Analyzing deals after time away
4 Replies
- 1wCurt DavisBusiness MemberFlipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
It all depends on what you are looking at or for. If its basic like positive cash flow with modest appreciation, that is simple. If it is more complex with things like 5-10yr projections, with more than just the property specifics, it can get very detailed and overwhelming. Ultimately, I refer to keep it simple. Good luck !!
Curt Davis - KAIZEN Realty538 Reviews- 1wScott B.Queens, NY · Member since 2015 · 35 posts · 6 votesOP
@Curt Davis Thanks! I'm having trouble getting confirmed information for even simple things like rents.
- Investor · Pacific Northwest · Member since 2026 · 511 posts · 286 votes1wScott — I’m probably the wrong person to ask for the easy way because our process is borderline painful. 😂 But after being away for 10 years, I’d actually rebuild the habit this way rather than relying on any single calculator. We don’t really “run a property through a calculator.” We build an evidence file around the deal and make the numbers prove themselves. Our basic process looks like this: 1. Reconstruct the property first. Ownership, listing/acquisition history, recorded size, legal unit count/use, taxes, permits, zoning, liens/title issues, and anything that doesn’t reconcile between sources. 2. Build the market evidence. Verified sold comps, active competing properties, price-per-foot positioning, rent comps, vacancy/tenant assumptions, and the immediate micro-market—not just the city average. 3. Reconstruct the actual economics. Purchase price, closing costs, rehab/capex, taxes, insurance, utilities, management, maintenance, reserves, vacancy, turnover, financing, carrying costs and selling costs where applicable. 4. Separate facts from assumptions. This is a big one for us. If we know the rent is $1,450, that’s a fact with a source/date. If we think it can rent for $1,650, that goes into the model as an assumption and has to be supported. We don’t let estimates quietly turn into facts. 5. Underwrite the financing independently. Down payment, rate, debt service, reserves, lender treatment of rental income, DSCR where relevant, appraisal risk and the actual cash gap required to close. 6. Model multiple cases. Base case, conservative case and “what has to go wrong before I hate owning this?” Vacancy goes up, rehab runs over, rents miss, taxes reset, appraisal comes in light, exit takes longer, etc. 7. Work backward from the exit. For a flip, defensible resale minus selling costs, financing, carry, rehab, contingency and required profit tells us the maximum acquisition price. For a hold, the operating economics have to survive without requiring heroic appreciation assumptions. 8. Create a missing-information list before deciding. Every unanswered question gets turned into a diligence item: lease, title commitment, payoff, permits, insurance quote, contractor scope, utility history, rent roll, whatever the deal requires. 9. Then make the decision. Not just “8.2% return.” We want to know why we believe the return, what evidence supports it, what could break it, what still needs verification, and whether the deal is actually financeable. The annoying part is that the spreadsheet is probably only 20% of the work. The rest is making sure the numbers going into the spreadsheet aren’t fiction. Once you analyze enough deals this way, the calculator itself becomes almost irrelevant—you start recognizing where the deal lives or dies before you finish underwriting it.
- 1wScott B.Queens, NY · Member since 2015 · 35 posts · 6 votesOP
@Michael Eskenasy Thanks! Wow that does sound like a painful process, but very thorough, and I appreciate it. That's a ton of information you're finding. Where are you getting it?
Also, does this level of due diligence put you in analysis paralysis?
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