Deal Analysis
From property details to funding and exit strategies, learn how to run each potential deal through a gauntlet of due diligence to ensure your success and ability to recover when the unexpected happens.
Back To: All Topics | Operations
Deal Analysis
From property details to funding and exit strategies, learn how to run each potential deal through a gauntlet of due diligence to ensure your success and ability to recover when the unexpected happens.
Back To: All Topics | Operations
Proper Planning Makes the Difference in Fix-to-Flip Loan Success
It’s vital to plan for challenges that can arise during the renovation process that may require financial resources and quick decision-making. When you invest in a fix-to-flip property, having a flexible, reliable, and well-connected private lender by your side can make all the difference. Because challenges invariably arise during the ...
7 Ways to Evaluate Investment Options
00:07:18| In this Video, Flip and Dani talk about seven ways to evaluate investment options. Make sure you look at your specific situation because everybody's different, every situation is different. And you decide what you need most ...
Sales Comparison Approach – SCA
A comparison between recently sold local, similar properties and a property that you plan to list for sale. Usually, an SCA would be used to help determine a list price, but investors may use them to make predictions about market movements and decide whether a purchase is a good deal ...
Return on investment (ROI) measures how much you gained or lost on an investment property relative to how much you invested in the property up front. ROI is typically used to compare the efficiency of different investments ...
Net operating income (NOI) is the annual income generated by a rental property after subtracting all expenses from operations. Note: NOI does not factor in your financing costs. The cash flow left when you subtract all reasonable and necessary operating expenses from your property’s revenue, excluding principal and interest on ...
Multiple Listing Services are used by real estate brokers, agents, and other licensed professionals to cooperate on the purchase, sale, listing, and appraisal of homes. These services are often referred to as “The MLS,” but multiple listing services are often regional and do not include all properties for sale in ...
The amount that a property may be sold for in the marketplace. Market value may be derived by comparing a property to other similar properties that have sold recently or by attempting to determine the price at which a property would sell immediately. While both may be referred to as ...
A calculated value that shows where home prices should be according to local income. Income price metrics are used to help determine whether a market is over- or underpriced, and are based on data from the FHFA Home Price Index and the Bureau of Economic Analysis. This metric was developed ...
An investment “strategy” that relies more on an investor hoping there will be profits rather than strong numerical indications a deal will succeed ...
An estimate of the market value of the property ...
Comparative Market Analysis (CMA)
Evaluation of how properties in an area have sold conducted for the purpose of making predictions about how a specific property might sell in the future. CMAs use comparable properties (comps) in the local area to make predictions about price, time on market, and other strategic decisions when listing a ...
The annual return an investor makes on a purchase of real estate in relation to the down payment (cash) only ...
A property that is generating regular income at time of purchase ...
Use this calculator to quickly compare and screen multiple rental properties in a given market. The math: (Property Fair Market Value / Annual Gross Rental Income) = GROSS RENT MULTIPLIER Calculating the Gross Rent Multiplier (GRM) is a quick way to compare multiple rental properties' return by evaluating the number ...
Also known as holding costs. These are the costs associated with owning a piece of real estate during a rehab. These costs may include monthly mortgage payments, insurance, utilities, and security ...
Capitalization (cap) rate is the rate of return on a real estate investment based on the income the investor expects the property to generate. Cap rate estimates potential return. Calculate your cap rate with our REI-optimized Think Realty calculator! ...
Debt Service Coverage Ratio (DSCR)
Use this calculator to evaluate the viability of an rental property from a financing perspective. The math: (Net Operating Income / Debt Service) = DSCR Debt Service Coverage Ratio (DSCR) calculations are commonly used by lenders to determine your ability to make loan payments based on the performance of the ...
Use this calculator to check the cash yield on an investment property, commonly after its first year in your portfolio. The math: (Annual Pre-Tax Cash Flow / Total Cash Invested)*100 = CASH-ON-CASH RETURN Cash-On-Cash Return calculations measure your return on the actual cash invested over one year. This calculator is ...
Use this calculator to measure your current return on a single rental property or compare multiple holdings. The math: (Net Operating Income / Property Total Value)*100 = CAP RATE Cap Rate does not include debt servicing costs. It can be calculated using different definitions of Expenses (cost) and net operating ...
Use this Excel spreadsheet to organize your budget over multiple real estate investment projects. This Excel spreadsheet template includes: Cells to input key property variables, including location, property type, number of units, status, price, and more. Ability to customize to your own profit margin tolerance TIP: Customize this spreadsheet to ...
Use this Excel spreadsheet to determine your maximum offer on a property This Excel spreadsheet template includes: Cells to input key cost variables, including property values, pricing, transaction and finance costs, holding costs, repairs, and more Ability to customize to your own profit margin tolerance Functions to automatically calculate totals ...
The value of a residence, usually for tax purposes. This value should involve comparable home sales in the area and property inspections, and is used to calculate property taxes. These are not always up-to-date ...
An expert valuation of a house by a qualified appraiser ...
The value of a property after repairs are made. ARV usually refers to the value of the property after it has been brought to a level comparable with other properties for sale in the area, but can simply indicate the value of a property after planned repairs are made. Investors must ...
The Federal Deposit Insurance Corporation (FDIC) defines affordable market value as the amount a buyer or tenant can pay to purchase or rent a property based on their income, not necessarily the appraised value of the property ...
