How to Analyze a Rental Property Before Buying
Verify the rent, test vacancy and costs, inspect the property, and compare the result with other opportunities.
1. Verify estimated market rent
Select close rental comps. Compare their location, size, type, condition, and features. Use a supported range instead of the seller's projected rent.
2. Test vacancy and operating costs
Do not assume twelve full months of rent. Include vacancy, taxes, insurance, repairs, maintenance, utilities paid by the owner, management, and association fees.
3. Review the property and local rules
Get an inspection. Check permits, insurance limits, rental registration, and landlord-tenant rules. Confirm that the planned rental use is allowed.
4. Compare returns with the same assumptions
Use GRM for a quick comparison, then calculate cash flow with your actual financing and expense assumptions. Stress-test lower rent, higher vacancy, and unexpected repairs before you make an offer.