Real Estate Investment Analysis Checklist

Use BLS QCEW for employment and Census ACS for population and median household income at the MSA and county level. Flag any submarket where job growth is negative or where one employer represents more than 25% of the local payroll — single-employer towns are a known concentration risk.

Pull leased comps from the MLS plus Rentometer or Zillow Rental Manager for the last 90 days. Match on bed/bath count, square footage, and condition tier. Discard comps older than six months in fast-moving markets.

Vacancy under 5% with falling DOM signals a landlord market; over 8% with rising DOM means longer lease-ups and stronger concession pressure. Use the local MLS rental dashboard or CoStar/Yardi Matrix where available.

Check the municipal planning department for pending rezonings, new multifamily permits, and infrastructure projects within a one-mile radius. A 300-unit complex breaking ground next year will compress your rents at lease renewal.

Use trailing-12 actuals where available, market rents otherwise. Underwrite to 7-8% vacancy and credit loss minimum unless you have a documented reason to go lower. Compare your computed cap rate to the submarket cap range — a deal priced 75 bps inside market deserves scrutiny, not enthusiasm.

Most lenders require DSCR of 1.20-1.25 minimum on residential investment loans. Cash-on-cash should clear your hurdle rate after debt service, taxes, insurance, and reserves — not before. Watch for pro formas that quote yield on cost rather than yield on equity to inflate the number.

Roof, HVAC, water heater, flooring, paint, appliances. Use a component-based reserve schedule (remaining useful life × replacement cost) rather than a flat 5% of gross rent — the flat-percentage approach systematically under-reserves on older properties.

Run downside cases: rents flat for 24 months, vacancy at 12%, capex 25% over budget. If the deal still services debt under that scenario, it has a margin of safety. If it goes negative, the base case is doing all the work.

Buy-and-hold for cash flow, BRRRR with refinance at month 12, or value-add flip at 24-36 months — each implies a different financing structure and underwriting standard. Lock the strategy before sizing the loan.

Workforce renter, young professional, student, Section 8 voucher holder, or short-term rental guest — each implies different rent caps, turnover frequency, and management overhead. Source-of-income discrimination is illegal in many jurisdictions, so don't structure tenant criteria around that protected class.

Get a written term sheet covering rate, points, LTV, DSCR floor, prepayment penalty, and recourse. DSCR loans, conventional Fannie investment loans, and portfolio loans price very differently — confirm which product the LO is actually quoting.

Flood zone (FEMA), wildfire zone, foundation type, deferred maintenance, environmental (former gas station, dry cleaner adjacency), HOA litigation, special assessments. Score each on likelihood × impact and document the top three.

If the loan is an ARM or has a balloon, model what happens to DSCR at +200 bps and +400 bps. A deal that pencils only at today's rate has refinance risk baked in.

Compare the underwritten metrics against your hurdle rates: cap rate, cash-on-cash, DSCR, IRR. If the deal clears, proceed to due diligence. If it misses on price alone, send a renegotiation letter to the seller's agent. If it misses on fundamentals (location, condition, tenant base), pass.

Order from a licensed inspector with rental-property experience. Add sewer scope, radon, and termite as separate scopes — they are not included in a standard inspection. For pre-1978 homes, confirm lead-based paint disclosure has been delivered with the EPA pamphlet.

Look for unreleased mortgages, mechanics' liens, easements that constrain use, and HOA assessments. Schedule B-II exceptions are where the surprises live; read every one.

Reconcile the rent roll against trailing-12 bank deposits, not just the seller's spreadsheet. Common gotchas: rent concessions not disclosed, tenants behind two months but listed as current, month-to-month tenancies represented as long-term leases.

Check existing tenant criteria, advertising copy, and screening practices for Fair Housing Act compliance. Pull any open code-enforcement cases from the municipality. In rent-controlled jurisdictions, confirm registered rent levels match the rent roll.

Project exit value at three cap-rate scenarios: held flat from purchase, +50 bps (cap-rate expansion), and -50 bps (compression). Layer in tax consequences: depreciation recapture at 25% plus capital gains, or 1031 deferral with identification and closing windows of 45 and 180 days.

Set 90-day, 12-month, and annual review checkpoints to compare actuals against pro forma. The 12-month review is when refinance feasibility, capex variance, and rent-growth assumptions get tested against reality.

The principal or investment committee signs off on a written recommendation summarizing thesis, key metrics, top three risks, and exit plan. The signed recommendation goes in the deal file alongside the pro forma and inspection report.