Deal Analysis & Tools: How to Evaluate Real Estate Investments Like a Pro

Every successful real estate investor knows that the money is made when you buy the deal, not when you sell it. That’s why deal analysis is the cornerstone of smart investing. Whether you’re purchasing a tax lien, wholesaling a property, or considering a rehab project, having the right tools and formulas will help you avoid costly mistakes and maximize profits.

Why Deal Analysis Matters

• Protects Your Capital – Helps you avoid overpaying.

• Reveals Hidden Costs – Rehab, holding costs, and fees add up fast.

• Guides Decision-Making – Tells you if a deal is worth pursuing or walking away from.

• Builds Credibility – When you share clear numbers with buyers, lenders, and partners, you look professional and trustworthy.

Key Metrics Every Investor Should Know

1. ARV (After Repair Value)

The estimated value of a property once all repairs are complete.

• Why it matters: Determines potential profit and resale price.

• How to find it: Use comparable sales (“comps”) in the same area.

2. Repair Costs

An accurate rehab estimate is essential.

• Use a Contractor Repair Sheet to list repairs line by line.

• Always include a 10–15% cushion for unexpected costs.

3. MAO (Maximum Allowable Offer)

This formula tells you the most you should pay for a property.

• Formula: MAO = (ARV × 70%) – Repair Costs

• Example: If ARV is $200,000 and repairs are $40,000:

  • MAO = (200,000 × 0.70) – 40,000

  • MAO = $100,000

4. ROI (Return on Investment)

Shows the percentage return compared to your total investment.

• Formula: ROI = (Net Profit ÷ Total Investment) × 100

5. Cash-on-Cash Return

Measures how much cash you’re making compared to the cash you invested. Especially useful if you’re borrowing money.

6. Holding Costs

Monthly expenses while you own the property: mortgage, taxes, insurance, utilities, lawn care. These eat into profits if the deal drags out.

Tools Investors Use to Analyze Deals

1. Deal Analyzer Calculator (Website Tool)

   • Enter ARV, repair costs, holding costs, and purchase price.

   • Instantly see MAO, ROI, and projected profit.

   • Perfect for wholesalers to quickly evaluate contracts.

2. Repair Cost Checklists

   • Keeps rehab estimates consistent across properties.

   • Prevents missed items like permits, dumpsters, or landscaping.

3. Spreadsheets

   • Many investors build Excel or Google Sheets calculators to model deals.

   • Great for tracking multiple properties at once.

4. Mobile Apps

   • Real estate comps apps, contractor bid apps, and ARV calculators help investors in the field.

5. Document Templates

   • Contracts, W-9s, and pay schedules integrated with analysis tools ensure every deal is covered from start to finish.

Example Deal Breakdown

• ARV: $150,000

• Repair Costs: $25,000

• Holding/Closing Costs: $5,000

• MAO Formula: (150,000 × 70%) – 25,000 = $80,000

👉 If you can buy this property for $80,000 or less, it’s a solid deal. If the asking price is $95,000, you know to walk away or renegotiate.

Final Thoughts

Real estate success isn’t about luck—it’s about running the numbers. With the right deal analysis tools, you can confidently separate good investments from money pits.

For wholesalers, tax lien buyers, and rehab investors alike, mastering deal analysis ensures every property you touch moves you closer to financial freedom.