← Back to BlogMay 202612 min readDan White
How to Analyze a Real Estate Deal: Step-by-Step Guide
Deal analysis is the core skill of real estate investing. Every other skill — negotiation, marketing, construction management — depends on knowing your numbers. Here is the exact framework I use on every deal before making an offer.
New investors either skip analysis entirely (dangerous) or get paralyzed by over-analysis (also dangerous). The goal is a consistent process that takes 15–30 minutes and gives you a clear go/no-go with a maximum offer price.
Current Northern Virginia Market
Live Market Data
Washington, DC Housing Market
Cool Market
Data through Mar 2026
Median Sale Price
$590,000
+0.8% YoY
Median Days on Market
44 days
lower = faster market
Sale-to-List Ratio
99.7%
buyers' market
Homes Sold
4,457
last reported month
Source: Redfin Data Center. Updated monthly. Data reflects Washington, DC residential sales.
redfin.comStep 1: Establish ARV
Before anything else, determine what the property will sell for after renovation. Pull three comparable sales — within 0.5 miles, sold within 90 days, similar size and condition after renovation. Average them and apply conservative adjustments. This is your ARV.
Step 2: Estimate Rehab Cost
Walk the property systematically. Roof, HVAC, electrical, plumbing — these are the expensive surprises. Kitchen and baths are the high-ROI cosmetic items. Get a contractor walkthrough before making an offer on any property over $50K in estimated rehab. Your rehab estimate drives every number downstream.
Step 3: Calculate Your Maximum Offer
For a flip: (ARV × 0.70) − Rehab = Max Offer. For a rental: work backward from required cash flow given your financing terms. For wholesale: buyer's max offer minus your required assignment fee.
Step 4: Model All Costs
- Acquisition costs: Purchase price, closing costs (1–3%), inspection, title search
- Rehab costs: Your estimate plus 10–15% contingency
- Holding costs: Financing (interest + points), insurance, taxes, utilities for your expected hold period
- Selling costs: Agent commissions (5–6%), closing costs, staging, any buyer concessions
Step 5: Calculate Projected Profit and ROI
Profit = ARV − Total Costs. ROI = Profit / Total Cash Invested. For a flip, I target minimum 15% ROI and $30,000 net profit. For a rental, I target positive cash flow and acceptable cash-on-cash return given the market.
Run Your Full Deal Analysis Free
FreeDealCalc runs all five steps automatically — ARV, rehab, max offer, cost modeling, and profit/ROI — in one free conversation with Freddie.
Analyze My Deal Free →Deal Analysis Red Flags
- ARV pulled from wholesaler's package, not your own comps
- Rehab estimate done without a contractor walkthrough on a heavy rehab
- Forgetting holding costs — 6 months of hard money at 12% is 6% of ARV gone before you start
- Using best-case ARV instead of conservative ARV
- No contingency on rehab estimate
Dan White is a licensed Virginia real estate agent at Pearson Smith Realty and founder of FreeDealCalc.com. He has been analyzing and closing deals in Northern Virginia for 20+ years.