By name: deal-analysis description: Underwrite and analyze any residential or small commercial (1-50 unit) real estate investment deal. Use this skill whenever someone asks to analyze a property, run numbers on a deal, evaluate cash flow, calculate returns, do a BRRRR analysis, compare properties, run sensitivity analysis, or score a deal. Also trigger when someone provides a property address or listing URL and wants to know if it's a good investment. This is the primary analytical engine — use it aggressively for any property-level financial analysis.
Deal Analysis Skill
This skill handles all property-level financial analysis: cash flow modeling, return calculations, deal scoring, BRRRR analysis, sensitivity testing, and multi-deal comparison.
Quick Screening (Before Full Analysis)
Before running a full underwriting, apply these rapid screening heuristics to determine if a deal warrants deeper analysis:
The 1% Rule
Monthly gross rent should be ≥ 1% of purchase price. This is a screening tool, not a decision tool.
- Example: $200,000 property should rent for ≥ $2,000/month
- Markets with high appreciation potential may justify < 1%
- Passes screening → proceed to full analysis
- Fails screening → flag and ask investor if they want full analysis anyway
The 50% Rule
Estimate that ~50% of gross rent goes to operating expenses (excluding debt service). Use this for quick NOI estimation before you have itemized expenses.
- Gross Rent × 0.50 = Estimated NOI
- Then subtract debt service for estimated cash flow
- This is a sanity check, not a substitute for itemized underwriting
The 70% Rule (Flips/BRRRR)
Maximum purchase price = (ARV × 70%) - Rehab Costs
- Example: ARV $300,000, Rehab $50,000 → Max offer = $160,000
- Adjust percentage based on market (65-75% range)
Full Underwriting Model
Required Inputs
Gather these before running analysis. Flag any that are missing or estimated:
PROPERTY DATA
- Address
- Property type (SFR, duplex, triplex, quad, small multi)
- Year built
- Square footage (total and per unit)
- Bedrooms/bathrooms (per unit)
- Lot size
- Current condition (1-10 scale or description)
FINANCIAL DATA
- Asking price or purchase price
- Current rents (per unit, actual or market)
- Property taxes (actual, current year)
- Insurance (actual or estimated)
- HOA/condo fees (if applicable)
- Utility costs (who pays what)
- Property management (% or flat fee)
- Current vacancy status
- Any existing leases (terms, expiration)
DEAL TERMS
- Financing structure (see Financing skill for details)
- Closing costs estimate
- Rehab budget (if applicable)
- Holding period assumption
Core Calculations
Execute these calculations in order. Save intermediate results for the sensitivity analysis.
1. Gross Potential Income (GPI)
GPI = Sum of all unit market rents × 12
+ Other income (laundry, parking, pet fees, storage)
2. Effective Gross Income (EGI)
EGI = GPI - Vacancy Loss - Credit Loss
Vacancy Loss = GPI × vacancy_rate [DEFAULT: 8%]
Credit Loss = GPI × credit_loss_rate [DEFAULT: 2%]
3. Operating Expenses (OpEx)
Itemize all expenses. Do NOT use percentage estimates when actuals are available.
FIXED EXPENSES
- Property taxes [ACTUAL or estimate from county assessor]
- Insurance [ACTUAL or estimate $1,200-2,400/yr for SFR]
- HOA/condo fees [ACTUAL]
VARIABLE EXPENSES
- Repairs & maintenance [DEFAULT: 5% of EGI for <20yr old, 8% for >20yr]
- CapEx reserves [DEFAULT: 5% of EGI minimum, see CapEx table below]
- Property management [DEFAULT: 8-10% of EGI for professional mgmt]
- Vacancy turnover costs [DEFAULT: $500-1,500 per turn per unit per year]
- Advertising/leasing [DEFAULT: 1 month rent per vacancy occurrence]
- Landscaping/snow [ACTUAL or $100-300/month depending on property]
- Utilities (owner-paid) [ACTUAL]
- Pest control [DEFAULT: $50-100/month]
- Legal/accounting [DEFAULT: $500-1,500/year]
- Miscellaneous [DEFAULT: 2% of EGI]
TOTAL OpEx = Sum of all above
OpEx Ratio = Total OpEx / EGI [HEALTHY: 35-50% for residential]
4. Net Operating Income (NOI)
NOI = EGI - Total OpEx
5. Debt Service
Annual Debt Service = Monthly Payment × 12
Monthly Payment = use standard amortization formula
P × [r(1+r)^n] / [(1+r)^n - 1]
where P = loan amount, r = monthly rate, n = total months
6. Cash Flow
Annual Cash Flow = NOI - Annual Debt Service
Monthly Cash Flow = Annual Cash Flow / 12
Per Unit Cash Flow = Annual Cash Flow / number_of_units
Per Door Monthly = Monthly Cash Flow / number_of_units
7. Return Metrics
Cash-on-Cash Return (CoC)
CoC = Annual Cash Flow / Total Cash Invested × 100
Total Cash Invested = Down Payment + Closing Costs + Rehab + Reserves
Target: varies by investor profile, typically 8-12% minimum.
Cap Rate
Cap Rate = NOI / Purchase Price × 100
Note: Cap rate ignores financing. Useful for comparing properties and market-level analysis.
Gross Rent Multiplier (GRM)
GRM = Purchase Price / Annual Gross Rent
Lower is better. Market-dependent; typically 8-15 for cash-flowing properties.
Debt Service Coverage Ratio (DSCR)
DSCR = NOI / Annual Debt Service
Minimum 1.25 for most lenders. Below 1.0 = negative cash flow.
Return on Equity (ROE)
ROE = Annual Cash Flow / Current Equity × 100
Current Equity = Property Value - Loan Balance
Important for refi decisions — if ROE drops below CoC threshold, consider harvesting equity.
Internal Rate of Return (IRR) Calculate using full hold period cash flows:
Year 0: -Total Cash Invested
Year 1-N: Annual Cash Flow (with growth assumptions)
Year N: Cash Flow + Net Sale Proceeds
Net Sale Proceeds = Sale Price - Selling Costs - Remaining Loan Balance
Use iterative calculation or numpy IRR function.
Equity Multiple
Equity Multiple = Total Cash Received / Total Cash Invested
CapEx Reserve Guide
Use this table for estimating remaining useful life and annual CapEx reserves:
| Component | Useful Life | Replacement Cost (SFR) | Annual Reserve |
|---|---|---|---|
| Roof | 20-30 yrs | $8,000-15,000 | $400-500/yr |
| HVAC | 15-20 yrs | $5,000-10,000 | $333-500/yr |
| Water Heater | 10-15 yrs | $1,000-2,000 | $100-133/yr |
| Appliances | 10-15 yrs | $2,000-5,000 | $200-333/yr |
| Flooring | 7-15 yrs | $3,000-8,000 | $400-533/yr |
| Paint (ext) | 7-10 yrs | $3,000-6,000 | $428-600/yr |
| Plumbing | 20-30 yrs | $5,000-15,000 | $250-500/yr |
| Electrical | 25-40 yrs | $5,000-12,000 | $200-300/yr |
| Windows | 20-30 yrs | $5,000-15,000 | $250-500/yr |
| Driveway | 15-25 yrs | $3,000-8,000 | $200-320/yr |
Adjust based on property age, condition, and materials. For multi-unit, multiply per-unit items by unit count.
BRRRR Analysis
When the strategy is Buy-Rehab-Rent-Refinance-Repeat, use this extended model:
Phase 1: Acquisition
Purchase Price
+ Closing Costs (acquisition)
+ Holding Costs During Rehab (insurance, taxes, utilities, loan payments)
+ Rehab Budget (itemized preferred)
= Total Project Cost (All-In Cost)
Phase 2: Rehab
Rehab Timeline: _____ months
Rehab Budget Breakdown:
Kitchen: $______
Bathrooms: $______
Flooring: $______
Paint: $______
Exterior: $______
Systems: $______
Contingency (15-20%): $______
Total Rehab: $______
Phase 3: Rent
Run standard underwriting (above) using post-rehab market rents.
Phase 4: Refinance
After-Repair Value (ARV): $______ [from comps]
Refinance LTV: ____% [typically 70-80%]
New Loan Amount: $______ = ARV × LTV
Cash Out: $______ = New Loan - Original Loan Balance
Money Left In Deal: $______ = Total Project Cost - Cash Out
Phase 5: Final Returns
Cash-on-Cash (based on money left in deal):
CoC = Annual Cash Flow / Money Left In Deal × 100
If Money Left In Deal ≤ 0:
→ "Infinite return" — all capital recovered plus surplus
→ Report surplus cash returned as a dollar amount
Velocity of Money:
Time from acquisition to refinance completion: ____ months
Annualized capital efficiency: Total Project Cost / months × 12
BRRRR Feasibility Scorecard
Score each factor 1-5:
| Factor | Score | Notes |
|---|---|---|
| Purchase below ARV | /5 | Need ≥20% discount |
| Rehab scope clarity | /5 | Cosmetic vs. structural |
| Rent comp confidence | /5 | Strong comps available? |
| ARV comp confidence | /5 | Recent sales support value? |
| Refinance feasibility | /5 | Lender will hit target LTV? |
| Cash recovery % | /5 | Will get ≥90% cash back? |
| Total | /30 | ≥24 = strong candidate |
Sensitivity Analysis
For every full underwriting, run sensitivity on these variables:
Variables to Stress Test
- Purchase price: ±5%, ±10%
- Rent: ±5%, ±10%
- Vacancy rate: base case, +3%, +5%, +10%
- Interest rate: base case, +0.5%, +1.0%, +1.5%
- Expenses: base case, +10%, +20%
- Appreciation: 0%, 2%, 4% annually
Output Format
Generate a sensitivity matrix showing CoC Return and Monthly Cash Flow for each variable combination:
| Variable | Downside | Base Case | Upside |
|---------------|-----------|-----------|----------|
| Rent -10% | CoC: X% | CoC: Y% | N/A |
| Vacancy +5% | CoC: X% | CoC: Y% | N/A |
| Rate +1% | CoC: X% | CoC: Y% | N/A |
| All downside | CoC: X% | CoC: Y% | CoC: Z% |
Highlight any scenario where cash flow goes negative in bold red or with a ⚠️ marker.
Break-Even Analysis
Calculate the break-even point for:
- Vacancy: what vacancy rate makes cash flow = $0?
- Rent: what rent reduction makes cash flow = $0?
- Rate: what interest rate makes cash flow = $0?
Deal Scoring Matrix
Use this weighted scoring system for comparing deals:
| Category | Weight | Score Range | Criteria |
|---|---|---|---|
| Cash Flow | 25% | 0-100 | Per-door monthly relative to market |
| Returns | 20% | 0-100 | CoC, IRR vs. investor minimums |
| Risk | 20% | 0-100 | DSCR, break-even vacancy, condition |
| Market | 15% | 0-100 | Population growth, rent growth, employment |
| Upside | 10% | 0-100 | Value-add potential, rent-to-market gap |
| Ease | 10% | 0-100 | Turnkey vs. heavy rehab, management needs |
Total Score = Σ(Category Score × Weight)
Scoring thresholds (adjust per investor profile):
- 80-100: Strong buy — meets or exceeds all criteria
- 65-79: Worth pursuing — meets most criteria with manageable risks
- 50-64: Marginal — needs specific favorable conditions
- Below 50: Pass — doesn't meet investment criteria
Multi-Deal Comparison
When comparing 2+ deals, output a comparison table:
| Metric | Property A | Property B | Property C |
|-------------------------|-----------|-----------|-----------|
| Address | | | |
| Price | | | |
| Units | | | |
| Monthly Gross Rent | | | |
| 1% Rule | | | |
| NOI | | | |
| Cap Rate | | | |
| CoC Return | | | |
| Monthly Cash Flow | | | |
| Per Door Cash Flow | | | |
| DSCR | | | |
| Break-even Vacancy | | | |
| Deal Score | | | |
| Recommendation | | | |
Follow the comparison table with a narrative analysis explaining why one deal is preferred over others, specific to the investor's goals.
Output File Structure
Save all analysis to: ~/.rei-agent/deals/pipeline/<sanitized_address>/
<address>/
├── analysis.md # Full underwriting report
├── pro_forma.xlsx # Excel pro forma (if xlsx skill available)
├── sensitivity.md # Sensitivity analysis results
├── assumptions.json # All assumptions used
├── comps.md # Comp data used (if available)
└── metadata.json # Timestamp, data sources, certainty flags
Scripts
scripts/calculate_returns.py
Python script for all return calculations. Import and use for consistency:
# Usage: python scripts/calculate_returns.py --input deal_params.json --output results.json
# Also importable: from scripts.calculate_returns import calculate_coc, calculate_irr, ...
Read scripts/calculate_returns.py for implementation details before running calculations.
scripts/sensitivity.py
Generates sensitivity matrices. Accepts a base-case parameter file and stress-test ranges.
scripts/score_deal.py
Applies the deal scoring matrix. Accepts analysis output and investor profile.