Favorite method for analyzing a deal

[Jameson Hooton]

I’m curious about the various approaches to analysis out there.  Every book I’ve read describes the math a little bit differently, or focuses on different elements. 

For example, Brandon Turner's book says that ignoring maintenance and capex is one of the main reasons that people fail, but David Greene's BRRRR book's section on analysis (if I remember correctly) didn't mention maintenance or capex in the numbers.

Or, another example:  Brandon Turner loves cash-on-cash return, but Paula Pant doesn’t like that metric and prefers to look at Cap Rate. 

Some people, like Paula Pant, seem to imply that hitting the 1% rule should guarantee decent cash flow and a property worth buying, but other analysis methods make me think 1% is too skinny of a deal. 

I’d just love to hear about what approaches work for you.  What do you include in your math.  What metrics mean the most to you.  Thanks!

[Michael Evans]

What ultimately matters to me is my annualized cash-on-cash ROI. How fast can I make my cash grow? I developed a complex system for vetting deals that uses a version of the 70% rule, the 1% rent to price rule (my number is 1.3%) and uses as much leverage as possible. My goal is to achieve at least a 25% cash on cash return on flips over a 6-month period or in the worst case convert the purchase into a buy and hold investment to earn at least a 10% annual cash on cash ROI after taxes.

For me cash is king and I want to grow my cash as quickly as possible while managing and shifting risk.