If you're interested in buying rental properties, it's important to correctly estimate your projected cash flow and returns before putting a property under contract.

DealCheck's powerful rental analysis tools make it easy to analyze rental properties, Airbnb's and vacation rentals in just a few minutes.

This tutorial will show you how to analyze a single-family rental property. Read this guide if you're analyzing multi-family or commercial deals, or this one if you want to analyze the home you're currently living in.

 

Adding a New Property

Step 1: Click the "Add Property" Button from the Property List

Navigate to the rentals list and click the Add Property button at the top right:

 

Step 2: Select the "Enter Manually" Option

Our software allows you to import property data from the MLS or copy an existing property, but in this tutorial we'll add the property manually and explain all of the parameters you can customize along the way.

Select the Enter Manually option to launch the step-by-step wizard:

 

Step 3: Fill in the Property Description

The first step is to enter basic details about the property, including a name, property type and address. All of the fields here are optional, so you can fill in as many details as you want.

Here are the most important fields to fill in:

  • Name: this will be the name of the property used throughout our app. Some people simply use the property's address, while others like more creative names, like "2/1 Condo in South Beach, Excellent Condition".
  • Property Type: select the type of the property from the available options. This field is important, as it will enable or disable other fields based on your selection.
  • Address: enter the address of the property to view it on the map, as well as to access its MLS records later.
  • Details: enter any of the basic home facts that you know about this property, including bedrooms, bathrooms, square footage, year built, parking, etc.

Click the Next button at the bottom of the page to continue to the next section:

 

Step 4: Enter the Purchase Information

The next section describes the property purchase.

Here is what you should customize:

  • Purchase Price: the amount you're paying to purchase this property.
  • After Repair Value: the estimated market value of the property after any rehab work is complete. If no repairs are necessary, the after repair value is the same as the current market value.
  • Financing: if you're going to use financing to purchase this property, enter the details of your loan in this section, including the loan type, interest rate, term and any mortgage insurance you'll be paying. Disable financing if this is a cash purchase.
  • Purchase Costs: these are all costs and fees associated with purchasing the property, also called closing costs. Examples include loan points, escrow fees and property inspection fees. You can enter a total amount as a percentage of the purchase price, or click the Itemize button and enter a detailed list of each purchase cost separately.
  • Rehab Costs: if you're planning to do any up-front rehab work on this property, enter the total or an itemized list of all rehab expenses. Leave this as $0 if the property is already rent-ready.

Click the Next button at the bottom of the page to continue to the next section:

 

Step 5: Enter the Cash Flow Information

Use the Cash Flow section to enter the projected rent you're going to collect from your tenants, as well as all operating expenses you're going to have.

First, customize the rental income:

  • Gross Rent: the total gross rent you expect to collect from your tenants. You can also change the rent collection period, which is useful for analyzing short-term rentals like Airbnb's.
  • Vacancy: every rental property is going to have some downtime. Enter the percentage of time you expect the property to remain vacant here.
  • Other Income: use this to enter any miscellaneous income you expect to receive from this rental property, like storage rental, coin-operated laundry or parking fees. You can enter a monthly total or itemize the list.

Next, customize the monthly and yearly recurring expenses. You can enter an estimate as a percentage of the gross rent (useful if your'e doing a quick analysis using the 50% Rule), or itemize expenses one at a time:

When itemizing expenses, you have several options on how to enter each item:

  • As a monthly or yearly amount - good for fixed costs
  • As a percentage of the purchase price - for things like property taxes
  • As a percentage of the gross rent that either accounts for vacancy or ignores it - for maintenance, management or capital expenditures

Click the Next button at the bottom of the page to continue to the next section:

 

Step 6: Customize Other Assumptions & Projections

The final section of the wizard has several additional inputs and projections you can customize to further fine-tune this deal:

  • Land Value: the appraised value of the land, excluding any structures or improvements. Entering the land value will improve the accuracy of the depreciation deduction.
  • Appreciation: the anticipated annual increase of the property's market value. This is important to calculate how the property's value will increase in the future.
  • Income Increase: the anticipated annual increase of the gross rent and any other income. In most cases the property's rent will increase each year and this is the percentage it will increase by.
  • Expenses Increase: the anticipated annual increase of the operating expenses. Expenses will typically rise due to inflation and other factors.
  • Selling Costs: an estimate of the costs and fees associated with selling this property, also called closing costs. We use this as part of the ROI calculation.

When finished, click the Save Property button at the bottom of the page to add this property to your account:

Tip: You can save a lot of time by customizing the default presets that are used for all new rental properties. Read this help article to learn how to do this.

 

Viewing the Property's Analysis

Now that you've added this property, you can view a full breakdown of the purchase requirements, cash flow and investment returns on the Analysis Summary page:

Tip: Hover over the question mark icon next to any metric to view its description and calculation formula.

If you need to edit any of the parameters of this deal later, go to the Worksheet page from the property menu on the left side:

 

Viewing Long-Term Buy & Hold Projections

While each property's Analysis Summary page shows the numbers for the first year, you may want to see how this rental property will perform in the future as well.

Click the Analysis Projections link from the menu on the left side to view buy & hold projections for up to 35 years:

By default, this page will show projected numbers for years 1, 2, 3, 5, 10, 20 and 30. You can view projections for all years by toggling the dropdown at the top right:

Tip: Scroll the data table left and right to view information for additional years.

 

What's Next?

Once you've added a new rental property, it will remain in your account and you can come back to it at any time from the property list:

Here are some other things you can do with this property:

 

Note: the above screenshots were taken from our web app, but the same features can be found in our iOS and Android apps as well.

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