What actually slows you down when analyzing a deal?

Question

For those actively buying or analyzing residential investment properties, what part of deciding whether a deal actually works takes you the most time or creates the most uncertainty?

Rehab costs? ARV? Rent assumptions? Financing? Due diligence? Keeping everything organized? Something else?

I’m especially curious what your process looks like when a property first catches your attention and you’re trying to decide whether it’s worth pursuing further.

Not looking for anyone to share proprietary spreadsheets or anything — mostly interested in how other investors approach the problem and where the process still feels unnecessarily difficult.

G. Brian Davis · Answer

The hardest part is usually not running the numbers, it’s figuring out which numbers I actually trust. Rents, repairs, insurance, taxes. Anyone of those can change the deal pretty quickly. When a property first catches my eye, I’m mostly trying to figure out whether the numbers are realistic enough to keep digging. If they are, I spend more time on it. If not, I move on.

Jaron Walling · Answer

@Nicholas Alexander Guerrero From a SFR and BRRRR strategy investor's prospective the most time consuming part is finding a good deal. Without a good deal your target ARV (forced equity) or cash-flow goals are impossible to achieve. I'd say 90% of the houses on the MLS don't work, 7% warrant good analysis, and 3% are worth an offer when you're activity trying to buy property.

The second part is estimating your rehab. Once you have done 2-3 properties and hired the same crew that part gets easier and less time consuming. Our contractors actively tell me what's wrong with my rentals or SOW. There's surprises but you learn to tailor the deal (negotiate) and rehab (material or SOW) to met your goals.

Financing is probably the 3rd issue (maybe 1st if you're green and young), but it's not time consuming. You either live below your means, save for a few years, or find a partner. Once you have experience people are willing to lend you money for a 10% ROI after a 5 month flip or BRRRR deal. They're beating the stock market, you're getting equity or profit, and it's repeatable if you're motivated and the market is right.

Jaron Walling · Answer

The first 90% is ruled out by location, the 7% would be the asking price vs. condition/strategy, and last 3% would be getting an offer accepted. We target distressed properties that warrant a lower offer. If you want to create equity (actual wealth/CF) you'll buy ugly houses too.

My life is extremely busy right now (new job, two small kids) so we're not making offers on houses. I don't do REI full time but I hope to in the future. I keep the same expectations regardless.

Nicholas Alexander Guerrero · Answer

@Jimmy Lieu

This is exactly the kind of workflow I was curious about — really appreciate the detail. I’ll shoot you a message.

Nicholas Alexander Guerrero · Answer

@Brian Burke

That distinction between running the numbers and trusting the numbers is exactly what I was trying to understand. When you’re validating rents, repairs, insurance and taxes, are you usually bouncing between different sources/people for each one? Or is the bigger problem finding the information, resolving conflicting information, or just knowing how much confidence to put in it?

Nicholas Alexander Guerrero · Answer

That 90/7/3 breakdown is really interesting. On that first pass through the 90%, what are you actually looking at to eliminate a property quickly? And for the 7% that make it through, what information do you usually have to go find before you’re comfortable deciding whether it’s one of the 3%?

What actually slows you down when analyzing a deal?

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