One of the biggest mistakes new investors make is spending hours underwriting deals that were never worth looking at in the first place.

After looking at a lot of rental deals, I’ve found that most of them can be filtered out in about 5 minutes before you ever open a full spreadsheet.

Here’s the quick framework I use to screen deals before going deeper.

1. Rent vs Purchase Price

First thing I check is how the rent compares to the price.

For small rentals I usually want to see something around 0.8%–1%+ of the purchase price in monthly rent before I spend time underwriting.

Example:
$350k purchase → ideally $2,800–$3,500/month in rent

If it’s way below that, the deal usually struggles once financing, taxes, and insurance are added.

2. Taxes vs Purchase Price

This one quietly kills a lot of deals.

If the property taxes look extremely low relative to the purchase price, I assume they may adjust after the sale and I run the numbers using a higher estimate.

A deal that only works with artificially low taxes usually isn’t a real deal.

3. Insurance Reality Check

Insurance costs have been rising quickly in a lot of markets.

Before underwriting, I usually sanity check whether the assumed insurance number is realistic for that property type and location.

4. Financing Stress Test

I'll quickly estimate the loan payment using a conservative rate and typical DSCR terms.

If the deal only works at best-case financing, it’s probably too fragile.

5. Cash Flow Cushion

Finally I check whether the deal still produces reasonable cash flow after:

- Vacancy
- Maintenance
- Property management
- Capex reserves

If it barely breaks even on paper, it usually gets worse in real life.

Most deals fail somewhere in these five checks, which saves a lot of time before getting into detailed underwriting.