New investor: Best way to validate rent, rehab, and expense assumptions?

Question

Hi everyone, I’m 22 years old and graduated about a month and a half ago from a great university where I studied Finance and Real Estate. I recently started working in real estate and corporate banking, but my real goal has always been to start investing in real estate as early as possible.

Right now I’m living well below my means and saving aggressively, with the goal of buying my first investment property in the next 12–18 months.

I’ve been spending a lot of time reading books, researching the BRRRR strategy, and analyzing properties I find online. For each deal, I try to estimate rehab costs, rent, taxes, insurance, property management, financing, etc. to see if the numbers work.

The problem is… I have no idea whether my assumptions are actually realistic.

It’s great practice, but without real-world experience, I don’t know if I’m underestimating rehab costs, overestimating rent, or if all my numbers are just wrong

For those of you who were in my position starting out, how did you get confidence that your underwriting was accurate before buying your first deal? Are there any resources, tools, or methods you’d recommend for validating your assumptions?

Additionally, if anyone is open to a conversation to show me the ropes and let me hear about your investing experiences, I'd love to connect!

I’d really appreciate any advice. Thanks!

Tyler Ruppert · Answer

What built my confidence was back-testing my own numbers. I'd underwrite a listing, then months later check what it actually rented and sold for. After a dozen of those, my rent and expense assumptions stopped feeling random. While I was still unsure I kept my reserves on the high side, so a wrong line still left margin. I run most of my analysis from out of state, so that feedback loop matters more to me than any single tool.

Arman Ahmed · Answer

You're asking exactly the right questions. The biggest lesson is that your underwriting is only as good as the assumptions behind it. I'd validate your numbers by talking to local property managers about rents, getting rehab estimates from contractors, and comparing insurance and tax quotes before assuming anything. The more deals you analyze and reality-check with people in the market, the faster your confidence will grow. That's a much better habit than relying on a spreadsheet alone.

Tim Hunt · Answer

@Arman Ahmed noted thanks a lot for the advice I really appreciate it!

Tim Hunt · Answer

@Kerlous Tadres really helpful thanks a lot. I'm definitely the kind of person to spend too much time digging into my numbers on a spreadsheet rather than validating them with someone actually out there in the market so I'll correct that. Thanks!

Kerlous Tadres · Answer

The fastest way I validated my numbers early on was to just talk to local property managers and contractors directly. Call a PM, give them an address, and ask what it would rent for and what they're seeing on vacancy. Do the same with a couple GCs on rehab estimates. Those two conversations will tighten up your assumptions faster than any book or spreadsheet ever will.

Abel Curiel · Answer

Hello Tim!

For rental comps, I'd start by looking at leased/rented units on Zillow or Realtor.com. As a BiggerPockets member, you have access to the Rental Estimator tool (you may need a PRO account). Rentometer is another good resource. The best source for rental data to find accurate comps is the MLS, however, I wouldn't rely on any single tool. If you use a few of the tools/sites listed, you should be able to come up with a realistic range of what the subject property can rent for.When analyzing deals, consider what month would be the projected closing date as time of year can affect rental estimates in many markets. For example, September-February rentals in my market can command 3-10% lower rents in my market (NYC Metro Area).

Assessing rehab costs is challenging - you and the contractors won't know the actual cost until the project is complete. Without looking behind walls, beneath floors, and purchasing all materials, any estimate is subject to change. I'd recommend:- Speak with local contractors to get a price per square foot estimate that they recommend as a general rule of thumb. If they say $100 per sq ft, for example, then you know that a 1,000 sq ft house would cost about $100,000 to fully renovate- Have a trusted contractor tour properties with you and offer to pay for their time- Use platforms like repairpricer to submit inspection reports and have the platform produce an itemized scope of work with pricing

All the best!

Abel

Tim Hunt · Answer

@Abel Curiel I really appreciate the advice and thanks for taking the time to write this for me!