How to Analyze a Deal in 10 Minutes: The Real Estate Investor's Quick-Check Formula

## The Problem: Analysis Paralysis You see a deal in Montgomery. The numbers look interesting. But you don't know if you should move on it or keep looking. So you run comps. You get contractor estimates. You call your lender. You analyze the rental numbers. By the time you've done all that, the deal is gone — and someone else closed on it. The best investors don't analyze every deal in depth. They have a quick-check formula that tells them in 10 minutes whether something is worth serious time or a pass. Here's that formula. ## The 10-Minute Deal Analysis Framework ### Step 1: Get the Basic Numbers (2 minutes) When you first hear about a deal, gather these five pieces of info: - **Purchase price:** What are they asking? - **Property type & size:** How many bedrooms, bathrooms, square footage? - **Condition:** Move-in ready, needs rehab, or significant work? - **Address:** Which neighborhood? - **Asking days on market:** How long has it been listed (if at all)? If it's off-market, that's a plus. If it's been on MLS for 90+ days, it might be a sign. ### Step 2: Calculate Your After-Repair Value (ARV) (3 minutes) ARV is what the property will be worth after you fix it up. This is THE number that makes or breaks a deal. **The quick way:** Pull 3-5 recently sold comps in the same neighborhood, similar size and condition. Use the average sale price as your baseline ARV. Example: - Comp 1 (3BR/1BA, 1,100 sqft, renovated): $165,000 - Comp 2 (3BR/1BA, 1,080 sqft, renovated): $168,000 - Comp 3 (3BR/1BA, 1,120 sqft, renovated): $162,000 - **Average ARV: $165,000** Don't overthink this. You're looking for ballpark accuracy, not perfect precision. ### Step 3: Estimate Rehab Costs (2 minutes) Don't call contractors yet. Use this quick rule of thumb: - **Good condition (minor cosmetic):** 5-10% of purchase price - **Average condition (kitchen, bath, some systems):** 15-25% of purchase price - **Poor condition (major systems, structure, heavy rehab):** 30-50% of purchase price So on a $80,000 fixer in average condition, budget $12,000-$20,000 in rehab. **Pro tip:** Always add 10-15% contingency. Rehabs always cost more than you think. ### Step 4: Run the Numbers (2 minutes) This is where you find out if the deal pencils out. **For a Fix & Flip:** - ARV: $165,000 - Purchase price: $80,000 - Estimated rehab: $18,000 - Total investment: $98,000 - Holding costs (6 months): $4,000 (financing, insurance, taxes) - Realtor commission on sale: $10,000 (6% of ARV) - Closing costs on sale: $2,500 - **Total costs: $116,500** - **Gross profit: $165,000 - $116,500 = $48,500** That's 49% ROI on your total investment of $98,000 in 6 months. Good flip. **For a BRRRR Play:** - Purchase price: $80,000 - Rehab: $18,000 - Total into property: $98,000 - After rehab market value (ARV): $165,000 - Refinance at 75% LTV: $123,750 - **Cash recovered: $123,750 - $98,000 = $25,750** - Rental income: $1,050/month - Expenses: $350/month - **Net cash flow: $700/month** That's $8,400/year cash flow on $72,250 cash tied up. That's 11.6% cash-on-cash return annually. ### Step 5: Ask the One Question (1 minute) After running the numbers, ask yourself: **"Would I still do this deal if I had to hold it for 12+ months?"** If the answer is yes (because the cash flow is solid), it's a keeper. If the answer is no (because you NEED to flip it fast to make money), it might be riskier than you think. ## Red Flags That Kill a Deal in the First 10 Minutes Even if the numbers look good, walk away if you see: - **Foundation issues** — Expensive, risky, hard to refinance - **Roof in last year of life** — $8,000-$15,000 replacement not in your estimate - **Problem neighborhood trending down** — Your ARV might not hold - **Major structural damage** — Costs blow past estimates fast - **Financing nightmare** — Hard money with 3+ points, or no lender will touch it - **Seller won't budge on price** — If they won't negotiate, walk ## The Bottom Line You don't need to be a real estate analyst to evaluate a deal. You need a system. Use this 10-minute framework to quickly sort deals into three buckets: 1. **Pass** — Numbers don't work or red flags present 2. **Maybe** — Numbers are okay but you want contractor estimates before moving 3. **Go Deep** — Numbers look solid; call your lender, get bids, write an offer Most deals fall into bucket 1 or 2. The ones that land in bucket 3 are the ones worth serious capital. Speed matters. Decision paralysis costs you deals. Use this formula and move fast on the opportunities that pencil out. --- **Red Clay Deals sources off-market opportunities across Montgomery before they hit the MLS.** Get on our buyer list at redclaydeals.com to see deals before they're listed.