others who are sifting through what seems like chaos. Either way this mentality is one that can help regardless of where you are with your work. Good luck out there and happy deal hunting!

Photo: ros k @ getfunky_paris

Kyle is the creator of, a blog dedicated to commercial real estate development. Kyle is also a real estate development associate with Blu Homes, Inc. His company focuses on buil...
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    Mark Ferguson
    Replied almost 7 years ago
    I’m usually able to make a decision on a rental or flip in about 15 minutes. I say usually because with our market prices increasing I have to do a little more research in comps now and consider properties I would have never considered a year or two ago. One of the reasons I can act so fast is I know there is enough room for unknowns. If I have to run numbers over an over there isn’t enough profit potential.
    Jeff Brown
    Replied almost 7 years ago
    Hey Kyle — True for sure. All of my mentors told me the same thing: Relentless repetition is the key to real expertise, and for sure, experience. It proved 100% accurate in my experience.
    Charles Bradford
    Replied almost 7 years ago
    Kyle — There is a learning curve to investing for sure. It’s something that simply sticking with it and learning on each transaction will help. As with anything, you become more proficieint with every deal. I guess I’m one of the “old guys” — like Mark above, I can make a decision on a house for flip or rental in about 10-15 minutes. It comes from doing it over and over and becoming a habit. You apply the same steps to each property. Thanks for sharing — keep doing it and the learning curve will reduce over time.
    Kyle Zaylor
    Replied almost 7 years ago
    Thanks Charles. I definitely agree. I remember getting a “deer in the headlights” feeling back when I first started underwriting real estate development projects. There’s always a mountain of information to synthesize. I’ve been getting plenty of questions lately about how to start developing real estate. It can be intimidating! But it definitely gets easier as you go through the motions.
    Glenn Schworm
    Replied almost 7 years ago
    Kyle, nice article. So true! Systems really help to take the emotions out of things. Thanks for writing.
    Replied almost 7 years ago
    Good points and comments. Like others I have found as I have gained more experience that I can make calls faster. To be honest I don’t even like to waste time looking at a house until I am pretty sure I want to buy it. I’d be shocked if I actually went to 10% of the places I offer on before getting a reasonable counter.
    Scott Rose from Sherman Oaks, California
    Replied over 2 years ago
    Does anyone have a great book on the fundamentals of underwriting an investment property? I understand the basics and several rules of thumb, but I’m looking for something a little more in-depth and procedural to follow. I’m a newbie to RE investing, so any advice/suggestions are appreciated. Thanks!