Most real estate deals look good… until you actually run a proper deal analysis
I’ve been going deeper into deal analysis lately instead of just scanning listings, and something keeps repeating.
A lot of properties look solid at first.
Price seems reasonable
Rent estimates look fine
Comps support the ARV
But once you actually run the numbers properly, the story changes.
When I plug in more realistic assumptions:
• Rent comes in a bit lower than expected
• Expenses are higher than you think
• Vacancy actually matters
• Rehab + holding costs add up fast
That’s usually where the margin disappears.
I’ve noticed most deals don’t fail because they’re obviously bad, they fail because the underwriting is too optimistic.
Now I’m less focused on “does this deal work?” and more on:
Where does this deal break?
At what rent level?
At what ARV?
It’s kind of crazy how small changes flip a deal from positive to negative.
Curious how others are approaching this.
Are you stress testing deals with different assumptions, or mostly looking at best case numbers?