Tailwind Talks
Tailwind Talks is a podcast for high-performing professionals who want to build serious real estate portfolios without leaving their careers. Hosted by an airline and military pilot turned investor, it dives into actionable strategies for scaling your real estate portfolio while balancing the demands of a full-time job.
Tailwind Talks
Napkin Math for Real Estate Analysis
Ever feel like you're drowning in spreadsheets and second-guessing your real estate investment decisions? What if analyzing a property could be as simple as glancing at your watch?
Today, I'm pulling back the curtain on my actual process for evaluating potential investment properties in under five minutes. As a full-time pilot and part-time real estate investor, I've had to develop systems that maximize efficiency without sacrificing accuracy. I walk through a real single-family property that I viewed just this morning—from the initial asking price of $79,000 to our final negotiated price of $74,000, and everything in between.
You'll discover exactly what I look for when walking through a property (hint: focus on the big-ticket items like roofs, mechanicals, kitchens, and bathrooms) and how I quickly estimate renovation costs without overthinking. I break down this property's projected monthly cash flow of $446, showing how a $30,000 investment (including down payment and renovations) can generate a healthy 17% cash-on-cash return.
This no-fluff approach strips away the complexity that keeps many would-be investors paralyzed. Whether you're evaluating your first deal or your fiftieth, you'll appreciate this back-to-basics method that relies on what I call "napkin math"—straightforward calculations that cut through analysis paralysis and get to the heart of what makes a deal work or not.
Got questions about my approach or want to share how you evaluate properties? Drop a comment below—I personally respond to all feedback, whether it's about the real estate content or suggestions for improving these videos. Your input helps make this channel better for everyone looking to build wealth through property investment.
how to analyze a deal in under five minutes. I'm just gonna take you through what I did today. This morning, 9.30, today's what is this? May 16th, I went through a single family house with my buddy and he's like my trusted confidant. I have full faith in him that if I do something dumb he'll be there to save me and course correct. He's in the real estate game day in and day out and, like you may already know from the first episode, I'm a part-timer, I'm a full-time pilot and this is my part-time gig, hopefully one day a full-time gig. What do we do? We look at the property. Today I've got it all written down over here. The property they were asking I think it was 79,000, from a wholesaler. I looked at the pictures. The pictures actually look pretty decent. So I was like, okay, I think we could do maybe 70. I think I said 72,000. I was like that's probably where we'll be at, but we'll walk it. So he said, hey, 930 tomorrow Sound good, sounds good. So we showed up, we walked the property.
Speaker 1:It does not take much to analyze a deal. You can get in, get out and it's pretty straightforward from there. So let's just go through the numbers. So they wanted 79,000. We went back and forth a little bit. We ended up at 74. That's the last thing. I'm actually going to get this deal or not? So I said $74,000. We think is worth after it's all cleaned up and ready to go. Maybe about $120,000 was the guesstimate. So there's a little bit of equity built in there, which is always good to have. That's like a nice little backstop. But you got to remember that's not cash on the table, that's just paper wealth, right, rehab costs walking through it, basically flooring, paint, mechanicals all look pretty good, but flooring, paint bathrooms and some kitchen cleanup.
Speaker 1:We estimated somewhere in the $5,000 to $10,000 range on the low end and $10,000 to $15,000 on the high end, and that's all relative terms. This is not Malibu I put on here. $10,000 to $15,000 is where I thought we were at. We were talking about putting a concrete slab in the back too for parking, because currently there's only street parking and there's a huge back lot. So we're like, oh, this is the perfect place to put a pad. And Alex actually he was the one that recommended it, so I'll give credit to him if he sees this.
Speaker 1:$12.99 a month is what we think you can get for rent. Don't ask me why $12.99. That's a Milwaukee thing. I don't know why $12.99, $13.99, $9.99, the same anywhere else. If you're watching this and you're from another place, leave a comment, if you can, about what you guys do for your rent numbers, because we do all this weird 99 stuff and anybody that's from out of state always seems to think that it's the craziest thing. So $12.99 a month in rent, three bed, one and a half bath tenant pays all the utilities. So that kind of saves the owner as far as that goes.
Speaker 1:$420 a month for the financing. There's a month for the financing. There's kind of two choices. You can either go traditional, which would be 20% down at a minimum, or you can go hard money, which would be zero down, but you are going to pay higher fees. Usually you're paying 15% interest over, let's say, six month period and you're going to pay an origination cost of a couple points, which is usually, let's say, three points. That'd be 3% of the total loan value. So you're going to pay a little over two grand probably for that.
Speaker 1:$133 a month in property taxes. Simple enough, you just look that up. $100 a month in insurance I know what insurance costs out here because we've got other properties that are similar. So I just roll and dice and say about $1,200 a year, $100 a month for that, $100 a month for property management. My property manager charges me 8% a month on my properties. So you take $1,299, I just guesstimated $100 a month is probably right. I just do napkin math. I'm not a big brainiac, I'm a napkin math kind of guy. $100 a month in work orders, $1,200 a year Could be light, could be heavy, but I think it's good to build that in because if you don't you're going to get burnt if anything happens. And that puts us at $446 a month in cash flow, which is $5,300 a year just over. And depending on if you do it with zero money down or you do it with a 20% down, I ran this all as if we're going to put 20% down and we're going to do $15,000 in rehab, so about $30,000 all in. It's running about 17% cash on cash. And that is how to analyze a deal in less than five minutes.
Speaker 1:Now I understand that I breezed through a lot of that stuff and I didn't really give you a lot of context, but I wanted to at least touch on that stuff and give you an idea of what it looks like to actually go through a property and say, okay, what does this look like? When I'm going to a property, I'm looking at some big stuff. I'm looking at the roof, I'm looking at windows, siding, okay, and I'm just generally looking. Is it new, is it old, is it broken, is it in decent shape? I'm looking at the kitchen and the bathrooms to see what kind of shape they're in. Is it a tile? Is it a surround? Is it just gutted? Who knows what it could be? Take a note of that, because that's the kind of stuff that is expensive. And then the next one would be flooring. If it's got carpet, it's probably coming out unless it's really clean. If it's got some sort of vinyl plank, hopefully it's in good shape. If it's got hardwood floors, there's a couple choices.
Speaker 1:Milwaukee there's a lot of people are painting right over the top of those bad boys, but you could also potentially refinish them. The problem with refinishing is it expensive, it's time consuming and in this game you gotta make some concessions if you want to stay in business. So you're gonna have to decide that for yourself if it makes sense. We have basements here. Not everybody has basements, but basements. We got furnaces. We got water heaters in there and then we've got the foundation. Those are the big ones, furnace.
Speaker 1:I'm looking to make sure that, a it operates. B it's not 3,000 years old and that's really it. Furnaces come and go. We replace furnaces all the time Not all the time, but enough that straight. Is it damp? These are things that you can ascertain pretty quickly. You don't have to be in the property for three hours to figure that stuff out. We see people all the time that are sitting there and hemming and hawing about all these little things. Man, that's the stuff you need. You can get all that information in about five minutes and you can get in and out and you got your number and that's it. So for me, I didn't want to spend more than I really didn't want to spend more than 70, but he said he was in it for 73. He was super transparent. He told me I'm in it for 73,. Man, can you come up at all? I said I can go with 74.
Speaker 1:Maybe you can negotiate out and analyze any deals now. What is it good for you and what is bad for you? To me, I'm aiming for a 20 cash on cash return, if I can get it hard to get it sometimes, especially with the multi-family stuff. That stuff the cap rate gets squeezed and you're not going to see those kind of deals. But in the single family and duplex world not uncommon to see, but you have to know where you're looking. That comes with time and trial and error and, yeah, so appreciate it. Five minutes how to analyze a deal. This video is going to run a little longer than five minutes and I apologize, but I try to get through all the bullet points before the five minute mark hits. So appreciate you watching and hope to look to you again on another video. If you have any feedback lighting camera, anything at all please let me know. I'm here to get feedback and try to do better. Good, bad, indifferent leave it and I'll definitely respond to it. So I'll talk to you soon. Thanks,