Analyzing the Deal: The 20-Minute Number Crunch

If you can't tell whether a property makes money in 20 minutes, you'll either buy bad deals or miss good ones while you're still "thinking about it." This module gives you the exact math investors use to screen deals fast — and the rules that tell you when to walk away.

The rent comps: what will it actually rent for?

  • Forget Zillow's "rent estimate." Look at ACTUAL rented listings: check Zillow, Apartments.com, and Facebook Marketplace for similar properties (same bedrooms, bathrooms, area) that rented in the last 90 days.
  • Call property managers and ask: "What would a 3-bed/2-bath at [address] rent for?" They know.
  • Be conservative. If comps show $1,800-$2,000, use $1,800. Optimistic rent projections kill deals.
  • Subtract 5% for vacancy. Even in hot markets, you'll have turnover. Budget for it.

The expenses: what will it cost you?

  • Mortgage (P&I): Use a mortgage calculator with your actual rate and down payment.
  • Property taxes: Look up on county site. Don't guess. Taxes vary wildly by area.
  • Insurance: Get a quote. Landlord policies cost more than homeowner's. Budget $100-200/month.
  • Maintenance reserve: 5-10% of rent. Old houses = 10%. Newer = 5%. This is not optional.
  • Capital expenditures (CapEx): Roof, HVAC, water heater will die eventually. Budget $200-300/month for future big repairs.
  • Property management: 8-10% of rent, even if you self-manage at first. Your time has value, and you'll hire out eventually.
  • Utilities (if you pay any): Water, trash, common electric. Tenants usually pay their own, but verify.

The metrics: does it make money?

  • Cash flow: Rent minus ALL expenses (above). Must be positive. The Bull's minimum: $200/month per unit after ALL expenses. Less than that and one vacancy wipes you out.
  • Cap rate: (Annual NOI / Purchase price) × 100. NOI = rent minus operating expenses (excluding mortgage). A 8%+ cap rate is good. Below 6%? You're paying too much.
  • Cash-on-cash return: (Annual cash flow / Cash invested) × 100. If you put $40k down and cash flow $4,800/year, that's 12%. The Bull's minimum: 10%. Your cash should work harder than the stock market.
  • The 1% rule (quick filter): Monthly rent should be ≥ 1% of purchase price. $150k house should rent for $1,500+. If it doesn't, the numbers probably won't work. (This is a rough screen, not gospel.)

The Bull's screening rules: when to walk away

  • If cash flow is negative, walk away. No exceptions. "But appreciation!" is not a strategy.
  • If the seller won't let you inspect, walk away. They're hiding something.
  • If you have to "get creative" to make the numbers work (assuming rent increases, ignoring expenses), walk away. Good deals work with conservative numbers.
  • If the property needs more work than you budgeted, renegotiate or walk away. Don't fall in love.
  • If your gut says "this feels risky," listen. Your gut is your brain noticing red flags.

The 20-minute analysis (do this for every deal)

  • Minutes 0-5: Pull rent comps. What's the realistic rent?
  • Minutes 5-10: Estimate expenses (taxes, insurance, mortgage, reserves).
  • Minutes 10-15: Calculate cash flow, cap rate, cash-on-cash.
  • Minutes 15-20: Apply screening rules. Does it pass? If yes, schedule a viewing. If no, move on.
  • If you can't get the numbers in 20 minutes, you don't have enough info. Get the info or pass.

Action step

  • Pick 3 listings in your target area. Run the 20-minute analysis on each. Write down the numbers. You'll quickly see why most "deals" aren't.