What Makes a Good Real Estate Deal? The Numbers Every Investor Should Know

The Key Metrics for Every Strategy

Different investment strategies have different benchmarks. Here's what to look for:

Fix and Flip

The 70% Rule

Maximum Offer = ARV x 70% - Repair Costs

This ensures a minimum 15-20% profit margin after all costs.

Target Profit Margins

Good deal: 15-20% ROI

Great deal: 20-30% ROI

Home run: 30%+ ROI

Example

ARV: $300,000

Purchase: $180,000

Repairs: $40,000

Holding/closing costs: $20,000

Total investment: $240,000

Profit: $60,000 (25% ROI)

Rental Properties (Buy and Hold)

Cap Rate

Cap Rate = Net Operating Income / Purchase Price x 100

Good: 6-8%

Great: 8-10%

Excellent: 10%+

Cash-on-Cash Return

CoC = Annual Cash Flow / Total Cash Invested x 100

Good: 8-10%

Great: 10-15%

Excellent: 15%+

The 1% Rule

Monthly rent should be at least 1% of the purchase price. A $200,000 property should rent for at least $2,000/month.

BRRRR Strategy

Target Metrics

Purchase + Rehab: Below 75% of ARV

Cash-out refinance: Recover 100%+ of invested capital

Cash flow after refi: Positive (even $100-200/month is acceptable)

Wholesale

Assignment Fee Benchmarks

Minimum: $5,000

Average: $10,000-15,000

Great deal: $20,000+

The key is buying deep enough below ARV that there's room for both your fee AND the end buyer's profit.

Red Flags That Kill Deals

Negative cash flow on rentals (even with appreciation potential)

Foundation issues without proper engineering estimates

Environmental problems (mold, asbestos, lead paint in pre-1978 homes)

Declining neighborhoods — Check crime stats and school ratings

Over-leveraging — Don't stretch beyond 75% LTV

Analyze Any Deal in 60 Seconds

PropertyARV's Deal Analyzer runs all these calculations automatically. Input the property details, and get instant ROI, cap rate, cash-on-cash return, and a buy/pass recommendation.

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