The 10-Minute Deal Analyzer
Five questions. Ten minutes. You'll know if a deal is worth your time.
Most people make this harder than it needs to be.
They start by either looking at Zillow or having a Realtor send them properties and so each day they are looking at properties but really they end up doom scrolling and get distracted by the photos.
If they actually find a deal or two that they like, most people start to plug numbers into a spreadsheet and make all sorts of assumptions that are either far too optimistic or far too pessimistic which results in expensive mistakes down the road if they buy the home OR they never buy a property because sellers are not willing to sell it for a nickel.
Here's the truth: once you know what to look for, you can size up a deal in about 10 minutes.
Not to close it — just to decide if it's worth a closer look.
This is referred to as the SMELL TEST. That's all we're doing here.
Step 1 — Start With the Rent
The first number I look at isn’t the price. It’s the rent.
The rent tells you what the market is willing to pay for this property every month. That’s the income side of the equation, and without income, nothing else matters.
We are going to be using a property that we have in our current inventory as of June 24th, 2026.
For this property, we know from both real world experience and the data from our rental estimator that we have created that the market rent is going to be roughly $1,825 a month.
Write that number down.
Step 2 — Price vs. Actual Value
Purchase price: $229,000. Market value: $269,000.
That gap — $40,000 — is built-in equity.
You're not paying retail! You're buying below what the property is worth, which means your Return on Investment is going to be MASSIVE in this case because let's just say you get financing for the property and you put down 25% or call it $60,000 for easy math. This means the day you close you just made an instant 66.7% ROI and you haven't even factored in the rent.
A lot of investors skip past this number. Don’t.
Buying with equity built in is the best way to protect yourself when the market does something unpredictable.
Step 3 — Run the Quick Math
You don’t need a spreadsheet for this part. Here’s what a 10-minute back-of-the-envelope looks like:
Not life-changing money on its own.
But it’s real, consistent income from an asset you own — one that also has a tenant paying down your mortgage every single month without you doing a thing.
Step 4 — Two Numbers Worth Knowing
There are two metrics every investor should understand.
1. Cap rate is the return you’d earn if you paid all cash.
The reason why I like to use this number first and foremost is it takes out the interest rate / financing conversation. So you can compare each property on an "apple to apple" comparison without financing skewing the numbers.
Why is this so important? As I write this article, it is June 23rd, 2026 and the average interest rate for a DSCR loan is about 6.5%. 5 years ago, interest rates were roughly half of that. So you can imagine, just about every home would cash flow because your payments were so low. If you were to compare properties only based on cash flow, you can see how the math would not tell the entire story on if that property was a great investment or not.
So what is a good CAP rate you ask?
In the Chattanooga market, anything above 6.5% is solid. Below 6% and you’re buying an asset that doesn't have a lot of wiggle room for when things go wrong. With that said, most new construction homes that we sell are going to have the lowest cap rates because they generally do not have many repairs the first few years and they also are mostly in locations where we are seeing higher appreciation.
2. Cash-on-cash (COC) is your annual cash flow divided by what you actually put in out of pocket.
At roughly $277 a month on a $57,250 down payment, that’s about 5.8% cash-on-cash — before equity growth, before appreciation, and before the $40,000 that we already talked about where you are making a 66.7% ROI without factoring in the 5.8% COC from the rent.
What a Bad Deal Looks Like by Comparison
A bad deal is easy to spot once you’ve seen a few good ones.
The rent does not cover your costs.
DO NOT BUY A HOME WITH NEGATIVE CASH FLOW DESPITE WHAT PEOPLE MAY TELL YOU.
I have found the people who tell you it is ok to buy a home based off of faith that the market will eventually go up do not have your best interest in mind.
There’s no cushion for vacancy or repairs.
The investor is counting on appreciation to save them — which is just another way of saying they’re hoping things work out. One bad month and they’re pulling from savings to cover it.
That’s not passive income.
That’s a part-time job with worse hours.
The 10-Minute Checklist
When a deal lands in front of you, run through these five questions before spending another minute on it:
- What’s the rent — does it clear the mortgage and expenses with room left over?
- Is the purchase price below market value? Is there equity at buy?
- Is the cap rate above 6.5%?
- Can you comfortably cover the down payment?
- What’s the neighborhood doing — stable, growing, or declining?
If the first three check out, dig deeper. If any of them are a no, move on. There are other deals.
