All of our investments to date are single family residential – but that’s about to change. Single family is great to get your feet wet, but the amount of time and effort involved to take it to the next level is extortionate. So, we’re testing the waters in other arenas. The options on the table are either buying apartment complexes (100+ units) or going commercial. We’re running both down, but at the moment we’re excited by a package of outlots which will be auctioned by a bankruptcy trustee next week. Since at least one or two you seem to care about what we do, I thought I would walk you through the process of how I analyze a real estate deal.

Determine Timeline

There’s no shortage of investment opportunities. You’ve heard it before but “the deal of a lifetime comes along once a week-” assuming you’re looking! So we prioritize our time, and when a property is presented to us, we first determine how fast we need to act. If it’s been on LoopNet for 4 months, we’ll stick it on the back burner no matter how appealing the numbers.

For today’s lesson in how to analyze a real estate deal, I’m going to pick just one of the properties on the block next week.

Crunch the Numbers

When I see a property in person I sometimes become…attached. I’ve caught myself saying “Ooh I love those windows!” and “check out the well manicured lawns, it must be a nice area!”

The trouble is our investors don’t give a flying F about any of those things. Most of them will never even see the property – they just want a check every quarter.

Why waste my time? I don’t visit at a deal until I …read more