1. Define your buy box first
A specific buy box gets you better deal flow than a broad one. Wholesalers send deals to the investor they can picture buying it.
- Markets: name the counties and ZIP codes, not just the state.
- Strategy: flip, BRRRR, buy-and-hold, or short-term rental — each prices risk differently.
- Price band: purchase price range and maximum all-in cost.
- Property profile: bed/bath minimums, year built, square footage, foundation type.
- Condition tolerance: cosmetic only, full gut, or structural work accepted.
- Return floor: minimum ROI, cash-on-cash, or cash flow per door.
2. Underwrite in four numbers
- ARV — pull 3–5 sold comps within 1 mile, sold in the last 6 months, similar size and style. Adjust for condition, not for list price.
- Rehab — walk the scope room by room and price at contractor rates, then add a 10–15% contingency.
- MAO (Maximum Allowable Offer) = (ARV x 0.70) - Rehab - Assignment fee. Tighten to 0.75 in hot markets, loosen to 0.65 where days-on-market are long.
- Exit — model both exits: retail resale and rental hold. A deal that only works on one exit carries more risk.
3. Rental math that matters
- NOI = gross rent - vacancy - taxes - insurance - management - maintenance - capex reserve.
- Cap rate = NOI / purchase price.
- Cash-on-cash = annual pre-tax cash flow / total cash invested.
- DSCR = NOI / annual debt service. Most lenders want 1.20 or better.
- Budget reserves: 5–8% vacancy, 5–10% maintenance, 5–8% capex, 8–10% management.
4. Due diligence checklist
- Preliminary title report and lien search
- Property tax status and any special assessments
- Permit history for additions and converted space
- Flood zone, insurance quote, and HOA documents
- Contractor walkthrough with written scope
- Rent roll, leases, and estoppels if occupied
- Confirmed exit comps, not asking prices
5. Fund the deal
- Cash — fastest close, strongest negotiating position, lowest cost.
- Hard money — typically 10–12% interest plus 2–3 points, 70–75% LTC; underwrite the holding cost honestly.
- Private money — relationship-based; put terms in writing with a recorded note and deed of trust.
- DSCR refinance — the standard exit for BRRRR; verify seasoning requirements before you buy.
6. Close faster than the competition
- Keep current proof of funds ready to send within minutes.
- Pre-select a title company that handles assignments and double closes.
- Respond to new deal emails the same day — speed wins more deals than price.
- Keep a standing contractor for 48-hour walkthroughs.
- Honor your first number. Retrading kills future deal flow.