Good Deal or Bad Investment? Here's How to Know

May 22, 2025

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How Can I Know an Investment Property Is a Good Deal?

Knowing whether a property is a good deal isn’t about guessing, hoping, or trusting your “gut.” It’s about the numbers and the fundamentals. Here’s the fast track:

📊 1. Run the Numbers

  • Cash flow: Does the rent cover mortgage, taxes, insurance, and expenses—with something left over for you?

  • Cap rate: A good baseline for rental properties (many aim for 6-8%, depending on the market).

  • ROI: Especially important when using leverage. Know your return on cash invested.

🏡 2. Compare Comps

  • Are you buying below market value?

  • What are similar properties selling (and renting) for nearby?

🔎 3. Inspect the Condition

  • Deferred maintenance, hidden repairs, or poor layout can turn a “good deal” into a money pit fast. Always inspect—or have someone you trust do it.

🌎 4. Analyze the Location

  • Is demand growing? Are rents stable or rising?

  • Is it landlord-friendly (or at least landlord-tolerable)?

Bottom Line:

A good deal = strong cash flow + value upside + manageable risks. 🎯

Run the numbers, verify everything, and don’t fall in love with the deal. (It won’t love you back if the math is wrong. 😬)

The BIG Question for Comparison

How does this deal compare to other things I could be doing with my money?