We have a strict underwiring process to ensure we provide only the best investment opportunities. The following categories and data are our target values for providing great investments.

1. Market & Neighborhood Analysis

We only acquire properties in high-demand areas with strong investment potential. To determine a viable market, we analyze:

  • Median Home Prices: We target properties at or below 70% of the area’s median price for strong appreciation potential.
  • Population Growth: The area should show at least 1.5%+ annual population growth over the past 3 years.
  • Job Market Strength: Employment should be growing with multiple strong industries (e.g., healthcare, tech, manufacturing).
  • School Ratings: Higher-rated school districts tend to attract better tenants and buyers.
  • Rental Demand: We ensure vacancy rates are below 7% and rental price growth is at least 3% per year.

2. Comparables & ARV Calculation

We determine a property’s After Repair Value (ARV) using recent comparable sales (comps) in the same neighborhood. Our process includes:

  • Radius: We analyze comps within 0.5 miles of the subject property.
  • Sale Date: Comps must have closed within the past 6 months (3 months in fast-moving markets).
  • Similar Features: We compare properties with matching beds, baths, square footage (±15%), lot size, and year built (±10 years).
  • Condition Matching: If the property requires heavy rehab, we compare it to fully renovated homes in the area.
  • Price Per Square Foot (PPSF): We take the average PPSF of at least 3 comps to determine an accurate ARV.

3. Repair Cost Assessment & Rehab Scope

A crucial part of our underwriting is estimating rehab costs accurately to protect investor profit margins. We categorize renovations as follows:

  • Light Rehab: Paint, flooring, minor kitchen/bath updates, fixtures. Typical budget $15,000 - $30,000
  • Moderate Rehab: Kitchen remodel, bathroom updates, new roof, minor HVAC/plumbing/electrical work. Typical budget $30,000 - $60,000
  • Full Rehab: Full gut renovation, major structural issues, foundation repair, new systems. Typical budget $60,000 - $120,000+

4. Maximum Allowable Offer (MAO) Calculation

We determine the highest price we can offer for a property while ensuring strong investor returns. The standard wholesale MAO formula is:

MAO = ARV * 0.70 - Repairs

5. Rental Market & Cash Flow Analysis

For buy-and-hold investors, we ensure the property meets cash flow and return thresholds by analyzing:

  • Market Rent Comps: We use at least 3 leased comparables to determine achievable rent.
  • Cap Rate: We aim for a minimum 7%+ cap rate in most markets.
  • Cash-on-Cash Return: We target at least 12%+ annual cash-on-cash return.
  • Gross Rent Multiplier (GRM): Should be under 10 for strong rental value.

6. Exit Strategy Assessment

We ensure multiple exit strategies are viable:

  • Fix & Flip: Property can be resold within 6 months for at least a 20%+ ROI.
  • Buy & Hold: Property cash flows positively with at least 1.2x rent-to-mortgage ratio.
  • BRRRR Method: Investor can refinance and recover at least 75% of capital invested.
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