Posted over 5 years ago

# How to Quickly Evaluate a Real Estate Deal

There is a common saying among real estate investors, “Review 100 deals, make offers on 10, purchase 1.”

When I first began investing in real estate, I could not see how this could possibly be true. Who really goes and looks at 100 properties just to get a single deal?

It wasn’t until I was speaking with a fellow investor that I learned my mistake: you don’t physically need to see 100 deals in person, you just need to find 100 deals to evaluate. Obviously it takes time to evaluate 100 deals, so it makes sense to find a way to quickly evaluate deals.

I ended up creating a spreadsheet for quickly evaluating deals. Many of the formulas that I used came from the book "What Every Real Estate Investor Needs to Know About Cash Flow… And 36 Other Key Financial Measures". My goal was to be able to enter a few pieces of data and quickly analyze a property using multiple formulas. I then wanted a quick way to determine if the property was worth a further look. Below is the breakdown of the spreadsheet that I currently use.

Property Details

The first section is pretty straightforward. Enter basic information about the property. Orange cells require user entry.

Purchase Details

The second section gets into more of the financials. Again orange cells need to be entered. Gray cells with orange text are calculated and black cells do not apply. This section contains information about the property itself, the funding to purchase it and the cost to renovate it.

Rental Information

This section contains information about the number of rentable units and the going rate for rent in the area. It then calculates various relevant information about the rental financials.

Estimated Financials

Since the point of this sheet initially is to be a quick way to evaluate deals, we use 50% as the operating expenses for the property. This gives us a high level idea of how the investment looks. I like to target at least \$100 estimated cashflow per unit.

Calculated Financials (Optional at this point)

As a later step if you want to further evaluate the deal, I have a second sheet where you can break down the operating expenses, which will give you a calculation based on the actual numbers you enter for each line item. I skip this step when doing the initial analysis.

This section contains some additional information which may be relevant to you.

Should You Purchase the Property?

And now the magic. The numbers on the page give you a lot of information, but do not make it clear if you should pursue the property. I have determined 3 criteria that I want my properties to achieve in order to pursue them.

1. Monthly rent (GSI) should exceed 2% of the purchase price (+ renovations)
2. Cashflow should be \$100+ per unit
3. The debt coverage ratio should be greater than 1.2

Because you entered all of the information above in order to calculate these values, the spreadsheet will now tell you in simple terms if you should purchase the property.

If one of the values did not meet my criteria, it show up as red and provides a different recommendation.

What I love about this spreadsheet is how much data it generates and how easy it makes scanning through potential deals. I have added a ton of additional functionality to provide further analysis if I decide to purchase the property, which I will outline in a future blog post.

Here is what the first tab of the spreadsheet looks like put together.

Original blog located here - http://tom-sylvester.com/business/how-to-quickly-evaluate-a-real-estate-deal/

1. Hi Tom,

Late to the party here but can I also get a copy of your spreadsheet?

Thank you,

James

2. Gr8 job Tom. May i have the copy of spread sheet please?

3. Great article and exactly what I have been looking for.  May I have a copy of your spreadsheet too? :)

Thanks!

4. thanks for sharing this wonderful information

5. Hey, Tom great post. If possible I would like to get a copy of the spreadsheet. Thank You!

6. Great article, can I please get a copy of the spreadsheet?

7. Would like a copy of the spreadsheet if it is available.

8. Hi Tom, thanks for also mentioning the books that helped you out. Great post! Please could I have a copy of the spreadsheet too. Thanks!

9. Hi Tom!  Excellent info here- would love a copy of the spreadsheet as well!

10. Great article! Could I get a copy of your spreadsheet? Thanks!

11. Hello Tom, and what a great post! I would LOVE a copy of the spreadsheet!  Thanks!

1. Thanks for the awesome post! Love your advice. Could I also get a copy of the spread sheet? Also FYI, your website does not seem to be working.

Thanks

13. Hi Tom - do you mind sending along a copy of the spreadsheet to me as well? Thanks!

1. I'd also like to get a copy of the spread sheet if possible, Thank you!

14. Hello sir - may I get a copy of your spreadsheet?  This was an excellent article.  Thanks in advance, I really appreciate it.

15. Hi Tom, excellent post! Would you be able to send me the spreadsheet link too? Thanks very much!

16. Hi Tom - great post!  Would you mind sending me a link as well?  Thanks in advance!

17. This is a great post! Can you please PM me a copy of the spreadsheet as well.

18. Me, too!

20. Great read. Could I get a copy of the spreadsheet? Thanks!

21. Amazing post Tom. May I have a copy of that spreadsheet as well and thank you for your help!

22. Greetings Tom.,

Thank you for such a great post. I'm looking to do some evals in my area as well. I know this spreadsheet will be most helpful in my endeavors. Would you please pm me the link to the spreadsheet it would be greatly appreciated. Thank you and best of luck in your investing....

23. Hi Tom. I'm a newbie to REI and have been reading and learning so much from the BP Community! I've seen a few different spreadsheets and read quite a few Deal Analysis articles. Nevertheless I must say I really enjoyed how easy to follow and detailed your post and spreadsheet are presented!

Thank you!

24. Hi, new to BP. Would also love to have a copy of the spreadsheet. thks

25. Hey Tom, great looking spreadsheet. If I could get a link as well, that would be great. Subscribed to blog as well.

26. Thank you for sharing, I am a New Investor and this is what I was wondering, how to know if the deal is right. This was great reading.

27. Hi,

28. Hello everyone. I just joined bigger pockets and I came across this nice article. How can I download the spreadsheet? Thanks.

29. Hi Tom,

This is great!

I cannot wait!.

Thanks,

30. Hi Tom! I know you wrote this 3 years ago but any chance you could share the spreadsheet with me? Thanks so much!

31. Great job Tom! Can you, please,  PM Spreadsheet to me too....

Thank YOu

32. Hi Tom,

Great spreadsheet. Do you think you could PM me the link to it? I would love to use it as a new investor just getting started. Thanks!

Steven

34. Hey Tom,

It seems like a pain for you to send the spreadsheet out to so many people, but could I please be one more? Thanks in advance.

JTM

35. Hi Tom

Best regards

36. Hey, Tom,

37. Thanks for your post, Tom. The spreadsheet looks extremely helpful as evident by the hundreds of requests. On that note, could you PM me a link as well please?

38. Great post Tom ! Could you PM me a link as well please ? Thanks again !!

39. Thanks for posting, Tom.  If you get a chance, could you PM a link to your spreadsheet?  Thank you for your help!

40. Nice post Tom. Could you PM me a link to your spreadsheet as well? Thank you!

41. Great post Tom ! Could PM me a link as well please ? Thanks again !!

42. Awesome.

Can someone touch on using this vs. using the deal analyzer in the BP tools section?

And Tom, would you mind PM-ing me a copy? Would be greatly appreciated!

43. Also would love a link to the spreadsheet. Thanks for this post!

45. Hi Tom,

Thanks very much!

46. Hello Tom,

That is exactly what I have been looking for, I would really appreciate it if I could get a link to that spreadsheet.

Thank you very much,

47. Hey all.  I apologize for not being on here in a while.  Thanks for the great response/feedback regarding the spreadsheet.

If have sent some PMs out with a link to the spreadsheet.  If I missed you, just send me a PM and let me know and I'll send you a link.

-Tom

1. Hi Tom,

Thanks!

Marcelo

2. Hello Tom,

3. Hi Tom.  I'd live a copy of the spreadsheet as well if you wouldn't mind.  Thanks!

1. Sent.

1. Great blog post Tom!  I like your spreadsheet calculator too, can I get a copy?  Thanks for being there for us.

Dan Hill

2. Sent.

49. Excellent article @Tom Sylvester,  Could I also ask for a link to spreadsheet.  Thanks again for sharing what you have learned.  Nathan

50. Wondering also if that spreadsheet link is still available?  Much appreciated!

51. Great article @Tom Sylvester . This looks like an amazing tool! Would you happen to be still sending out the link? I would really appreciate it! Thanks

52. Hi Tom,

Was wondering if you can send me that link?

Nathen

53. new to BP and wonder if @Tom Sylvester is still sending out link? I would be interested also. Tom article was very informative.

54. Great article @Tom Sylvester. I wondered if you were getting tired of sending out your spreadsheet but have to ask, it seems like a great tool to use in addition to the BP analysis tools that I use several times a week. I look forward to reading your blogs, thanks!

55. Hello Tom,

Great blog. Would you please send me a copy of your sheet?

Thank you,

56. Hi Tom,

Could I get a copy as well?  Thanks so much!

~Aletha

57. Hey tom, awesome spreadsheet you got there, i would love to have a copy of it if its possible for you to send me one, Why not upload it in a cloud and put the link here?

wishing you the best.

B.

58. Hi Tom!

60. Hi Tom,

61. Hi Tom,

63. Hi @Tom Sylvester .  The spreadsheet looks awesome.  Would you be able to provide the URL??  Thank you in advance.

Nick

64. Very helpful -- can I also get a link to that sheet if still available?

Alex.

67. Hi Tom..

I'm also looking for the sheet!

Thanks

@Tom Sylvester

68. What a great tool. Can you please send me the spreadsheet as well? Thanks in advance.

69. Hey tom, Great post. I am brand new to BP and have been searching for what to analyze when contemplating a investment property. I am just curious if you (or anyone) can point me in the right direction to figure out what/how I should be analyzing properties. Thank you.

70. Hi @Tom Sylvester, awesome blog post! I've been voraciously reading blog posts and listening to the BP podcast and feel that I need to actually do something now, or else get trapped in the dreaded analysis paralysis stage, but analyzing deals is the one big area I need to learn more about.

Thank you kindly!

71. Hi @Tom Sylvester ,

Would it be possible to get a copy of the analysis spreadsheet?

Much appreciated,

Eric

72. Great Evaluation!

74. AWESOME POST!!!

75. Hi Tom, if you could send me a link to your spreadsheet also, I would really appreciate it. Thanks for your help!

76. I really like this spreadsheet model. Clear and concise. This is really useful for newbies like myself. I'm very thankful when people such as yourself are giving of your information and time. Thanks greatly!;-)

77. Hey Tom, this looks like it could be very helpful, could I get a copy as well? Thanks!

79. Thanks for the great article. I am just getting started into the rental property market and would appreciate if you could please send me a copy of the updated spreadsheet as well. Thanks for all the great posts!

81. Hello Tom. I just read your article. Great information, and nice tool. If your still sending out the sheet. I would greatly appreciate a copy. Thanks. Brent

82. Hi Tom. What a help! And just in time. I have a potential investment on the table (my first!) I'd love a copy of the spreadsheet too. Thanks!

83. Hello Tom! Thanks for taking the time to share with the community! I too would like to ask for a copy of your spreadsheet, I'm currently trying to sharpen my game and learn how to quickly analyze deals.

84. Tom, sweet spreadsheet. Can I get a copy? Thanks

85. Congratulations on hitting #1 for the most comments. It's a great post

86. Me too please Tom? :) thanks!

87. Hey Tom, interesting spreadsheet. Would you mind sharing it with me as well please. P.s. A dropbox link might be easy to post here since so many people are asking for it. Thanks!

88. Tom Great spread sheet, could you pm me a link too. Thanks

89. Tom, your sheet looks great. Would you be willing to PM me a link to it as well?

90. Awesome post. As a beginner looking to get started this seems like a great tool. I'd love a copy of the link as well please, and thanks in advance for sharing!

91. This looks beyond useful! As many have asked, could you PM me the link

92. Great article. Could you pm me that link as well? Thanks, Corey

1. Never mind, I found the link on your website. Good stuff, thanks.

93. Nice logic outputs Tom! I would love to have a look, could you PM me that link? Thanks!

94. Wow! Fantastic stuff. I've been floating around the website for just a few weeks. Everything is great but this article is my favorite. Is there a chance I can get this sent to me too? Thanks!

95. Tom, Great article, especially for a newbie like myself. I can see how this could be a very valuable tool to have when evaluating properties. Could you please send me a copy of the spreadsheet? Thanks!

96. Can you send me a link to the spreadsheet as well? Thanks!!

97. Tom please send me the spreadsheet as well. Do you know if this will work with Numbers? Thanks!

101. Hello Tom - could you send me a link of your spreadsheet to me as well? Thanks!

102. Hello Tom, Could you please send a copy of the spreadsheet over to me as well? I appreciate it. Thanks, Greyson

103. Sorry to be late to the discussion, but I would also really appreciate a copy of the latest spreadsheet. Thank you.

105. Hey Tom article. I just joined about a week ago and currently looking for my first rental. I would really appreciate it if you would send me a link to your spreadsheet. Thanks!

1. Tom, could you send me the spreadsheet as well. Thanks

107. Thank you! Great article, extremely helpful. On average how long does it take you to populate the sheet for a property your evaluating? I'd love to try this out, could you send me a copy?

1. Mike - It typically only take a few minutes. Most of it is calculated, there are only a few fields to enter. Then I just tweak the numbers until they work for me.

109. Nice article! If you get a chance, I'd like a copy of the spreadsheet as well.

110. If possible I'd like the spreadsheet too. If not I think I can build based on what I see and will be checking out the mentioned book. Thanks

111. Tom great spreadsheet that was a great read.. when you have a chance could I possibly get a copy of spreadsheat

112. Glad to find this post early in my career! I would love a copy, if possible. Thanks!

114. Tom, this spreadsheet will keep a lot of people out of a bad deal! May I have the link too? Great work!

115. I've been looking for something like this for a while now. Fabulous article. May I have a copy?

116. Awesome article, may I get a copy as well?

117. Better late than never! Great spreadsheet and great explanation. I can see how it would make 100 evaluations actually manageable! Thanks for sharing this. If you get a chance Tom. I'd like a copy as well. All the best!

118. Tom Great Article. Can you send me a copy of the spreadsheet? Thanks!

119. I just pmed you guys a link to it. Thanks for checking out my post.

120. Hi Tom, nice article. Your spreadsheet looks great! Could I get a link to it? Thanks!

121. Hello Tom, looks like you have a great spreadsheet with many links to BP members. I looked through all and hoped to see it somewhere so I would not have to ask you for the link. But, no luck so here I am asking for your hard work and gracious assistance. Hope all is well and I send my Thanks to You. Tom

122. Tom, Great article! I was planning on generating a spread sheet similar to this. I plan on referring to yours heavily. Thanks for your information.

123. Hi Tom, Great spreadsheet! Do you mind if I can get a copy of it. I would love to start plugging in my first 100 potentials in it and see if I can find a gem! Thanks in advance!

124. Hey Tom great post. Would you be so kind as to PM me the link too please? Also I am new to BP and the real estate biz and would really appreciate any guidance and knowledge to acquire my first deal and continue forward in my real estate endeavors. Hope to hear from you soon and continued success.

125. Hey Tom, Could I get a link as well? As someone who is just starting out, I find this is one of my greatest challenges. Thanks Ben

127. I just pmed everyone a link to the spreadsheet. Thanks guys.

1. Thank you so much for the information. I found this very helpful. If is not to much hassle would you mind sending me a copy of the link as well? Thanks Adrian

2. Hi Tom, I too would like to have your spreadsheet. I love it! Makes life a lot easier.

Thanks,

Jo-Lynn Silun

128. Hi Tom, It looks like a useful tool to evaluate deals. I would appreciate if you can share with us. Thanks.

129. Tom, thanks for contribution. Would you mind sending it to me as well! Thanks.

130. Hi Tom, Great article! Mind if I get a copy as well? Thanks!

131. Tom, thank you for posting and creating this. As many of the others on this forum have asked, may I get a link to it as well. This would be of real value for me! Thank you!

132. Tom - Great article and thanks for the book recommendation! As many have requested above, could I get the link as well?

133. In the Purchase Details section, could someone explain why Mortgage Payment (ADS) uses \$14,000 (the Purchase Price) as the Principal amount instead of \$11,200 (the Mortgage amount)? In the same section, could someone explain how Out of Pocket Costs (\$26,100) and Total Renovated Cost (\$40,100) are both described as 286% of the Purchase Price? Thank you

1. John, Thanks for the comments on potential issues with the calculations. Mortgage Payment - Looking at the current sheer (2.0), this does not appear to be an issue. I think I might have fixed it and you might be looking at an old version. % of Purchase Price - This was an issue. the Out of Pocket cost was incorrect. I corrected it and uploaded a new version of the sheet (2.1). Thanks again for pointing out those issues.

134. "What Every Real Estate Investor Needs to Know About Cash Flow… And 36 Other Key Financial Measures" by Frank Gallinelli - Hey, I'm reading that now. Great book, and it's actually pretty funny too! Here's the link to it in Amazon: http://www.amazon.com/Every-Estate-Investor-Financial-Measures/dp/0071603271 So can you upload this spreadsheet in the file section? If not, I'd love a copy too. Thanks, Tom

135. You might have heard this before... but may I have the link, too? :)

136. I'm with Pat in missing the boat. If you could Tom that would be great. Thank you.

137. Hi, I think I missed the boat. Can you share it again?

138. I just sent everyone a link to the spreadsheet. If you did not get it, please let me know.

1. Hey Tom, Awesome article about how you evaluated your first 100 deals. Do you think you could share the link with me as well? Thank you- Kenny

2. Tom, I have just become a member and noticed from your post you have a link to the spreadsheet. Would you be kind enough to send me a copy ? Thank you in advance. [email protected]

139. Awesome, can I have a copy of that link? Thanks!

140. Cool! I would love the link as well : )

141. Hi Tom, lovely tool. May I have the link too.

142. Hey Tom, great tool! Would you mind sending me a link. Preciate it!

143. Hi Tom, Great work. Could you forward me a link to down a copy of the spreadsheet as well? Thanks in advance.

144. Hi Tom, I see a lot of others have already requested this - would it be possible to get a copy of this very useful spreadsheet? It looks like it took a lot of work!! Many thanks!

146. Hi Tom, A wonderful tool, like many of the other commentors I too am just starting, and would appreciate the opportunity to try your spreadsheet. Would love a copy if possible. Cheers

147. Tom Awesome spreadsheet! Can you send it to me as well?

148. Hi Tom, could I have a link to the spreadsheet as well? I'm just starting and would love to start by practicing with a ton of properties. Thanks and good luck to you.

149. Hi Tom, This is a great spreadsheet!! I am just starting out and I think this would be a great tool to practice analyzing properties until I pull the trigger. I would love to get a copy of this. Do you think you could send me the link? Thanks!

150. Nice logic outputs Tom! I would love to have a look, could you PM me that link? Thanks ; )

1. Russell - Just sent a copy over. Thanks.

151. Hi Tom, Your spreadsheet looks great! Could I get a link to it? Thanks! Cheers~ Tara

1. Thanks Tara. I just sent you a pm with the link.

152. Thanks Eric. I would actually tweak your sentence a little and say "You have to know what you are going to do with it before you have a property". That is why I created the sheet, to help evaluate it.

153. Great post. I used to go to the Loop and look at properties, "just for fun". Once you get a property, you have to know what to do with it. Have a plan for the property after you buy it too.

154. Hi Tom, truly wonderful work and insight. But even better that you shared it. I've always developed my apps in Access just because I'm quirky and like to customize everything. But I would value a link to your spreadsheet. Once again, very well done! thanks

1. Thanks Patrick, I love to be able to share and help others. I sent you a pm with a link to the spreadsheet. Please let me know if you have any questions.

2. Hi Tom- Great spreadsheet. Can I get a link to it? All the Best, Beth

155. Hello Tom, appreciate the blog, any chance I can get a copy of the spreadsheet

156. Thanks for the link to this article Tom, Once I get done reading the book that htis information came from I will need to set up a sheet like this for my self. I think entering in all of the formulas into the sheet will help me understand how all of them are interconnected and work together.

1. Thanks Brandon, it is a great book. I just pmed you the link.

2. Hi Tom, Great article - would you mind sending me the link to the spreadsheet as well. Thanks! Eric

3. Hey Tom just came across this blog doing some exploring as a new member and new investor and I saw your spreadsheet and it really caught my eye. I could use something like this in my adventures into real estate investing. Would you mind PMing me the link as well? Also I could really use the guidance of an experienced and knowledgeable investor so that I can grab my first deal and never look back. Any help you can give will be greatly appreciated. Hope to hear from you soon and continued success.

158. Tom - I would love a copy of the spreadsheet as well, if possible. thank you for your help!

159. Hi Tom, I'm new to real estate investing and to bigger pockets in general. Came across this article and it was exactly what I was looking for. Can I get the download link to the spreasheet?

162. Thanks for the comments guys. Just sent you the link to the spreadsheet in a pm.

1. Excellent analysis, Tom. I'd be grateful if you could also PM a link to the spreadsheet.

2. Could I possible get a link as well? This is very well put together! Good job!

4. @Tom Sylvester Thank you for this post!  I find it difficult to analyze deals from time to time and it often prevents me from making offers.  Could you possibly send me a link the calculators as well?

Much appreciated and happy investing!

163. Hi, Edwin You can find spreadsheet on Microsoft.

1. What is it called?

165. I like this! I am going to write a spreadsheet like this for myself. "I have added a ton of additional functionality to provide further analysis if I decide to purchase the property, which I will outline in a future blog post." Looking forward to post #2!

1. If you have developed this spreadsheet, would you mind sharing?  Thanks!