Real Estate
Property Deal Review Checklist
I use this when a property looks good on first pass and I need to slow down before making an offer or signing anything. Work through it in order, write down the answer to every line, and treat any blank as a question you still need to answer.
What it helps with
Organize property facts, operating assumptions, financing terms, and unresolved risks before deciding whether to proceed.
When to use it
Use it before an offer, again during diligence, and whenever proposed terms change.
How to use this resource
- Gather the rent roll, actual collections, expense records, comparable sales, financing documents, and inspection findings.
- Enter verified figures separately from estimates. Write the source and date beside each assumption.
- Complete every section, stress-test costs and income, and record Go, No-go, or Renegotiate with the unresolved questions.
1. Property basics
- Confirm the full address, parcel number, and legal description.
- Record property type, unit count, bedrooms, bathrooms, and square footage.
- Note lot size, zoning, and whether the current use is allowed under that zoning.
- Record year built and any major renovations with their approximate dates.
- Note occupancy: owner occupied, tenant occupied, or vacant.
- Understand why the property is for sale and how long it has been on the market.
2. Financial underwriting: income
- Collect the current rent roll with lease start dates, end dates, and deposits.
- Compare current rents to market rents for similar units nearby.
- Verify actual collected rent with bank statements, not only the rent roll.
- List other income: parking, laundry, storage, pet fees.
- Apply a realistic vacancy and credit loss allowance for the area.
3. Financial underwriting: expenses
- Get property tax figures and estimate the tax after a sale reassessment if your area does that.
- Get insurance quotes for your own policy, not the seller's current rate.
- List utilities paid by the owner.
- Budget repairs and maintenance, and a separate reserve for capital items.
- Include property management even if you plan to self manage.
- Add HOA dues, landscaping, pest control, trash, and any other recurring costs.
4. Key numbers
Gross scheduled income (annual)
Effective gross income after vacancy (annual)
Total operating expenses (annual)
Net operating income (NOI = effective gross income minus operating expenses)
Cap rate (NOI divided by purchase price)
Annual debt service
Annual cash flow (NOI minus debt service, before income taxes and unbudgeted capital spending)
Total cash invested (down payment, closing costs, initial repairs)
Cash on cash return (annual cash flow divided by total cash invested)
Debt service coverage ratio (NOI divided by annual debt service)
5. Physical condition
- Order a professional inspection and read the full report, not only the summary.
- Check roof age and condition.
- Check foundation, drainage, and signs of water intrusion.
- Check plumbing, sewer line, electrical panel, and HVAC age.
- Look for unpermitted additions or conversions.
- Get written repair estimates for every item over your threshold.
6. Comparable sales
- Pull at least three recent sales of similar properties nearby.
- Adjust for size, condition, unit count, and location differences.
- Check active and pending listings to see where the market is moving.
- Confirm your after-repair value with a second source.
7. Financing terms
- Write down the loan amount, rate, term, amortization, and payment.
- Note any balloon date, prepayment penalty, or rate adjustment.
- If taking over existing financing or using seller financing, review the note and the existing loan documents.
- Confirm how the down payment and reserves will be funded.
- Run the deal at a higher rate and lower rent to see if it still works.
8. Legal and title
- Order a preliminary title report and review every exception.
- Check for liens, judgments, unpaid taxes, and easements.
- Review leases, HOA documents, and any service contracts that transfer.
- Confirm required disclosures have been delivered.
- Have an attorney review any non-standard structure before signing.
9. Risk factors
- Rent control or tenant protection rules in the area.
- Flood zone, fire zone, or other insurance risks.
- Dependence on a single tenant or a single source of income.
- Large deferred maintenance or capital needs in the next five years.
- Exit options: refinance, sale, or long-term hold, and what each requires.
10. Go or no-go decision
- The deal cash flows under conservative assumptions.
- All repair costs are known and funded.
- Title is clear or the issues have a defined fix.
- Financing terms are confirmed in writing.
- I can explain the biggest risk and how I would handle it.
- Decision recorded: Go, No-go, or Renegotiate, with the reason written down.
Illustrative example
See how to apply it
Sample figures or process, not John Her results- Sample figures only, not a John Her transaction: annual effective gross income $60,000; operating expenses $24,000; net operating income $36,000.
- If annual debt service is $30,000, annual cash flow is $6,000 before income taxes and unbudgeted costs. A $10,000 repair would exceed that annual cash flow.
- Decision: Renegotiate or obtain a funded repair reserve before proceeding. Confirm the expense assumptions and inspection estimate.
Shared metric definitions
Use the same meaning for these terms across the resources. Only apply metrics relevant to your review.
- Revenue
- Income earned or invoiced in the period, before subtracting expenses. Keep the same accounting basis across comparisons; it is not the same as cash received.
- Collections
- Cash payments actually received in the period, including payments for earlier invoices.
- Operating expenses
- Recurring costs required to operate, excluding financing payments; note separately any taxes, capital repairs, and one-time items not included.
- Net operating income (NOI)
- For property, effective gross income after vacancy and credit loss minus operating expenses, before debt service and income taxes.
- Cash flow
- Net operating income minus debt service for a property; for a business, cash received minus cash paid in the period. State any taxes and capital spending excluded.
- Labor cost
- Wages, payroll taxes, and contractor pay for the period.
- Customers lost (churn)
- The number of customers who canceled or did not renew during the period; do not confuse this count with a percentage churn rate.
Free to use and share. This is a general working tool, not legal, tax, or financial advice.
Property review video
When a Deal's Margin Is Too Thin
A tight margin leaves little room for changed costs or missed assumptions. Before risking capital, check the downside case, repair budget, and the point where a deal stops working. This written takeaway is a topic summary, not a verbatim transcript.
Use the Property Deal Review ChecklistFinancing comparison
Comparing Cash Offers and Seller Financing
A higher seller-financed price cannot be compared with a lower cash price on price alone. Compare the down payment, rate, payment schedule, amortization, balloon date, total interest, taxes, closing costs, and the time value of payments. The seller also weighs immediate liquidity against payment risk. Neither price is automatically better; the answer depends on verified terms, costs, and risks. These amounts come from the video title, not a reported John Her transaction.
Review financing terms in the checklist