How fast can you properly financially analyze a property?

7 Replies

Before I started a real estate tech company, I had all my tools... Excel sheets, favorite websites to check for new listings, favorite websites to estimate rental prices, ideas of what various renovations would cost... But even at my fastest, it still took me ~30 minutes to analyze a single property, and as fast as I could work, properties were coming on and *poof* going off the market! It drove me nuts!

So... Honestly, how fast can you really do a thorough analysis on a property that looks like it might be a good investment?

Aside from my contractor giving me a walkthrough, this should take less than 10 mins

I know my market, I know the neighborhoods, I know what home values should be, what it'll rent for, etc.

So once I get a unit in front of me, it takes a few seconds for me to be 75% sure if it's a deal or not. Plug the numbers into my spreadsheet and then I'm 100%.

Hot markets move fast, you have to as well.

I'm into multi's.. 10 minutes or less. First thing I look for is the gas meter. If one boiler(owner pays), if multiple meters it is forced air (usually on the tenants), if none electric heat (usually tenants pay). Next biggest expense would be taxes, I have all the local tax rates in my market memorized. Next would be water meters, those are usually on the inside though.. I do however have my markets water rates memorized to.

I bought a 20 unit 3 years ago ,I scratched out the assumed performa before calling.. I was within 2k of the actual noi..

 Plug the numbers into my excel sheet and look at cash flow.  Google maps to look for crack houses.  I can usually decide in 10 minutes if I need to jump in the car and do a drive by.  Oh, and average time to have the listing agent return my e-mail- 48 hours. 

@Jamie Nacht I’m nowhere near as fast as you guys! It’s really quick for me to qualify a property out. Or, more accurately, crunch a few numbers and see if it’s in the realm of the listing prices. I’d say at least 90% of first-blush numbers lead me to think “well, I’ll revisit this after it goes stale.” Since I invest out of state it’s not exactly easy to drive by! But I can ask my PM what she knows, look up the owners name on the assessors site, etc. Sometimes I get an “I know them” or “Andrew, I know you, you don’t want that apartment building.” And sometimes the PM will drive by and it’s interesting or “Hey, I saw 7 people just loitering outside those 3 duplexes at 2 in the afternoon.”

@Andrew Johnson Thanks for the comment. That's were I was too. Especially when investing in various markets at once. The other issue I have had is making sure that after I buy, finding service providers in markets outside my local area (GC's, Property Managers, etc.).

@Jamie Nacht Since I have a PM already I never run into the post-purchase issue.  It's easy for me the qualify out.  It's easy for me to come up with a "conservative" number.  But it's hard for me to (in a short amount of time) come up with a "competitive number".  So any quick number I come up with is probably going to be countered which gives me more than enough time to try and figure out what a pseudo-best-and-final would be.  Still, I don't make a ton of offers and life does get a ton more complicated when it comes to older buildings on properties that need rehab.  Sure, my PM is fully capable of handling rehabs, knows contractors, etc. but I always want to bake-in "hassle" as well as risk.  And since I'm sitting here in California and investing out of state, the risk is higher for me than someone else.  So, to be honest, a lot of these deals I *shouldn't* be competitive on with my highest/best.  Will I keep making offers on these properties?  Sure, I might run into someone that needs to sell "now" but I'm under no illusion that I'm going to be as competitive as someone local when it comes to price.

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