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(Video)How To Analyze a Real Estate Investment From Your Kitchen Table

by Brandon · 24 comments

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This morning I received an email from my real estate agent. A new multifamily property had just been listed. Based on a quick look – it meets my standards.

Almost (I explain the major downside later.)

So rather than simply go through the deal and decide what to do all by myself,  I decided to record the process I go through to show you exactly how I go through a real estate investment. Below is a video that chronicles my step-by-step process for investigating a property and deciding what do about it.

Please forgive me as this is my first video online ever! However, I hope it will be beneficial to you and will teach you how to analyze a deal.

This video is a little bit long, but I guarantee it’s full of great information that I think you’ll love!

In this video you’ll learn:

  • How to search online for properties
  • How to find public information about the property
  • How to learn exactly how much cash you’ll get from the property
  • How to determine if it’s best to flip, hold, or “hybrid” a property
  • What my cat sounds like (she’s a little vocal in this video at times…)

So what are you waiting for? Click play on the video below and let me show you how I do things. Then, (and this is important) please leave me a comment with your thoughts on this property. Would you pursue it? What do you think of it?

As always, I would also appreciate your Facebook “likes” and Twitter shares!

(Speaking of Facebook and Twitter – are you friends with me there yet?! Come on over! Click those cute little buttons to the left to visit my Facebook and Twitter pages!)

————-Update 10/15/12 —————-

Hey Guys – I just wanted to update this post quickly with some new expense information.  I wrote about this property at length over at which you can read here.  This article has become super popular and a lot of people are chiming into the conversation. Really good stuff.

Anyways, in the process I spent some time re-evaluating the expenses and numbers. I’m not going to make another video, but below is a much more detailed (but with less explanation) of the value based on deeper analysis!  Comment below if you have any questions!

Vacancy/Delinquency: $280 (10%)
Flood Insurance/Regular $250
Taxes: $200.00
Water/Sewer/Garbage: $400
Electrical $210 (From their expense listing… not sure why so high – master metered?)
Heating $100 (also from their expense listing- must be a boiler)
Repairs/lawn care/etc $280 (10%)

Total Expenses: $1720
Total Income: $2775
Expense to Income Ratio: 61%

Total Annual Expense: 20,640
Total Annual Income: $33,300

Net Operating Income: 12,660 (33,300 – 20,640= the cash left to pay the mortgage)
Value with 10% Cap: $126,000.00 (12,600 / .1)
Value with 8% Cap: $158,200 (12,600 / .08)

Loan amount: $80,000
Monthly loan payment (5.5%, 25 years) : $500

Monthly Cashflow: $555
Annual Cashflow: $6,660
Cash on Cash Return on Investment:(with no additional repair money put in) 33%
Cash on Cash Return on Investment: (with additional $25,000 repair money) 14.8%

Hope those numbers make sense. Now if we were to add in a property manager and increase the vacancy rate – it would push this way higher.
At this point, it’s marginal. 33% is nice -but that’s putting no extra work into fixing it. I wouldn’t want that. 14.8% is okay – but probably worth it for a property in this shape. I can find better returns elsewhere.

So now my new question is – if this property is “master metered” would it be possible to shift the heat/electric to the tenants?

Are there any other ways to cut costs?


About Brandon

has written 199 Awesome posts in this blog.

Brandon Turner (G+) is the Senior Editor and Community Director and owner of He is also an Active Real Estate Investor (Flips, Apartments, and Buy-and-Hold), Entrepreneur, World Traveler, Third-Person Speaker, and Husband. Come hang out with him on Twitter!

P.S. looking for hard money loans in California? Be sure to check out my friends over at They have very competitive rates, can fund within a week and specialize in fix and flip loans and other hard money loans.

P.S. Looking for more real estate investing knowledge? If you are interested in a top-notch course to help you understand the nuts and bolts of creative real estate investing, I would like to recommend Ben Leybovich's Cash Flow Freedom University. Ben is a close friend and has been my trusted adviser for years. He's a smart guy and CFFU is pretty awesome. The course is waitlisted, but while you wait for an opening Ben will send you tons of FREE content. Seriously. Click here to check it out.

(yes, that's an affiliate link!)

{ 24 comments… read them below or add one }

Joe October 12, 2012 at 7:25 pm

What I find most interesting is that you didn’t find the property from some underground source. From what I hear, most people think you have to have “insider sources” to finding investment deals. I love the walkthrough and explanations!



Brandon October 12, 2012 at 7:35 pm

Yeah, I never actually do a whole lot of fancy stuff. I mean, I know there are markets where you really have to be sneaky – but I seem to find a never ending supply of good deals just by offering extremely low amounts on the publicly available MLS listings! The key is offering on lots of deals and at a price that works. There are good ways to make a low priced offer stand out also – like offering cash or no contingencies.

Thanks for the comment Joe!


Danny Johnson October 12, 2012 at 8:28 pm

Darn you guys in your disclosure states. 🙂

Too bad Texas is non-disclosure. Wish my county assessor site showed sale values.

Definitely second you on being conservative. Great info and nice spreadsheet.


Brandon October 13, 2012 at 4:42 pm

Thanks Danny,
Yeah, our assessor page shows previous sales back to about 2002, so at least after that I get to know. I didn’t know that about Texas! Well, at least you get to live where it’s warm!


Remi October 13, 2012 at 12:58 am

I’m definitely going to buy this spread sheet. I also I have a question I recently read a book you recommend (Investing in Duplex, Triplex & Quads by Larry B Loftis.) How did you feel about some of the strategies he was presenting even though I know it was based on Pre Bubble. I’m really starting to get more focus on multi family units to invest in for the beginning of my career.


Brandon October 13, 2012 at 4:47 pm

Hey Remi,

I still love that book. I really should re-read it (it’s been a few years) but if I remember correctly, the idea is to buy one small multifamily the first year, a one the second, and then two the third year, thee the fourth, four the fifth, (and so on) and after 10 years you’ll have a million in equity.

I think it totally still applies, but his appreciation numbers might be high (I think he used 5% per year? Depending on where you live that might be rough). His specifics may change slightly, as the lending market changes, but the spirit of the strategy is right on.


Elizabeth October 13, 2012 at 10:48 pm

For me, the very first part of analyzing a property, is visiting the property and seeing the condition it’s really in.

Real estate listings are, unfortunately, full of lies… I have seen all units in a multi-family listed with rent figures, only to find out the place was 100% empty and the agent simply put in “estimates” for what he thought the rent would be… “estimates” which had no relation to comps in the area! I have also seen condemned/uninhabitable buildings completely destroyed by fire, flood, mold, etc and fit only for a bulldozer, listed as “a fixer upper” and “investment opportunity”!

Another thing is don’t forget to include the real costs of holding a rental property in your spreadsheet calculations – that includes *true* utility costs (verified with the utility company bills/records), true insurance cost (a commercial building like this one sitting in a flood zone will be a lot more than $100 a month!), property management, landscaping, repairs and maintenance (5-10% of rents, depending on the age of the building), as well as a realistic vacancy loss for the area.

In the case of this particular property, the owners have been trying to sell it since 2010 but everyone who’s seen the building runs in the opposite direction. The fact that the price has steadily fallen from $235k all the way down to $93k during that time and they still can’t sell it, is a big red flag… The place is a total dumpster, with 50+ years worth of deferred maintenance, drug-dealing tenants, and the foundation work alone would cost 25k. Sometimes when the cash-on-cash ROI looks too good to be true on the spreadsheet, it actually is…


Brandon October 14, 2012 at 12:22 am

Wow Elizabeth – Great comment! I agree- there is only so much one can do from a computer. Once a property passes through “step one” (the quick computer calculations) I move on to looking more in depth (or else I’d do nothing but walking though overpriced properties!)

It’s true – the property has been listed before. I think the owners have a hard money loan on it. And with all that trouble – big red flag. I walked inside (they won’t allow anyone into the units until there is a signed agreement – another flag) and it seemed in good enough condition (paint and carpet needed) but again – that was just the shared hallway. I’m sure the units are rough.

Check out my article coming tomorrow on (I’ll put a link here tomorrow) for a little bit more analysis of this deal and I’d love to have your comments there as well!


Elizabeth October 14, 2012 at 3:45 am

You bet, I’ll check that out.

I looked at the building about a year ago, and was inside a unit as well… the floors were so unlevel (the foundation issues I mentioned) that it felt like I was walking the deck of a ship at sea 😉 Granted it’s possible some updates might have happened over the past year, and anything is a better investment at 93k than the 120k they wanted at that time, or the 235k they started out asking (you can see the full history of this place going on and off the market, the price dropping each time on zillow) but I doubt it, considering the financial bind they’re in. To invest in a 100 year old wood building no one has taken care of for decades, in a wet climate & flood zone with serious foundation issues is not something I would want to do unless I owned a foundation company or had a great deal of experience in that area. Either way, it will take a thorough inspection and careful budgeting for repairs before you know your true potential ROI…

In the meantime, it’s true that a little math will save the trouble of visiting overpriced properties with no cashflow! (And we both know there are plenty of them out there 😉 )


Tiffany @CircusofHumaniT October 15, 2012 at 4:19 pm

Thanks for taking the time to film your initial due diligence! What a great way for people to get an overview of steps to take when they don’t know where to begin.

So, did you offer on it? 🙂


Brandon October 16, 2012 at 12:13 am

No problem Tiffany! And … not yet. I think I might pass though, only cause most of my financing abilities are tied up in the two properties I have on the market and trying to sell. If I had easier access, I might. I guess that’s a good reason not to flip – it ties up money that could be used for long term purposes. I’ll keep you informed!


Jon Russell October 15, 2012 at 7:16 pm

First of all, great spreadsheet! Frankly, I think it is better than the one I have been using and I will be grabbing a copy later today.

OK, for my business, the first part of analyzing a buy and hold is does the property meet the objective I am buying it for. A 6 unit complex in Grays Harbor is purchased for cash flow. Period. Bad neighborhood, deferred maintenance, junk cars on the front lawn (yes, I’ve dealt with that!) are all numbers that go into your due diligence.

On this property the numbers look great and I would be inclined to tie it up with the normal “Inspection”, “Financing” and “Neighborhood Review” contingencies. Negotiate down if any of the results from these are less than anticipated.

I guess, for me, the main question is… Do you have a good Property Manager to take care of this investment? If not, get one or walk away. In my opinion, the $1000/mo cash flow is not worth the time and/or emotion spent trying to find and keep good renters.

Good luck!! I am looking forward to hearing how this works out for you.



Brandon October 16, 2012 at 12:11 am

Hey Thanks Jon!
Correct, this is definitely a “cash flow” deal – however, I do like the idea of flipping it on a 2-4 year timeline (no holding costs when selling multifamily properties, after all!)

I don’t use a property manager, but I do have a resident manager at one of my units who does 99% of the maintenance and headache issues. So I’m probably okay with it – for now – but I would want to at least assume at some point in the near future I would need a property manager so I should budget now for that.

Thanks for the comment Jon!


Kirtley October 17, 2012 at 10:06 pm

Brandon, I am a new investor and really appreciate/enjoy your commentary. I have a question concerning a figure from your youtube video. In the fix and flip section, you state that you invested a total of 120K, and that you would receive 135,205 after all closing costs netting you a total profit of 15,205. My question is, what about the 4800 in loan points. Shouldn’t that figure be added to the 120K invested, making the total amount invested 124,800? I may be missing something..



Brandon October 18, 2012 at 9:00 pm

Hey Kirtley – You are 100% correct! That total profit should be $135,205 minus 124,800 for a profit of 10,405.00! Thank you for that! I’ll have to add one of those “bubbles” to the Youtube video and change that on my spreadsheet! 🙂 Thanks again!


Trey October 18, 2012 at 5:24 pm

Just curious but I think there might be something off in your “Annual “cash on cash” ROI” under Section 3. I think currently this only takes into consideration the down payment. Wouldn’t it be a “truer” calculation by including the initial/preliminary repair expense/holding costs as well (assuming you are paying cash for this portion/they aren’t somehow financed in)? Are you always able to finance these costs into the loan? I would assume this wouldn’t be common place.

I really enjoy the site! Keep up the good work!


Brandon October 18, 2012 at 9:14 pm

Hey Trey – Normally yes you are right, the annual cash on cash should include repairs and the down payment. However, at the bottom of that spreadsheet when it says “down payment” – I am including both the repair money and the loan down payment. I guess that’s pretty confusing and will need to change the terminology on that, but yeah – in that case when I wrote “down payment” I am meaning “all money invested.”

Does that make sense? Thanks for the question though – I’m assuming a lot of people have wondered that. I’ll have to make a Youtube bubble for that too!

Thanks Trey!


Trey October 19, 2012 at 3:43 pm

Makes perfect sense! Thanks for the quick response. I really enjoy the website and all your work. Keep it up!


Ben November 4, 2012 at 4:25 am

Great stuff Brandon! Thanks for providing your very detailed analysis. It’s really helpful!

I have a question though related to apartment/MF valuation. How would you ultimately evaluate your offer and decide with your purchase price? I mean, assuming everything else being fair, let’s say seller advertises a 10% cap rate, and your analysis shows that his asking only yields you a 7% cap rate. Would you make an offer that truly closely gets you a 10-cap? What if you really aim for a 13-cap deal? Would you “massage” your numbers so that it would appear and justifiable that your low-ball offer is the “real” 10-cap? Or would you be upfront and say that 13-cap is what you want and hence your offer?

I’m unsure about this part of presenting your number. Perhaps I should read more MF investing books. But I’m know your input would still mean a whole lot. : ) Thanks!


Brandon November 4, 2012 at 5:50 am

Hey Ben,

That’s actually a super excellent question. I guess when I look at it, I analyze each deal separate but within the standards by which I would actually buy. That sounds more complicated than it is 🙂

When I offer, though – I would find out exactly what average cap rates in my area are going for. I would then use my numbers (not the ones they give) and the average cap rate to determine the offer price. However, I might pay more or less for a property than the cap rate would dictate because of one thing: Cashflow. If I like the cashflow, and can actually make the deal happen (funds, partners, etc) – then I’ll pursue. I don’t worry too much about cap rates unless I’m trying to decide what it will be worth in the future. It’s a good number to know, and great for negotiations- but in the end its all about cashflow for me. Hope that helps! I’ll try to dive in more on that topic in a blog post sometime!


Ben November 5, 2012 at 5:59 pm

Thanks Brandon! Yes, the “true” cash flow is definitely a major consideration for many investors in their ultimate decision to purchase. But you made it clearer for me how the property valuation against advertised cap rates would likely come into play when negotiating. Awesome site! More power to you.


Aaron August 16, 2013 at 3:01 pm

Hi Brandon,

Great video. I appreciate you taking the time to map it out for us.

One question on the Hybrid Calculator. Where is the equity built up for the 5 years that you held it? Shouldn’t that be addressed in the profit after sale?


Brandon August 19, 2013 at 6:17 pm

Hey Aaron – technically – yep you are right it should be. However, for simplicity I usually leave that out on quick calculations. I guess I’m just lazy 🙂


Aaron August 19, 2013 at 8:07 pm

I guess it is just icing on the cake!


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