Real Estate

How to Know Your Market Will Make it In 2023


Is your market worth buying in? With the economy on shaky footing, now ISN’T the time to guess. And once you find your investing area, how do you ensure your rental property will profit? Even in 2023, when cash flow is low, and home prices are high, it doesn’t take long to determine whether a rental is worth your money (or time). And, if you’re still trying to get your FIRST real estate deal, odds are you’re probably spending HOURS finding deals and crunching numbers. So let’s speed up the process. 

In this webinar bonus, Dave Meyer, BiggerPockets VP of Data and Analytics and On the Market host, will walk through EXACTLY how to analyze a rental property in minutes, the tools he uses to calculate cash flow, cash on cash return, and more, and how to know whether or not a real estate market is worth investing in. With mortgage rates rising and affordability at historic lows, Dave was STILL able to find a property that produced positive cash flow. So, if Dave can find a deal like this, why can’t you? Stick around to learn how to calculate rental property profits in MINUTES and which markets are worth the money.

Ready to invest? Sign up for BiggerPockets Pro and use code “DEALANALYSIS” for 20% off an annual membership! 

This is the BiggerPockets Real Estate podcast and I’m your host, David Greene. What’s up everyone? Welcome to the biggest, the best, the baddest Real Estate podcast on the planet. So glad to have you. We’ve got a special episode for you today. Today’s show will be Dave Meyer giving a presentation on real estate in 2023. What you need to know about macro factors, micro factors, and actually analyzing the specific properties. This information is crucial if you want to make good investing decisions in a competitive market that is changing faster than ever. And Dave is a numbers guy. I’m a numbers guy. I like talking about the numbers. In today’s show, you’re going to get to hear about those numbers too. A lot of people make the mistake of looking only at the specific property. They find a lead, they run the numbers, they try to determine if it’s going to have a good cash on cash return and they make their decision only on that data.
But smart real estate investors look at more than just the specific deal. We do look at it, but we look at more. We look at macroeconomic factors like do I think that the government’s going to be printing more money and there’s going to be more inflation? Where are people moving to? Where are companies moving to where wages are rising? Where are rents going to be more five years from now than where they are today? Dave is one of the authors of Real Estate by the Numbers, and he’s going to break down some of the ways that he analyzes properties. So you can learn his system, things to look out for when considering your own deals as well as tools that we at BiggerPockets have that can help you bring this to fruition. So put your learning caps on and get ready to learn more about real estate and before we bring in Dave, today’s quick tip is very simple.
If you want to get a discount off of some of the tools that BiggerPockets has to offer you specifically to help you investing in real estate as well as discounts on vendors that you need, I’ve got a discount code for you. So get your pen and paper out, or if you live in 2023, get your phone out and get ready to take a note. You can use the code deal analysis, that’s D E A L A N A L Y S I S. Save this code and get 20% off your pro membership by going to That’s if you want to save some money. All right, let’s bring in Dave.

Hey, what’s going on everyone? This is Dave from BiggerPockets and today we are going to be talking about one of my favorite topics, how to analyze deals and how to pick a market to invest in even during uncertain economic times like the ones we’re in today. So let’s jump right in. The truth is, if you don’t know how to properly analyze the markets that you invest in and the specific potential deals that you come across, it could be really difficult to invest in today’s market. It’s not like a few years ago when you could just randomly pick a house, anyone, and it would go up 20% by the next year. That was a crazy time, and for better or worse, that is not the climate that we were in anymore. But that does not mean that you can’t invest. In fact, experienced investors know that you can actually invest in really any type of market conditions.
It doesn’t really matter what phase of the business cycle you’re in, and you can yes, even invest during a housing market correction like the one we’re in. You can invest with higher interest rates as long as you know how to analyze deals properly. After all, a deal is a deal. If the numbers work, what does it really matter that interest rates are higher this year than they were last year? As long as you can still get your target cash on cash return and your target ROI, then it’s still a good time to invest. If you’re worried about price declines, for example, if you can still buy under market value to protect yourself from future price declines, then you can still earn excellent returns. And these reasons are why every single experienced investor, I really mean that every single experienced investor I know is still active in today’s market and most of them are more active now than they were the last two or three years when the market was going up like crazy.
And they can do this because they know their numbers inside and out. They can determine what is a good deal even during a correction. On the other side, a lot of, I think newer investors are sitting on the sidelines because they’re afraid of what they don’t know, and that’s okay because there is a lot of economic uncertainty, but these things are knowable. You can learn how to do this kind of thing, and that is what I’m going to teach you today. All right, so this is today’s agenda. First, I’m going to address the elephant in the room. We’re going to talk about how you can invest confidently and conservatively safely even during today’s confusing economic times during this housing correction. Next, we are going to talk about the three stages of deal analysis. It’s not super complicated, I promise all of you’re going to be able to do it.
Then I’m going to walk you through how to analyze an actual deal that I found so you can learn how to do this yourself. Lastly, I’m going to share with you a couple tools you can use so that you can go off and do deal analysis yourself and even have some free giveaways at the end. So stick around for those because they’re going to help you learn to get really good at deal analysis really quickly. I’m Dave Meyer, I’m the Vice President of Data and Analytics at BiggerPockets and I’ve been investing in real estate for more than 13 years. I host the On the Market Podcast twice a week and I even wrote an entire book about analyzing deals called Real Estate by the Numbers. I have a master’s degree in business analytics. So basically my whole life is data analysis and real estate, so I love talking about this stuff.
I have worked at BiggerPockets for seven years now and our whole mission is to help regular Americans pursue financial freedom through real estate. If you don’t know what that means, financial freedom, it means achieving a level of financial stability where you can do what you want, when you want and with who you want. It doesn’t necessarily mean you can retire early or have to. Maybe if you want to, you can or you don’t need to become a tycoon and run a huge business. It just means that you can take some of the financial fear and uncertainty out of your life and replace it with confidence and growth and at BiggerPockets that is our whole mission to help you achieve financial freedom. All right, let’s get into the main content of our presentation today. First agenda item as we talked about is now a good time to invest?
Let’s address the elephant in the room. First question, you’re probably sitting there, is there going to be a recession? Yeah, probably. Are housing prices dropping? Yeah, in a lot of markets they are. Inflation is high and that is eroding spending power. There have been some high profile layoffs across the economy. These are all things that are actually happening and this is no doubt an uncertain economic period. I find it strange because these are often the times where you actually get better deals everyone wants to buy when the market is overheated and everyone seems to run away when there are opportunities. It doesn’t really make sense to me. Everyone thought I was crazy. I had friends who thought it was insane to buy in 2010 before the market had bottomed out. Now everyone obviously talks about how jealous they were and they wish that they could have bought in 2009, 2010, but not everyone was doing. In fact, most people weren’t doing it.
This is a similar situation where there are actually opportunities right now and it doesn’t actually have to be scary. You don’t have to sit on the sidelines and wait for your chance. There are chances every single day. I see it all the time. There are people who are willing to learn and put in the work and take action towards their financial goals and you can absolutely get started despite all of that economic certainty that I was just talking about. The key is that you have to be able to identify what is going on and adjust accordingly as we’ve talked about. And you do that by taking the three steps to deal analysis. Remember that’s the second agenda item that we were talking about today. Three steps to deal analysis.
One, you need to understand the economic climate, the macroeconomic climate. Number two, you also need to understand what is going on in your local housing market because what happens on a broad national scale or on macroeconomic scale can be different than what is going on in your local housing market. And third, you need to actually be able to run the numbers on the specific deals that you are looking to buy. So how do you do that? Step one, macroeconomics. I know this sounds really complicated and if you haven’t studied economics, it may seem like something that is unattainable or difficult to understand, but it’s really not. These are the things that we’re talking about When I say understand macroeconomics, talking about population growth, how many people are moving to a specific area? We’re talking about job growth. What is the unemployment rate? What types of jobs are coming to an area and wages, are wages going up in a given area and can continue to facilitate economic growth throughout that area?
At the end of the day, real estate prices both in terms of sales price, like how much a house sells for and rent, how much you can rent out a property you own for just comes down to supply and demand. And these macroeconomic indicators really help us measure mostly the demand side. So if population is going up, then more people are going to be demanding the housing in a given area. That tends to be a good thing for the housing market and the rental market as well. Jobs, when jobs are really good, high paying jobs are coming when there are really attractive jobs that obviously brings in population, but it also gives people the confidence that they can spend money on a house, that they can afford their rent because they have a good stable well paying job. And then wages of course, as we’ve seen over the last couple of years, wages need to keep rising to keep pace with inflation.
Unfortunately that’s been difficult over the last couple of years, but normally we want to track this and see that wages are at least keeping pace with the rate of inflation if not exceeding them because those are good lead indicators for what can happen in the market that you are looking to invest in. So that is the macroeconomic climate. That’s really it. And again, at the end I’m going to show you how you can look these things up for yourself. But for now, just know this is step one in market analysis is trying to figure out on the broad scale and over the long term, how well is this individual location doing? Second thing, looking at housing market conditions, you have to understand what is going on in terms of how many houses are on the market or prices going up, what’s going on with rent.
Because even in a market that has good macroeconomic indicators like let’s say Austin, I think Austin, Texas is a great example of that. Even in a market that has good long-term indicators, short-term conditions can actually really change. So when I talk about Austin that has great macroeconomic indicators, there are jobs moving there, there’s tons of people moving there, wages have exploded there over the last couple of years, but when you look at the housing marketing conditions there right now they’re not very good. Prices are dropping really quickly, inventory is skyrocketing, rent is falling, and so there’s sort of a mismatch there and this is why this is the second step of deal analysis is because you have to be able to, one, see long-term macroeconomic trends. Two, what is going on, on the ground in that market right now. And so the things that I like to look at, there’s many more, but I think the four main things that you should be looking at in terms of housing market conditions is one, sales price, is it going up, is it going down? That one should be pretty self-explanatory.
Number two is inventory and days on market, I’m going to actually loop those together because they’re both really good measurements of the balance between supply and demand in a given market. And they do that by measuring how many properties are on the market but also how quickly they come off. And so when inventory and days on market are really high, that indicates that you are in a quote, unquote, buyer’s market. It means that there is more supply of houses on the market for sale than there are buyers and this gives the buyers leverage. They can be selective about which properties that they’re looking for. They can negotiate with sellers and they’ll have a lot of leverage. And generally speaking, these are the kind of conditions that we see in the housing market today. So we see that one of the flip sides of higher interest rates is that inventory tends to be going up, days on market is going up, which gives buyers more negotiating power.
They can be more selective about what they’re looking for. The last thing that you should be looking at is rent growth. If you are going to be a rental property investor, you do want to see where rent is at in a given market, if it’s growing, if it’s declining, what is going on there? So that’s step two, housing market data. Step three is deal analysis. You need to know the first two are really about the market that you’re investing and the location. But you also need to know is the individual deal that you are looking to buy going to make money? Is it going to earn the rates of return that you’re expecting? Will it help you on your path to financial freedom? So if you can evaluate these three metrics, your cash on cash return, your equity growth, your return on investment, you can know with a pretty high degree of confidence how well your investment is going to perform.
These are the three things you need to learn and I’m going to teach you how to do this in a minute. But again, these are the three steps that you need to take for deal analysis. One, understand macroeconomic conditions, two housing market conditions in the local area and three deal analysis. Now that we know this, let’s actually just run a deal. Let’s just pick a deal. I found one for you. It’s in Atlanta, Georgia and we’re going to run through these three steps. So this deal I found the list price is 429,000. It’s in Atlanta. Property type is a duplex, so it’s two sides. Each side is four bed, two bath and the strategy is a rental property and it has an opportunity for future redevelopment. I actually found this deal, someone on the BiggerPockets forum shared this. I think it’s a really cool deal because we’ll see if it’s a good deal but it has this huge upside to build up to 22 units in the future.
It actually was zoned in a specific way where you could redevelop it in the future. The person who I found this deal from doesn’t have the cash to do that right now or the desire to do it right now, but it’s one of those deals where it might be good enough now and then can be a grand slam in the future. I personally always like those, but it does need rehab work to be done right now. So 50,000 investment on top of purchasing it just to rehab it so you can rent it out for the next couple of years. All right, so first step here, remember is macroeconomic conditions. The first thing we want to look at is population. So I pulled this chart, the average population growth in the US was under, it was about 0.8%, but in Atlanta it’s been averaging about 1.2%.
So that is significantly higher than the national average, which bodes really well for the Atlanta area. Remember population super important for measuring demand. The second here is wage growth and I’ve plotted two different things on this graph here. The first is the blue line which shows the percent growth and the red line just shows how many dollars per week the average person makes. But the one thing I want to point out on this chart is the blue line and that the average wage growth year over year has been over 5% for several years and that is really significant because even over the last couple of years as inflation has been stubbornly annoyingly high, wage growth in Atlanta is outpacing it. So right now the last reading that we have is wage growth in Atlanta about seven or 8%. The most recent inflation data we have is at about five, five and a half percent.
So that means that wages are growing faster than inflation. This is a good sign for the Atlanta market. Last thing here is the unemployment rate. I have two things here. You can see the unemployment rate, which is the blue line for Atlanta is lower than the national average. Unemployment across the country is very low as of this recording in May of 2023. But you can see what I really care about here is the trend and the trend is that unemployment in Atlanta has been lower than it has on a national level. Even pre-pandemic back to 20 19, 20 18, it was still lower than the national average and that is really good for economic predictions. So overall Atlanta looks really good on a broad macroeconomic scale. Next, let’s look at local market conditions. Local market conditions. You could see the median sale price here in Atlanta is right about the national average.
So it’s just under 400,000 and this seasonally adjusted data shows that housing prices did peak back in June of 2022. They have come down, which if you’re looking to get into the market is a good thing, but they’re relatively stable right now. They’re not really growing, they’re not really sinking right now. They’re relatively stable. To understand what’s going to happen next, we need to look at those lead indicators. Remember we talked about inventory and days on market as being good indicators of whether you’re in a seller’s market or a buyer’s market and that can help you understand what is going to happen next. When we look at Atlanta inventory levels, there are a few things that really stand out to me. First, inventory has come up from the pandemic lows. This happened across the country but the inventory was super low but it has come back but not anywhere close to pre-pandemic levels.
If you see what inventory was like back in even 2019, back in 2015, it was way higher than it is now. And inventory has actually started to fall again. And if you remember when inventory starts to fall, that means we are heading back towards the seller’s market and in seller’s market prices tend to go up. Now I don’t know if that’s going to happen, but this indicates that we are heading for a summer in Atlanta where it’s going to be relatively competitive. And I think there is a decent chance that prices go up and at the very least I do not see a crash happening in Atlanta given these inventory and supply and demand dynamics. One last thing I wanted to show you about this is new listings in Atlanta, which is basically the amount of properties that get put for sale every single month are absolutely in the gutter.
No one is listing their property for sale in Atlanta, which means it’s going to be competitive to find a deal, but it also means there’s going to be a lot of competition for the deals that are out there and that tends to drive prices up. So to me what I see from this data is that prices have come down a little bit but they might not stay down in Atlanta so it could be a good time to buy. Rent growth, when we look at rent growth by bedroom count, you can see that they’ve really flattened out over the last couple of months and that is to be expected. And I think personally I believe that rent is going to stay relatively flat and I’m going to think about that when I do my deal analysis. I’m not going to presume a lot of rent growth because look at the trends here.
Rent is not really growing right now and I think if you want to be a conservative safe investor in this type of market condition, you probably want to do that as well. Both things I think to me indicate that one, macroeconomic conditions in Atlanta, pretty good housing market conditions like everywhere are a little uncertain, but I don’t think that we are at risk of a free fall in Atlanta. And if anything, I think there is an opportunity for some slight improvement over the course of 2023 in the Atlanta area, but to know we’re going to have to just run the numbers. So remember this is the deal that we’re doing to run the numbers. I am going to use the BiggerPockets calculator. It is a tool that you can use to quickly figure out whether or not a deal is a good deal. And so I’m here on and you can see I use this tool all the time and actually let me just show you something here. Before I get into the specific analysis, I want to show you some of the last few deals that I’ve analyzed.
Look, this one in Tulsa was a 3%, Memphis negative 3%, Memphis 7%, we have Alabama 9%. I want to show you this because some deals, look Carmel, Indiana, 0% are not good deals. Not every deal is going to be a good deal. I wouldn’t do this deal in Tulsa, I wouldn’t do this deal in Memphis. This one in Memphis probably would do it. So I just want to show you that the idea behind analyzing deals is not that you’re going to nail it every time, so don’t get discouraged if you do your first rental report, if you do your first analysis and the answer is no. In a market conditions like this, a lot of the deals are not going to be good. The whole point is to do 10, 20 deal analyses and then whittle them down to the point where you find one really good one.
Because that’s all you need, you just need one good deal. So sorry I digress, but let’s get into this. Okay, so our address here is 930 Hall Street Northwest. So I’m going to go back to the calculator and just type in 930 Hall Street Northwest and that’s in Atlanta. So you just click on this if you see it. So this will import your property data as you can see here. So it sees Atlanta, Georgia, we got our zip code, I’m going to add a photo. It just helps me remember what deal that I’m actually talking about. So if you go here, I just put this photo of the deal, so I’m going to put that in there. Now I can easily remember which one I’m talking about. Okay, so that’s the first thing. Just put in the basic property information, then hit purchase.
Our purchase price, let’s go back and check this out was 429, so I’m going to put in here 429 and our closing costs are about to be 5,000 bucks. If you’ve never run a deal before, you might come across calculator and say what are closing costs? We have all these little things here. Calculate closing costs. You can see one to 2% of the purchase price and it can tell you. If you’re unsure, 1.5%. So actually let’s bring that up a little bit. Let’s say $6,000, that’s about 1.5%. Okay. So that’s basically what you need to do. And again, we have these tool tips all along the side. So if you need to figure out how to do this deal analysis, you can just click on this stuff. Remember we talked about that this deal needed rehabbing, so I’m going to hit rehab this property and what we’re going to do is figure out after you rehab it, usually the value of the property goes up.
That’s called your after repair value. And so the value of the property, we’re estimating at about 429, but once we put remember $50,000 in, hopefully we’re going to get that deal to let’s say 550. $550,000 for after repair value and our repair costs, remember we’re $50,000. So again, we’re moving right along here. That’s all that we need to do here for the purchase. Property value growth, this is something you can choose to alter if you want. If believe that you’re in a market that’s going to have huge appreciation, maybe you want to put 5%. If you’re really pessimistic about the market, maybe you put 0%, you can make these adjustments on your own. And this is what I mean when I’m saying you need to just adjust to market conditions. You can find a good deal if you think property values are going to be zero for the next five years, put zero in here.
Personally, I like to just use the average over the long term because I buy properties over the long term and on average, even though it goes up and down and up and down average property value appreciation is about 2%. And so I’m going to just keep 2% in there. Next loan details, because I am an investor, I need to put 25% down, interest rates are about 6.5% right now and I’m going to use a 30-year fixed rate loan. Again, if you don’t know what to put in here, we can have this here. We have help here for what you need to do. But honestly the best thing to do if you don’t know what to do about a loan is to just talk to a mortgage lender. You can call them for free, they will tell you what you qualify for, how much you would have to put down down, what your interest rate would be.
So that’s the best way to learn about this. But if you just want to do this quickly right now, if you’re following along here, just put these in. This is a pretty generalized investor criteria here. 25% down, 6.5%, 30% loan term. Next, hit income. This is the really cool thing about the BiggerPockets calculator. Look at this. So it already, when I put in the address estimated rent for us at about $2,000 per month and that’s our confidence is medium, but I want to show you how this actually works. So let me just go up here. I’m going to copy and paste this. So we have this other tool on BiggerPockets, it’s really helpful for deal analysis. It’s called the rent estimator and I can search this address, so I’m putting it in here. I’m going to pick the address and remember it was two four bed, two baths.
So I’m going to search the address and you can see that the median rent here is about 1900 bucks, but that’s just for one unit. So remember there are two units here and what I want to see here is one, it’s telling me the median, so this is the average property is going to be about 1900 bucks a month, but I can come and see that there are other properties here that are very similar. Look, another four bed, two bath is about 2100. I’m also seeing another four bed, two baths, that’s only 1500. So this one is 2000. So you can see the whole grand scheme in this tight little area of what things are renting for. Look at that one, 2900, these are 2000. And so I can see the distribution and I’m looking at this because remember I am going to renovate this. I’m spending 50 grand to renovate this and I don’t think after that my property is just going to be the median price.
I don’t think it’s going to be an average. I think it’s going to be above average. I’m not going to go all the way to the high end and say I’m going to get 27, 25 here, but I think 2,200, 10% better. 2,200 is probably 60th percentile. And remember we have two of them. So we’re actually going to be getting, I’m going to estimate about $4,400 here for gross monthly income and then I’m going to hit expenses next. So that’s all you need to do. 4,400 bucks. We’re almost done guys. We’ve done property information, purchase, loan details, rental income. This is the last step. So I just want to show how easy deal analysis can be the calculator’s already pulled in our taxes, so that’s great. Super helpful. Insurance, I looked this up before the webinar is about 2,500 bucks. And then repairs and maintenance.
So I like to just estimate these things 5%. If you have an old property, it might be higher than 5%, but remember I’m spending 50 grand to renovate this place and so I don’t think I’m going to have a lot of repairs and maintenance or capital expenditures because I’m paying a lot of that upfront. Vacancy, you always want to be careful about vacancy. So I like to put away 5%, which is 220 bucks a month. So that’s a lot coming in every single month just in case that there’s vacancy because again, during these uncertain economic conditions, it just makes sense to store a little bit of money away to save in case there is a vacancy or something like that. Capital expenditures, again, this is similar to repairs and maintenance, but it’s sort of for big ticket items like the roof or the foundation or hot water heater or whatever.
And again, since I’m doing those renovations, I think it’s going to be low, but I do want to sock away some money. Management fees, I recommend people are getting started to self-manage because you save all this money and you learn a ton. I live in Europe so I’m going to put 8% fee because I am going to be paying a property manager and in this scenario I just want to see if this deal would work for me. So management fees of 8%. Electricity, because of this property, I’m going to let the tenants just pay for everything. They put the electricity in their name, they put the gas in their name, and so for me, I don’t need to get involved. They pay for what they use. I don’t need to be involved in that situation at all. All right, so I put zero, zero, zero. HOA fees, zero. Garbage, usually pay for the city.
I don’t know why I do, I just do. So it’s like 25 bucks a month and that’s it guys. That is done. We have done deal analysis. All we need to do is finish deal analysis and let’s see what we got. I have no idea if this is going to be a good deal. All right, so what we see here is if we bought these deals using the assumptions, we would be making 500 bucks a month in cashflow. That’s great. That’s really good. When you look at the cash on cash return, it’s about 4%, which I’d say is average. It’s not great, it’s not bad, it’s okay, but when you looked at the annualized return, this is your ROI. 16% is actually really good. When you think about the average for the stock market for example is eight to 9%. So you’re looking at 16%, it’s almost double what the stock market returns and these are just based on our normal conditions.
So one thing I think that new investors often overlook is you don’t need to just pay and do the first analysis that you’ve done. So I ran this analysis using certain assumptions and I got a 4% cash on cash return. For some people that might be good enough. For me, it might be okay because there’s that development play in the future where you could build 21 units, but if this was just like a straight-up rental property, it wouldn’t take a 4% cash on cash return. That’s me and my goals. But that doesn’t mean this is a deal you should write off because you might be able to get it for less. So one consideration is as we’ve talked about, some areas prices are falling and so maybe you can convince the seller to sell it to you for let’s say 415.
So you can use the BiggerPockets calculator there to just adjust it to 415 and now you could see our cash and cash return went up from 3.8 to 4.4%. That’s looking a little bit better. One popular strategy right now is sellers are buying down the rate of buyers. Could we get them to buy it down to 5.5%? What happens now? Now we’re talking about a 6% return. Let’s put this back at 6.5%. Maybe another option is maybe after doing some more analysis of the rental market, instead of 2200, if I make this property super nice, I can get 4620. Now we’re talking about 5.7%. What if I self-managed this? Okay, now we’re talking about 8.5%. A deal is what you can make of it. People often say that deals aren’t found that they are made, and I think that’s one of the cool things about deal analysis and using these calculators is that you can adjust the assumptions that you make to see all the different scenarios.
It still may not be a good deal for you. Remember turning down bad deals is a really important part of being an investor, but it allows you to look at the different angles. Say, could I get this? Will the seller accept this different price? That’s what being good at deal analysis and using these calculators allows you to do. If you come all the way down here, you can see what the profit would be. Given the assumptions that I’ve updated here, you would get 20% returns over five years, which is amazing. Even though the cash on cash return is… Oh, with these assumptions, the cash on cash return is really good at 8.5%. Let me just put that back down. Let’s just assume we self-manage. We’re going to get 4,400 a month. All right, 7% cash on cash return. That’s good. So our average annualized return about 19% and if we went to sell it after just five years, our profit would be $223,000.
That is honestly incredible. Anyone who’s looking for financial freedom will probably love these numbers. Again, not all deals are going to look this good. Not all deals are going to work out, but if you get good at running this, you’re going to be able to say, I’ve run 20 deals, 19 of them had a 3% cash return and the 20th one had a 7% cash on cash return. That’s the one I’m going to buy because I know that one is so much better than all of the other deals. So that’s it. Hopefully this helps you. I do want to just show you one other thing here that if you use the calculators, you can generate these reports, which is super helpful. If you were going to talk to a seller and say, oh, I actually can only pay 415, you can bring this with them and say, look at your selling price 430 doesn’t work for me.
I need a 7% cash on cash return and so I am willing to pay 415. I’m willing to pay 405, whatever that number is. You can show them that you’re not just making this up, you’re not trying to take advantage of them, but you have an ROI in mind that you want to get and that this is the price that you’re willing to pay. This is also helpful if you want to go talk to a lender or you want to get your spouse on board, whatever it is, this property sharing is super helpful. Okay, so that’s it guys. We just did it. We looked at the macroeconomic conditions, we looked at local market conditions and we did deal analysis. Honestly, if this were me, I would try and negotiate down this deal a little bit, but I would consider it because of that development upside.
I would also do some more research into the rent and see if I could get a little bit more. I talked to local property managers. I’d probably talk to local investors to see if they thought I could get that 4,600, but I think this deal is close enough that you should engage the seller and start to negotiate and see if you can work something out. Hopefully this has been helpful to you. I’ve been talking about this the whole time and blabbing on and trying to explain it. This has taken me 15 minutes, but if I were doing this on my own, this would probably take me five to 10 minutes because I have really good tools that enable me to do this analysis really quickly. So let me share with you the tools that I use so that you can do deal analysis all on your own.
Step one, for macroeconomic conditions, my favorite thing is the Fred website. It’s the Federal Reserve Bank of St. Louis. It’s completely free. They aggregate a ton of macroeconomic conditions. The charts that I showed before, those are all generated from the Fred website. Again, it’s completely free to use, so you should definitely check that out. There are other similar websites called Statistica, YCharts, Trading Economics. They have a lot of these things, but honestly, I would just recommend using the Fred website. But the other thing you should look at honestly is local government data. So the local chamber of commerce will have great information about what businesses are moving to the area or what government initiatives, where they’re investing money into a local market. These are really helpful nuggets that you can use to decide where you want to invest. So these are free great resources for you to do that macroeconomic analysis.
Step two, if you want tools for housing market analysis. There are free websites that you’ve all heard of, Redfin and Zillow. They provide a lot of the information that we’re talking about. You can easily find sales price data there. You can find inventory days on market. Rent can be harder to find. That’s why we have the rent estimator tool on BiggerPockets because not all of these listing sites have rent data there, but you can get a lot of pretty good information for free from Redfin, Realtor, Zillow. But also I created a completely free tool for you where I aggregated housing market information for hundreds of the biggest cities in the entire country. So this will save you a lot of time and if you wait to the end of this video, I’m giving it away completely for free. So just stick around for another minute or two and you’ll get that.
The third tool I use to analyze deals really quickly you just saw it, is the BiggerPockets calculator, which is available to BiggerPockets pro members. So if you want to jump into the real estate market to pursue financial freedom, you believe like I do, that real estate investing is a great way to achieve it. If you become a BiggerPockets pro member, you get unlimited access to our rental estimator, which I showed you, the calculators, which I showed you, and a ton of other incredible tools. BiggerPockets pro is basically built to be a one-stop shop to help you start, scale and manage your portfolio. On top of the things that I already showed you, it has all sorts of content, tools, community, services. It’s really how you start taking action and get off the sidelines. So many people are out there saying they want to get into real estate, but they don’t have the tools, the community to do it.
This is the way that you can do it. That gives you access to the calculators we talked about that showed it to you, how useful that can be. It gives you access to the rent estimators a crucial part of deal analysis. This data is harder to get off Zillow, it’s harder to get off Redfin, and so we built this tool just to help people analyze deals quickly with really up-to-date accurate data. We also have tons of pro-exclusive videos and content. This is all about videos, about how to analyze deals, how to pick a market, how to understand the housing market, all these videos all available to pro to help you do these three steps that I just showed you really quickly and really confidently, which is really important. People have been doing this. I’ve worked here for seven years. I’ve seen tens of thousands of people use the BiggerPockets pro membership and the BiggerPockets calculators to become financially free.
I really mean that. I’ve seen it tens of thousands of times. Just as an example, this guy Aaron C wrote to us and wrote the BiggerPockets calculators are my go-to for analyzing potential properties. There is no way I could analyze the volume of properties I do without being a pro member. I locked out my first three unit almost a year ago and now selling for almost a 70k profit that will go towards something larger. The BiggerPockets calculators were a huge factor in making sure my numbers were right. I love this because one, Aaron is talking about he analyzed a lot of deals. Not every deal is going to be good. He did it quickly and confidently so he could find the right deal, and he was focused on finding deals with the right numbers, which is what every experienced investor does. So if you’re wondering how much BiggerPockets pro is, it is normally $390, which if you follow other influencers or real estate training courses, this is literally one 10th of the price that can costs tens of thousands of dollars.
But we’re actually going to do you one better, and just for watching this video today, we’re going to give you 20% off and it’s going to be 312 bucks for you if you want to join pro today and get access to all these deal analysis tools. So if you want to go pro and you want 20% off, which you should use the code deal analysis when you’re checking out, and that will get you the discount. But I’m actually going to do one more thing for you, which is to give you my book completely for free if you become a BiggerPockets pro. I wrote this book with Jay Scott. He’s an incredible investor. He’s been doing this for longer than I have, he has an incredible portfolio, and we wrote this book to help people understand what is a good deal, when should you actually pull the trigger?
It’s a really, I think it’s a great book. Obviously because I wrote it, but I think it’s a really good resource for you and it’s a $45 value, and we are giving it to you completely for free if you go pro. So if you want to become a pro, it’s a screaming deal. Honestly, it’s so much cheaper, it’s better tools than a lot of our competitors, and we’re offering it to you for 312 today with that free book. Just go to when you’re checking out, use the code deal analysis for 20% off. The code is deal analysis, D E A L A N A L Y S I S. So thank you guys so much for watching. Oh, I forgot one more thing. If you don’t use pro, you can get your money back if you use it for 30 days. We love it. People use it all the time, but if you don’t love it, we’ll give you your money back, no questions asked.
But thank you all so much for watching. Oh, and the last thing, we’ve made it all the way to the end. The last thing I want to give you my free housing market analysis tool that says all of that aggregated data to do that housing market, so basically step two, do all of that analysis on your own. You can get it for free We’ll put a link in the description. Know I keep saying that, but that one’s completely free to everyone, so go check it out. This is our gift to you for watching this video. I really hope you have learned something. This is honestly one of my favorite topics to talk about. I am super passionate about it. I really hope this will help you on your journey to financial freedom.

And that was our show. Hope that your mind was blown with information and you’re feeling better and more confident than ever to get into the game, start looking for deals and making some smart investing decisions. Again, if you liked what you saw and you want to start using this system to help you analyze real estate as well as some of the perks that you get, you can save 20% off your BiggerPockets pro membership by using the code deal analysis at You can also follow me @DavidGreene24 on social media everywhere, or visit my site, to see what I got going on and how I can help you. If you got a minute, check out another BiggerPockets episode, and if not, we will see you next week.


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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.


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