Any tools to help analyze multiple deals at once?

Question

Hi BP Community!

My wife and I are looking to dive head-first into the REI game -- WOOO. We know that finding and analyzing deals is always a challenge. We currently have an agent who is sending us listings, but analyzing each one using the BP calculators does take a little time. Is there a bulk analysis tool where we plug in the numbers and see them all side by side? If not, this might just have to be a tool or spreadsheet that my wife and I will have to create to help us sift through the number of potential properties that come our way to determine if it's one to pursue or not.

We're looking into doing STRs and the BRRRR strategy.

Thank you for your time, and looking forward to seeing how others analyze multiple deals quickly.

Randall Alan · Answer

This may sound over simplistic - but it worked really well for me:

In short you can create your own chart that will let you analyze deals based on dollars per square foot very quickly.  Buy analyzing 5-10 houses at varying price points from your area, you will quickly determine what dollar per square foot you have to buy at for a deal to be inside your parameters to buy and be able to make money.  Once you know this one number (the dollar per square foot price), you can literally just divide any priced house by the size and know how close it comes to being profitable.

You might ask, “how can that work?” - and the short answer is that you are going to approximate for taxes and insurance.  We have 40 units, and I can tell you from experience that insurance rates are similar for similar priced houses.  Likewise for taxes. (Which you can look up on your county property appraiser’s website.)

Start by taking too low, two medium, and two higher priced houses for your area that are for sale and run the calculations for buying them with whatever percentage down you anticipate (we usually use 25% down), but use whatever percentage down  you know you have available under whatever program you will be buying., including whatever interest rate you think is current.  Google has a super simple principle and interest mortgage calculator if you type in “mortgage Caculator”. But put two spaces between the words to not go directly to the website by the same name.    Look up the taxes for the specific homes, and approximate your insurance.  For us in Florida I would use $1500/year for a cheap house, $2500 for a medium house, and maybe $4000 for a nicer house for insurance. Again, use numbers for your area… you can literally call an agent and ask them to get you a quick figure for a house you are looking to buy.  They won’t mind at all (it’s what they are there for).

Look at rental rates around each house to get a close ballpark price for  what you can rent each property for.

When we started out we wanted to make at least $300/month per door on a property… so a duplex we wanted to make $600/month after Principle, interest, taxes, insurance, and a $100-$150 maintenance reserve.  We have properties that perform much better in our portfolio, but you have to draw a line where you say “below this it just isn’t worth buying”  we started off with the $300 and it served us pretty well.

Once you run these numbers I predict you will find that the cheaper / smaller properties fare the best for profitability.  If you don’t get $300/month (at least) then that property isn’t good for you (or whatever figure works for you for profitability).  Simply adjust your buy price downward to determine what you would have to buy that property for to get the profit you want.  Then look at what dollar per square foot that figure is.  You can now use that as a quick measuring stick that in 10 seconds you can have a good idea if a property will be profitable.

From there - go to Redfin.com and zoom in on a map of your area.  Put their map in list view and sort the table by dollars per square foot by clicking on that column.  You may have to be zoomed in a little for that column to sort.  Pretty instantly you can use your target $/sqft figure to know what property’s will be profitable to your liking.  Once you find a target house that works you can run real numbers for a specific house.  You then have to take condition of the property into account , and any other factors you care about - but the quick and dirty method will take you far!

Hope it helps!

Randy