How do you analyze a prospective property to see if it makes sense as a rental?

5 Replies

What resources or tools do you use and what numbers do you crunch?

You should search the forum for the following threads to get a good feel for metrics that folks use:

"2% rule"

"CAP rate"


well I tried the analyze tool and it appears it wasted 5 minutes of my time. Once I keyed in all my data it tried to sell me an upgrade with no option to move forward without purchasing the upgrade.

Unless I'm using it wrong, it would have been nice for them to tell me that up front and not sneakily collect all my data on my prospective property without me being able to get to the calculated data I was expecting.

I'll probably have to try a tool from another site I suppose.

Back when I rented, I preferred a 2 bed 2 bath on the first floor....with washer and dryer in the unit.  While a pool sounded nice, I never used it.  In terms of numbers, I wasn't making much back then so rent took up an entire weeks pay.  Of course, I compared rent with competition to get the best deal.  Now that I own several houses, I think about things entirely different.  Just get a recent copy of apartment guide and you should be fine....unless you don't want an apartment. 

there is a book called multifamily millions by David lindahl and the ABCs of real estate investing by ken McElroy. Both are very helpful in learning how to analyze a property.


We use CAP 8%+, Debt Coverage Ratio 1.6%+, Cash on Cash return 12%+

With those achieved profit for you and a good return for your investors.


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