How to properly analyze a property for a good deal

Question

Hi all I am new to real estate investing and I realize I hit a stopping point when I find a property. I’m not exactly sure if it will make money or not. How do you know when you find a good deal? To be honest, I’ve been looking on the MLS, but would love to partner with Wholesalers in my area of Southeast Wisconsin.

Lydia Castro · Answer

Hi Chrissy, if you go to the BP youtube page and search for "how to analyze a deal," you will find great videos that walk you through the whole thing step by step. :)

Marcus Auerbach · Answer

What you call a "good deal" is different for everyone, it really depends on your definition and what you are looking for. Some people call it a buy box. Most new investors believe that a certain amount of cash flow will qualify a deal to be a "good one" and focus on becoming an expert in cash flow anaysis. They you start to wonder if the water bill will be $20 more or less and that's the wrong rabbit hole. The reality is not that simple, that is probably what you are feeling instinctively.

The concern is that capex will exceed cash flow over time. Read that again.

The problem is that it takes most new investors 5 years to find out, because you can kick that can for a few years. Most of the housing stock we have in the Milwaukee metro area is either 60 or 100 years old. And every component has a design life, it will eventually need to be replaced. Not only a water heater, but literally everything else that makes up the exterior and the interior of a house.

To make the argument tangible, think about $70,000 for a single family every 30 years. That is basically the cash flow, so without appreciation, you can spend a life time as a landlord and not making any money.

Charles Clark · Answer

@Chrissy Anderson

Great question! Running the numbers is key — focus on cash flow, expenses, and potential repairs. Partnering with local wholesalers is a smart move too since they often have access to better deals. Keep learning and networking — you’ll build confidence with every deal you analyze!

Chrissy Anderson · Answer

Rebecca I’m actually looking to buy. I’d rather find a wholesaler to work with to find me deals.

Rebecca Knox · Answer

Hi Chrissy,

You could ask ChatGPT that question--It's amazing.

I wholesale in SE Wisconsin and also buy. Are you looking to buy yourself or wholesale?

When wholesaling, the numbers investors come in with will vary. One person's trash is another person's treasure...what I've noticed is that some people have built very good teams which allow them to get work done cheaper than others.

Bryce Jamison · Answer

Check out the "Rental Property Calculator" tool on this site. I suspect you've been using some calculator and are struggling to find deals. This is most likely due to today's interest rates and rising insurance cost. This means you may need to put more down, or make lower offers. I suspect very shortly we're going to see the dam break and sellers start to lower prices in mass.

If your problem is you run the numbers but don't trust them, you can call loan officers and insurance brokers for today's rates, and taxes are public. You can also under estimate your rent and over estimate your expenses so you're extra conservative. Finally, having a big, beefy, emergency fund can help give you the confidence, and security, to make a big purchase.

How to properly analyze a property for a good deal

How to properly analyze a property for a good deal

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