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What I've Learned So You Don't Have To Pay For It

Every article here comes from real projects, real numbers, and real mistakes, mine and my clients'. No theory. No gurus. Just what actually happens when money meets concrete.

Start here:

Master Basic Real Estate Investments with This Proven Flowchart

1. Property Entry

Input: Property details (price, location, type, condition).

2. Market Analysis Check

Data Needed:

  • Local market rent averages (Zillow, Rentometer).

  • Vacancy rates (Census data, local property managers).

  • Appreciation trends (NeighborhoodScout, MLS comps).

  • Days on Market (DOM) for similar properties.

Decision:

  • Pass: Rent ≥ 1.5x PITI (mortgage + taxes + insurance) and DOM < 60 days.

  • Fail: Reject or renegotiate price.

3. Financial Viability Check

Calculations:

  • Gross Potential Income (GPI): Monthly rent × 12.

  • Net Operating Income (NOI): GPI – (Property taxes + Insurance + Maintenance + Vacancy + Management fees).

  • Cap Rate: (NOI / Purchase Price) × 100.

Decision:

  • Pass: Cap rate ≥ 8% (adjust for market) and NOI > Debt Service.

  • Fail: Walk away or adjust offer.

4. Financing & Cash Flow Check

Data Needed:

  • Loan terms (interest rate, down payment, loan term).

  • Debt Service: Mortgage calculator output.

  • Cash Flow: NOI – Debt Service.

Decision:

  • Pass: Cash flow ≥ $200/door (or investor’s target).

  • Fail: Renegotiate financing terms or reject.

5. 1% Rule Check

Calculation:

  • Monthly Rent ≥ 1% of Total Acquisition Cost (purchase + rehab).

Decision:

  • Pass: Proceed.

  • Fail: Reject (unless value-add potential).

6. Rehab & ARV Check (For Flips)

Data Needed:

  • After Repair Value (ARV): Comps + appraisal.

  • 70% Rule: Max offer = (ARV × 0.7) – Rehab costs.

Decision:

  • Pass: Purchase price ≤ 70% Rule threshold.

  • Fail: Reject or renegotiate.

7. Exit Strategy Validation

Options:

  • Buy & Hold: 10-year cash flow projections.

  • Fix & Flip: ARV – Holding costs – Rehab – Purchase price ≥ 20% profit margin.

  • BRRRR: Refinance appraisal must cover 75%+ of total investment.

Decision:

  • Pass: Exit strategy ROI ≥ 15% annualized.

  • Fail: Reject.

8. Final Deal Scorecard

Metrics to Aggregate:

  • Cash-on-Cash Return: (Annual Cash Flow / Total Cash Invested) × 100.

  • IRR (Internal Rate of Return).

  • Risk Score: Market volatility + tenant demand + loan leverage.

Final Decision:

  • Greenlight: All metrics meet investor thresholds.

  • Red Flag: 1+ critical fails (e.g., negative cash flow, low cap rate).

Key Notes for Flowchart Design:

  1. Use automated formulas (e.g., Excel/Google Sheets) to plug in inputs and auto-calculate metrics.

  2. Include escape valves (e.g., “Renegotiate Offer” loops).

  3. Bold rejection triggers (e.g., “ARV < Purchase Price + Rehab + 20% Profit”).

  4. Add risk warnings (e.g., “Over-leverage” if loan > 75% ARV).

This system forces investors to confront hard numbers—not emotions—to avoid costly mistakes.

Jeph Burnett