Improving Deal Analysis Before My First Property

Real Estate Agent · Philadelphia · Member since 2026 · 10 posts · 3 votes

5mo

Wow, Shane! This is fantastic! I feel like I could offer some valuable insights into some of the things you’re currently researching. Let’s connect! 🙌🏽

1 Reply

Garreth Gibson

Member since 2026 · 1 post · 1 vote

5mo

Have you considered lowering the purchase price (if seller is amenable to that)? My concern is the cash flow component (not NOI) may be on the lighter side, unless that isn't a concerning metric you're chasing and just want a healthy NOI..

1 Reply

Vontay Callahan

Real Estate Broker · Lincoln, NE · Member since 2026 · 64 posts · 12 votes

5mo

Id love to see if I can find you something better than that

1 Reply

Ethan Rolnick

New to Real Estate · Atlanta, GA · Member since 2025 · 63 posts · 20 votes

5mo

@Shane Thompson I am also in college rn. I think we should connect and look to do something in the future possibly! My LinkedIn account name is Ethan Rolnick!

0 Reply

Greg Kasmer

Rental Property Investor · Philadelphia, PA · Member since 2021 · 774 posts · 500 votes

4mo

@Shane Thompson - Numbers look decent. I assume this is a stabilized property with little upside or "value add" potential? I agree with others in that one (you or somebody) could put in an offer ~15% or so and see how that would change your returns. To me this opportunity would be even better if you found that it needs work and you could really get a price discount of 20-25% or so... Good Luck!

3 Reply

Kamil Lysik

Property Manager · Warsaw · Member since 2026 · 107 posts · 37 votes

4mo

Hi,

How did you consistently source off-market or on-market properties worth analyzing? Did you rely on the MLS, wholesalers, direct mail or something else? Is it hard with hundreds advertisement analysing that ?

0 Reply

Jaycee GreenePro Member

Real Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 726 votes

4mo

Quote from @Shane Thompson:

Hey everyone, I'm a college student planning to get into real estate investing within the next few years, and I've been trying to take the learning process seriously now so I'm not going in blind later. I'd really appreciate any feedback on how I'm approaching deal analysis and whether I'm thinking about this the right way.

Right now, I'm not actively buying yet. I'm more focused on practicing underwriting deals and building a solid framework. My goal is to eventually house hack small multifamily properties (2-4 units) in the Philly area or surrounding markets. I've been spending a lot of time familiarizing myself with neighborhoods in both NW Philly (Germantown, Roxborough/Manayunk, Mt. Airy etc.) and NE Philly (Mayfair, Castor Gardens, Fox Chase, Rhawnhurst, Somerton etc.).

Below is a snapshot of a deal I looked at a few weeks ago in the 19128 zip code. It stood out to me because it appeared to be originally built as a duplex and not converted into one. It also seemed like a good price for the area based on other properties I've seen.

Strategy: House-hack (post move-out numbers)

Property: Duplex

Unit Mix: 2 bed/1 bath each

Acquisition

Purchase price: $395,000
Closing costs: $13,825 (3.5%)
Downpayment: $61,324 (15%)
Assuming no initial improvements for this one but I would go into a deal with some reserves built anyway
Loan Amount: $347,501
Interest Rate/Term: 6%/30 yr fixed
PMI Rate: 0.5%
PITI: 2,838

Income

Rent per Unit: $1,650 (conservative estimate based on Zillow rent listings for similar units/amenities)
Total Gross Rent (monthly): $3,300
Total Gross Rent (annually): $39,600

Operating Assumptions

Vacancy rate: 6% (based on Zillow listings for nearby similar units sitting for 25-30 days)
Property Taxes: $5,513 (from property.phila.gov)
Insurance: $1,800 (rough estimate using ChatGPT)
Owner-paid utilities: $1,800 (rough estimate using ChatGPT)
Other annual costs: $1,000 ($500 for commercial trash fees, $500 for misc.)

Reserves

Maintenance/CapEx: 4,200 (roughly 10-11% of gross rent)
Vacancy: 2,376 (6% of gross rent, I like to put vacancy as a reserve in my models instead of baking it into EGI)

Key Metrics:

Gross Income: $39,600
Total Operating Expenses: $10,113
Net Operating Income (NOI): $29,487
Cash Flow (before reserves): 2,748
Cash Flow (after reserves): (3,828)
Cash-on-Cash Return (CoC): 4.48%

I'm mainly concerned about investor standards and my approach to acquiring assumptions.

If anyone can speak from their experience, what kind of cash flow or returns are investors with similar strategies actually targeting or accepting right now for deals like this in areas like Manayunk/Roxborough? What about in any of the neighborhoods I mentioned above?

Also, do my rent, reserve, and operating expenses assumptions, as well as my methods of getting to them, seem realistic based on anyone's experience? Are there any other resources I could use to help me get these to be more realistic? I understand that there might be limitations to this based on how early I am in my journey.

I seriously appreciate anyone who takes the time to read this and provide input.

Hey @Shane Thompson, welcome to the BP Forum! I don't know the Philly market, but the $1,650 rent seems low. I understand you say it's conservative, but what do you believe the true market rent is for a 2/1 in that zip code? The FMR rent is $2,060.

[email protected]

0 Reply

Hiromi Gonzalez

New to Real Estate · Orange County, CA · Member since 2026 · 40 posts · 28 votes

4mo

Hey Shane, your framework is really solid for where you are. Most people don't even think about separating reserves from cash flow, and your expense sourcing (actual tax records vs. estimates) is the right instinct. A couple things jumped out when I re-ran the numbers though.

The cash flow might have a math error. Your PITI of $2,838/mo = $34,056/yr in debt service. Subtract that from your NOI of $29,487 and you get -$4,569/yr (-$381/mo), not the +$2,748 you have listed. That flips the CoC from +4.48% to roughly -6.1%. I'm guessing either PMI or the full P&I didn't get pulled into the cash flow line, easy to miss when you're building the model manually.

That's not a dealbreaker, but it changes what question you should be asking. Instead of "is this good enough," the question becomes "what would need to change to make this work?"

The answer: rent needs to hit roughly $1,960/unit to break even (accounting for your 6% vacancy). That's interesting because @Jaycee Greene already flagged that FMR for a 2/1 in 19128 is $2,060 which means if the actual market rent is closer to FMR than your conservative $1,650, this deal goes from solidly negative to roughly breakeven or slightly positive.

So the real homework here isn't tweaking your model, it's nailing down that rent number. If you can validate rents closer to $1,950-2,000 with actual lease comps (not just Zillow listings), the deal math changes completely. If $1,650 is truly the ceiling, this one doesn't work at $395K.

0 Reply

Shane Thompson
OP
New to Real Estate · Philadelphia, PA · Member since 2022 · 3 posts · 2 votes
3mo
Quote from @Hiromi Gonzalez:

Hey Shane, your framework is really solid for where you are. Most people don't even think about separating reserves from cash flow, and your expense sourcing (actual tax records vs. estimates) is the right instinct. A couple things jumped out when I re-ran the numbers though.

The cash flow might have a math error. Your PITI of $2,838/mo = $34,056/yr in debt service. Subtract that from your NOI of $29,487 and you get -$4,569/yr (-$381/mo), not the +$2,748 you have listed. That flips the CoC from +4.48% to roughly -6.1%. I'm guessing either PMI or the full P&I didn't get pulled into the cash flow line, easy to miss when you're building the model manually.

That's not a dealbreaker, but it changes what question you should be asking. Instead of "is this good enough," the question becomes "what would need to change to make this work?"

The answer: rent needs to hit roughly $1,960/unit to break even (accounting for your 6% vacancy). That's interesting because @Jaycee Greene already flagged that FMR for a 2/1 in 19128 is $2,060 which means if the actual market rent is closer to FMR than your conservative $1,650, this deal goes from solidly negative to roughly breakeven or slightly positive.

So the real homework here isn't tweaking your model, it's nailing down that rent number. If you can validate rents closer to $1,950-2,000 with actual lease comps (not just Zillow listings), the deal math changes completely. If $1,650 is truly the ceiling, this one doesn't work at $395K.

Hi Hiromi, thank you for taking the time to read my post and provide input. In my model, I list taxes and insurance as operating expenses, which is subtracted from operating income to give me my NOI. Additionally, I exclude those components from debt service, where I only include principal, interest, and PMI (if applicable). Perhaps this is nontraditional or even incorrect. Given this information, I believe you may have double-counted the taxes and insurance on both sides of the equation. Please feel free to correct me if I'm wrong about this. Also, do you know of any resources (preferably free to use since I'm not ready to buy just yet) that I can use to find lease comps? For me it's one of those components of my analyses that I know could be more fine tuned. Thanks again!
0 Reply

Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

4mo

Quote from @Shane Thompson:

Hey everyone, I'm a college student planning to get into real estate investing within the next few years, and I've been trying to take the learning process seriously now so I'm not going in blind later. I'd really appreciate any feedback on how I'm approaching deal analysis and whether I'm thinking about this the right way.

Right now, I'm not actively buying yet. I'm more focused on practicing underwriting deals and building a solid framework. My goal is to eventually house hack small multifamily properties (2-4 units) in the Philly area or surrounding markets. I've been spending a lot of time familiarizing myself with neighborhoods in both NW Philly (Germantown, Roxborough/Manayunk, Mt. Airy etc.) and NE Philly (Mayfair, Castor Gardens, Fox Chase, Rhawnhurst, Somerton etc.).

Below is a snapshot of a deal I looked at a few weeks ago in the 19128 zip code. It stood out to me because it appeared to be originally built as a duplex and not converted into one. It also seemed like a good price for the area based on other properties I've seen.

Strategy: House-hack (post move-out numbers)

Property: Duplex

Unit Mix: 2 bed/1 bath each

Acquisition

Purchase price: $395,000
Closing costs: $13,825 (3.5%)
Downpayment: $61,324 (15%)
Assuming no initial improvements for this one but I would go into a deal with some reserves built anyway
Loan Amount: $347,501
Interest Rate/Term: 6%/30 yr fixed
PMI Rate: 0.5%
PITI: 2,838

Income

Rent per Unit: $1,650 (conservative estimate based on Zillow rent listings for similar units/amenities)
Total Gross Rent (monthly): $3,300
Total Gross Rent (annually): $39,600

Operating Assumptions

Vacancy rate: 6% (based on Zillow listings for nearby similar units sitting for 25-30 days)
Property Taxes: $5,513 (from property.phila.gov)
Insurance: $1,800 (rough estimate using ChatGPT)
Owner-paid utilities: $1,800 (rough estimate using ChatGPT)
Other annual costs: $1,000 ($500 for commercial trash fees, $500 for misc.)

Reserves

Maintenance/CapEx: 4,200 (roughly 10-11% of gross rent)
Vacancy: 2,376 (6% of gross rent, I like to put vacancy as a reserve in my models instead of baking it into EGI)

Key Metrics:

Gross Income: $39,600
Total Operating Expenses: $10,113
Net Operating Income (NOI): $29,487
Cash Flow (before reserves): 2,748
Cash Flow (after reserves): (3,828)
Cash-on-Cash Return (CoC): 4.48%

I'm mainly concerned about investor standards and my approach to acquiring assumptions.

If anyone can speak from their experience, what kind of cash flow or returns are investors with similar strategies actually targeting or accepting right now for deals like this in areas like Manayunk/Roxborough? What about in any of the neighborhoods I mentioned above?

Also, do my rent, reserve, and operating expenses assumptions, as well as my methods of getting to them, seem realistic based on anyone's experience? Are there any other resources I could use to help me get these to be more realistic? I understand that there might be limitations to this based on how early I am in my journey.

I seriously appreciate anyone who takes the time to read this and provide input.

Some potential errors:

1) What loan product will allow 15% down?

2) Unless it's only for the short-term, why would you put only 15% down and pay PMI?

3) Where are you going to get a 6% loan on an investment property in today's environment?

4) What about escrows & prorations at acquisition?

5) If a unit sits vacant for a month, that's 1/12 or 8% of your rent gone. So, why are you using 6%?
- The only way - if you know what the average tenant stay is.

6) Property taxes - did you investigate if they will go up after purchase? What's this process, so you can apply to all your evaluations?

7) Why are you trusting ChatGPT for insurance estimate? Why not contact an insurance agent and start establishing a relationship you will need later?

8) Owner utilities are what specifically? Again, why trust ChatGPT? Contact the agent and ask! It's GREAT practice!!!

9) What about lawn care & snow removal?

10) Why aren't you factoring in property management expense? Even if you plan to self-manage, most DSCR lenders will require this to be included in the calculations.

[email protected]248-209-6824

Logical Property Management4.9451 Reviews

Website View Page

2 Reply

Shane Thompson
OP
New to Real Estate · Philadelphia, PA · Member since 2022 · 3 posts · 2 votes
3mo
Quote from @Drew Sygit:
Quote from @Shane Thompson:

Hey everyone, I'm a college student planning to get into real estate investing within the next few years, and I've been trying to take the learning process seriously now so I'm not going in blind later. I'd really appreciate any feedback on how I'm approaching deal analysis and whether I'm thinking about this the right way.
Right now, I'm not actively buying yet. I'm more focused on practicing underwriting deals and building a solid framework. My goal is to eventually house hack small multifamily properties (2-4 units) in the Philly area or surrounding markets. I've been spending a lot of time familiarizing myself with neighborhoods in both NW Philly (Germantown, Roxborough/Manayunk, Mt. Airy etc.) and NE Philly (Mayfair, Castor Gardens, Fox Chase, Rhawnhurst, Somerton etc.).
Below is a snapshot of a deal I looked at a few weeks ago in the 19128 zip code. It stood out to me because it appeared to be originally built as a duplex and not converted into one. It also seemed like a good price for the area based on other properties I've seen.
Strategy: House-hack (post move-out numbers)

Property: Duplex

Unit Mix: 2 bed/1 bath each

Acquisition

Purchase price: $395,000
Closing costs: $13,825 (3.5%)
Downpayment: $61,324 (15%)
Assuming no initial improvements for this one but I would go into a deal with some reserves built anyway
Loan Amount: $347,501
Interest Rate/Term: 6%/30 yr fixed
PMI Rate: 0.5%
PITI: 2,838

Income

Rent per Unit: $1,650 (conservative estimate based on Zillow rent listings for similar units/amenities)
Total Gross Rent (monthly): $3,300
Total Gross Rent (annually): $39,600

Operating Assumptions

Vacancy rate: 6% (based on Zillow listings for nearby similar units sitting for 25-30 days)
Property Taxes: $5,513 (from property.phila.gov)
Insurance: $1,800 (rough estimate using ChatGPT)
Owner-paid utilities: $1,800 (rough estimate using ChatGPT)
Other annual costs: $1,000 ($500 for commercial trash fees, $500 for misc.)

Reserves

Maintenance/CapEx: 4,200 (roughly 10-11% of gross rent)
Vacancy: 2,376 (6% of gross rent, I like to put vacancy as a reserve in my models instead of baking it into EGI)

Key Metrics:

Gross Income: $39,600
Total Operating Expenses: $10,113
Net Operating Income (NOI): $29,487
Cash Flow (before reserves): 2,748
Cash Flow (after reserves): (3,828)
Cash-on-Cash Return (CoC): 4.48%

I'm mainly concerned about investor standards and my approach to acquiring assumptions.
If anyone can speak from their experience, what kind of cash flow or returns are investors with similar strategies actually targeting or accepting right now for deals like this in areas like Manayunk/Roxborough? What about in any of the neighborhoods I mentioned above?
Also, do my rent, reserve, and operating expenses assumptions, as well as my methods of getting to them, seem realistic based on anyone's experience? Are there any other resources I could use to help me get these to be more realistic? I understand that there might be limitations to this based on how early I am in my journey.
I seriously appreciate anyone who takes the time to read this and provide input.

Some potential errors:
1) What loan product will allow 15% down?
2) Unless it's only for the short-term, why would you put only 15% down and pay PMI?
3) Where are you going to get a 6% loan on an investment property in today's environment?
4) What about escrows & prorations at acquisition?
5) If a unit sits vacant for a month, that's 1/12 or 8% of your rent gone. So, why are you using 6%?
- The only way - if you know what the average tenant stay is.
6) Property taxes - did you investigate if they will go up after purchase? What's this process, so you can apply to all your evaluations?
7) Why are you trusting ChatGPT for insurance estimate? Why not contact an insurance agent and start establishing a relationship you will need later?
8) Owner utilities are what specifically? Again, why trust ChatGPT? Contact the agent and ask! It's GREAT practice!!!
9) What about lawn care & snow removal?
10) Why aren't you factoring in property management expense? Even if you plan to self-manage, most DSCR lenders will require this to be included in the calculations.
Hi Drew, thank you for the detailed response to my analysis. You honestly opened me up to many aspects of a deal that I have not put much thought into previously. In response to point 2, I guess I think that since I plan to house hack that I have to take advantage of <20% down payment loan options. Is it a common practice to house hack even with 20% or more down? Also, in response to points 7 & 8, in my mind since I'm not immediately ready to buy that I should refrain from doing such things. Definitely gonna start getting myself out there and narrowing down my estimates by asking the right people. Thanks again!
0 Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
3mo
Quote from @Shane Thompson:
Quote from @Drew Sygit:

Quote from @Shane Thompson:

Hey everyone, I'm a college student planning to get into real estate investing within the next few years, and I've been trying to take the learning process seriously now so I'm not going in blind later. I'd really appreciate any feedback on how I'm approaching deal analysis and whether I'm thinking about this the right way.
Right now, I'm not actively buying yet. I'm more focused on practicing underwriting deals and building a solid framework. My goal is to eventually house hack small multifamily properties (2-4 units) in the Philly area or surrounding markets. I've been spending a lot of time familiarizing myself with neighborhoods in both NW Philly (Germantown, Roxborough/Manayunk, Mt. Airy etc.) and NE Philly (Mayfair, Castor Gardens, Fox Chase, Rhawnhurst, Somerton etc.).
Below is a snapshot of a deal I looked at a few weeks ago in the 19128 zip code. It stood out to me because it appeared to be originally built as a duplex and not converted into one. It also seemed like a good price for the area based on other properties I've seen.
Strategy: House-hack (post move-out numbers)

Property: Duplex

Unit Mix: 2 bed/1 bath each

Acquisition

Purchase price: $395,000
Closing costs: $13,825 (3.5%)
Downpayment: $61,324 (15%)
Assuming no initial improvements for this one but I would go into a deal with some reserves built anyway
Loan Amount: $347,501
Interest Rate/Term: 6%/30 yr fixed
PMI Rate: 0.5%
PITI: 2,838

Income

Rent per Unit: $1,650 (conservative estimate based on Zillow rent listings for similar units/amenities)
Total Gross Rent (monthly): $3,300
Total Gross Rent (annually): $39,600

Operating Assumptions

Vacancy rate: 6% (based on Zillow listings for nearby similar units sitting for 25-30 days)
Property Taxes: $5,513 (from property.phila.gov)
Insurance: $1,800 (rough estimate using ChatGPT)
Owner-paid utilities: $1,800 (rough estimate using ChatGPT)
Other annual costs: $1,000 ($500 for commercial trash fees, $500 for misc.)

Reserves

Maintenance/CapEx: 4,200 (roughly 10-11% of gross rent)
Vacancy: 2,376 (6% of gross rent, I like to put vacancy as a reserve in my models instead of baking it into EGI)

Key Metrics:

Gross Income: $39,600
Total Operating Expenses: $10,113
Net Operating Income (NOI): $29,487
Cash Flow (before reserves): 2,748
Cash Flow (after reserves): (3,828)
Cash-on-Cash Return (CoC): 4.48%

I'm mainly concerned about investor standards and my approach to acquiring assumptions.
If anyone can speak from their experience, what kind of cash flow or returns are investors with similar strategies actually targeting or accepting right now for deals like this in areas like Manayunk/Roxborough? What about in any of the neighborhoods I mentioned above?
Also, do my rent, reserve, and operating expenses assumptions, as well as my methods of getting to them, seem realistic based on anyone's experience? Are there any other resources I could use to help me get these to be more realistic? I understand that there might be limitations to this based on how early I am in my journey.
I seriously appreciate anyone who takes the time to read this and provide input.

Some potential errors:
1) What loan product will allow 15% down?
2) Unless it's only for the short-term, why would you put only 15% down and pay PMI?
3) Where are you going to get a 6% loan on an investment property in today's environment?
4) What about escrows & prorations at acquisition?
5) If a unit sits vacant for a month, that's 1/12 or 8% of your rent gone. So, why are you using 6%?
- The only way - if you know what the average tenant stay is.
6) Property taxes - did you investigate if they will go up after purchase? What's this process, so you can apply to all your evaluations?
7) Why are you trusting ChatGPT for insurance estimate? Why not contact an insurance agent and start establishing a relationship you will need later?
8) Owner utilities are what specifically? Again, why trust ChatGPT? Contact the agent and ask! It's GREAT practice!!!
9) What about lawn care & snow removal?
10) Why aren't you factoring in property management expense? Even if you plan to self-manage, most DSCR lenders will require this to be included in the calculations.

Hi Drew, thank you for the detailed response to my analysis. You honestly opened me up to many aspects of a deal that I have not put much thought into previously. In response to point 2, I guess I think that since I plan to house hack that I have to take advantage of <20% down payment loan options. Is it a common practice to house hack even with 20% or more down? Also, in response to points 7 & 8, in my mind since I'm not immediately ready to buy that I should refrain from doing such things. Definitely gonna start getting myself out there and narrowing down my estimates by asking the right people. Thanks again!
You can't really market-time real estate like a stock, so the sooner you get in, the better.
If you plan to occupy one of the units, look into an FHA mortgage which only requires 3.5% down. You can also get up to a 6% seller contribution to cover closing costs and prorated taxes +.
When analyzing a deal you plan to initially occupy, include what your unit would rent out for - which you'll do when you eventually move out. This will give you real world cashflow and ROI numbers.
You should still look for properties with a problem suppressing its value, that you can solve, that increases rental income.
While you're living there, rent our the other bedrooms in your unit to max cashflow. Also, experiment with MTR and STR to increase cashflow.
Via a combination of natural appreciation, increasing rents and saving extra rental funds, you should be able build enough equity to refi out of the FHA mortgage:
1) To use the FHA mortgage on your next purchase (you can only have one at a time)
2) Refi at 80% of value to avoid PMI with FNMA mortgage or go into a DSCR mortgage.
7) You can have one conversation with a knowledgeable insurance agent and get a better understanding of insurance costs. Just don't abuse their time.
8) Same goes for agents! Call a few for more data, so you learn NOW how to get the needed info. Guaranteed you'll be surprised how difficult it can be.
[email protected]248-209-6824
Logical Property Management4.9451 Reviews
Website View Page
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Improving Deal Analysis Before My First Property - Feedback Wanted

Improving Deal Analysis Before My First Property - Feedback Wanted

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