Why Speed Matters in On-Market Analysis
On-market properties move fast. The average good deal receives 5-10 offers within 48 hours. If your analysis takes 2-3 hours, someone else has already submitted their offer.
Professional investors can analyze a deal in 5 minutes or less using a systematic framework. This speed advantage is the difference between getting deals and watching them go to competitors.
The 5-Minute Analysis Framework
Key Metrics Every Investor Must Know
ROI (Return on Investment)
ROI = (Profit ÷ Total Investment) × 100
Example: Buy for $150k, sell for $200k after $30k repairs = $20k profit ÷ $180k invested = 11% ROI
Target: Fix-and-flip: 15%+ ROI. Rentals: 8-12% annual ROI
Cap Rate (Capitalization Rate)
Cap Rate = (Annual NOI ÷ Purchase Price) × 100
Example: $12,000 annual net income ÷ $150,000 price = 8% cap rate
Target: Target 8%+ for rentals. 10%+ in secondary markets
Cash Flow
Cash Flow = Monthly Rent - (Mortgage + Taxes + Insurance + HOA + Maintenance)
Example: $1,500 rent - $1,300 expenses = $200/month positive cash flow
Target: Minimum $200/month per property. $300+ is excellent
ARV (After Repair Value)
ARV = Avg Comparable Sale Price (adjusted for condition)
Example: Comps sell for $220k. Your property needs $20k work. ARV = $220k
Target: Used for fix-and-flip and BRRRR. Base offers on ARV
70% Rule
Max Purchase = (ARV × 0.70) - Repair Costs
Example: ARV $200k, repairs $30k → Max purchase = $140k - $30k = $110k
Target: Quick filter for flips. Ensures 30% margin for profit
1% Rule
Monthly Rent should = 1% of Purchase Price
Example: $150k property should rent for $1,500/month to meet 1% rule
Target: Good rentals meet this. Great rentals exceed it
Fix-and-Flip Deal Analysis
Complete fix-and-flip analysis in 3 steps:
Calculate ARV (After Repair Value)
- Find 3-5 comparable sales (similar size, neighborhood, sold in last 90 days)
- Average the comp prices
- Adjust +/- for your property's lot size, condition, features
- This is your ARV
Estimate Repair Costs
- Cosmetic updates (paint, flooring, fixtures): $10-20/sqft
- Moderate rehab (kitchen, bathrooms): $25-40/sqft
- Heavy rehab (structural, systems): $50-75/sqft
- Add 20% contingency buffer for surprises
Apply 70% Rule
- Maximum offer = (ARV × 0.70) - Repair Costs
- Example: ARV $250k, repairs $40k → Max offer = $175k - $40k = $135k
- Leave room for holding costs, closing costs, and profit
- If seller won't accept your max offer, walk away
Pro Tip: The 70% Rule Protects Your Profit
The 70% rule ensures you have a 30% margin. This covers your profit (10-15%), holding costs (3-5%), closing costs (3-5%), and unexpected repairs (7-12%). Never break this rule for on-market deals.
Buy-and-Hold Rental Analysis
Rental analysis focuses on cash flow and long-term returns:
Monthly Cash Flow Calculation
✅ Good Rental Indicators
- ✓Positive cash flow $200+ per month
- ✓Cap rate 8%+ (10%+ in secondary markets)
- ✓Meets or exceeds 1% rule
- ✓Strong rental demand in area
- ✓Low crime, good schools
- ✓Newer roof, HVAC, water heater
❌ Bad Rental Indicators
- ✗Negative or break-even cash flow
- ✗Cap rate below 6%
- ✗Rent less than 0.7% of purchase price
- ✗High HOA fees ($200+ per month)
- ✗Major systems need replacement soon
- ✗High crime area or poor schools
BRRRR Strategy Analysis
BRRRR (Buy, Rehab, Rent, Refinance, Repeat) combines flipping and rental strategies:
BRRRR Success Formula
BRRRR Math Must Work
Key: 75% of ARV must cover purchase + repairs. If you buy for $120k, spend $30k on repairs, and property appraises at $180k, you can pull out $135k (75% LTV). That's $120k purchase + $15k of repairs recovered. You only left $15k in the deal and own a cash-flowing rental.
Red Flags to Watch For
These warning signs mean walk away or significantly lower your offer:
🚩 Major Foundation Issues
Foundation repairs can cost $20k-$100k+ and scare away buyers/renters. Only experienced investors should touch these.
🚩 Active Mold or Water Damage
Mold remediation is expensive ($5k-$30k) and must be disclosed to future buyers. Can kill resale value.
🚩 Flood Zone A or V
Flood insurance can cost $2k-$10k per year. Dramatically reduces cash flow and buyer pool for exit.
🚩 Property Taxes 3x+ Area Average
High taxes kill rental cash flow. Tax appeals rarely work. Factor this into your numbers carefully.
🚩 HOA Special Assessments Coming
If HOA mentions upcoming $10k+ special assessments for repairs, factor this into your budget. It's coming.
🚩 Zoning or Legal Issues
Unpermitted additions, code violations, or zoning restrictions can prevent financing and delay closings.
🚩 Structural or Roof Issues
New roofs cost $10k-$30k depending on size. Structural repairs can be $50k+. Get inspector opinion before offering.
🚩 Property On Busy Road
Reduces resale appeal and rental demand. Harder to exit. Lower your offer 10-15% to compensate.
Automating Your Analysis with OnMarket CRM
OnMarket CRM includes built-in calculators that automate the entire analysis process:
Instant Deal Calculators
ROI, cap rate, cash flow, 70% rule, 1% rule—all calculated automatically as you enter property data. No spreadsheets needed.
Auto-Filled Comps
Pull comparable sales from Zillow automatically. System suggests ARV based on recent comps in the area.
Scenario Analysis
Run multiple scenarios (best case, worst case, likely case) to see how numbers change with different assumptions.
Deal Scoring
Properties automatically scored (1-10) based on how well they meet your investment criteria. Focus on 9s and 10s.
Frequently Asked Questions
How accurate does my analysis need to be?
Within 10% is good enough for initial decisions. Perfect analysis takes hours. Fast 90% accurate analysis wins deals. Get inspector reports and contractor bids before final offers.
Should I break the 70% rule for a great location?
No. Great locations don't make up for bad math. If the deal doesn't work at 70%, it won't work at 75% or 80% either. Disciplined investors pass on marginal deals.
What if I can't find good comps?
Expand your search radius to 1-2 miles. Look at similar-sized homes even if different style. Adjust for differences. If still no comps, the market might be too risky to invest in.
How do I estimate repair costs without a contractor?
Use conservative estimates: cosmetic $15/sqft, moderate $30/sqft, heavy $60/sqft. Always add 20% contingency. Get real bids before submitting final offers.
Should I analyze every property that hits my filters?
No. Quick reject obvious misses in 30 seconds (wrong location, too expensive, major issues in photos). Only deep dive on properties that pass initial screening.
How many deals should I analyze before finding a good one?
Expect to analyze 20-50 properties to find one that meets your criteria. If your numbers work on every property, your criteria are too loose. Discipline = profits.
Can OnMarket CRM pull comps automatically?
Yes! Connect your Zillow account and the system pulls recent comparable sales based on the property address. You can adjust filters and re-pull comps anytime.
Does the calculator factor in all costs?
Yes. Our calculators include purchase, repairs, holding costs, closing costs, financing costs, property management, maintenance reserves, vacancy reserves, and more. Comprehensive analysis.
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