Real Estate Investment Analysis
Comprehensive real estate investment analysis — from deal screening through financial modeling to investor-ready output. Covers all property types, standard and advanced metrics, code generation, and tax-aware structuring.
Analysis Workflow
Follow this 6-step process for any deal or market analysis:
- Define scope — Identify property type, investment strategy, and target output format
- Gather data — Collect property financials, market data, and comps (use API reference if automating)
- Build pro forma — Construct income statement: Gross Rent → Vacancy → EGI → OpEx → NOI → Debt Service → Cash Flow
- Calculate returns — Apply appropriate metrics (see Quick Reference below)
- Stress test — Run sensitivity analysis, scenarios, or Monte Carlo simulation
- Report — Generate investor-ready output with recommendations
Quick Reference — Core Metrics
| Metric | Formula | Typical Range |
|---|---|---|
| NOI | Effective Gross Income - Operating Expenses | Varies by asset |
| Cap Rate | NOI / Property Value | 4-10% (market-dependent) |
| Cash-on-Cash | Annual Pre-Tax Cash Flow / Total Cash Invested | 8-12% target |
| DSCR | NOI / Annual Debt Service | 1.2x+ (lender minimum) |
| IRR | Discount rate zeroing NPV of all cash flows | 15-20% target |
| Equity Multiple | Total Distributions / Total Capital Invested | 2.0x+ over hold |
| GRM | Property Price / Annual Gross Rent | 8-15 (lower = better) |
| Break-even Occ. | (OpEx + Debt Service) / Potential Gross Income | <85% preferred |
For complete formulas, Python code, and Excel equivalents → load references/financial-metrics.md
Property Type Router
Select the analysis framework based on property type:
| Property Type | Key Metrics | Rules of Thumb | Reference |
|---|---|---|---|
| SFR / Small Multi (1-4) | CoC, Cap Rate, DSCR | 1% rule, 50% rule, 70% rule | references/property-types.md §Residential |
| BRRRR | ARV, Rehab ROI, Refi LTV | 70% rule: Max buy = 70% ARV - repairs | references/property-types.md §Residential |
| House Hack | Effective housing cost, FHA terms | 3.5% down FHA, self-sufficiency test | references/property-types.md §Residential |
| Large Multifamily (5+) | Per-unit metrics, NOI, Cap Rate | OpEx ratio 35-45% | references/property-types.md §Commercial |
| Commercial (Office/Retail) | Per-SF metrics, lease analysis | NNN vs Gross lease impact | references/property-types.md §Commercial |
| Short-Term Rental | RevPAR, ADR, Occupancy | Revenue = ADR x Occ x 365 - fees | references/property-types.md §STR |
| Land / Development | Absorption rate, dev pro forma | Total cost vs projected value | references/property-types.md §Land |
Analysis Type Router
Select the analysis methodology based on what the user needs:
| Need | Method | Reference File |
|---|---|---|
| Run the numbers on a deal | Pro forma + core metrics | references/financial-metrics.md |
| Stress test assumptions | Sensitivity analysis (bear/base/bull) | references/advanced-analysis.md §Sensitivity |
| Model uncertainty/risk | Monte Carlo simulation | references/advanced-analysis.md §MonteCarlo |
| Syndication distributions | Waterfall modeling (GP/LP splits) | references/advanced-analysis.md §Waterfall |
| Compare/score markets | Market scoring framework | references/market-analysis.md §Scoring |
| Pull market data via API | API integration patterns | references/market-analysis.md §APIs |
| Find and adjust comps | Comparable analysis | references/market-analysis.md §Comps |
| Optimize tax impact | Depreciation, cost seg, 1031 | references/tax-strategy.md |
| Choose entity structure | LLC, LP, S-Corp comparison | references/tax-strategy.md §Entity |
Output Format Selection
Adapt output to the user's request:
Spreadsheet-ready — Generate formatted tables with formulas. Use pandas DataFrames exported to CSV/Excel. Include Excel formula equivalents for each calculation.
Decision framework — Provide structured narrative analysis with go/no-go recommendation. Include risk factors, key assumptions, and sensitivity ranges.
Code generation — Produce Python scripts using numpy-financial and pandas. Include complete, runnable pro forma models, Monte Carlo simulators, or waterfall calculators.
Investor report — Combine all three: executive summary, financial tables, risk analysis, and appendix with methodology.
Operating Expense Benchmarks by Property Type
| Property Type | OpEx Ratio (% of EGI) | Management Fee |
|---|---|---|
| Single-Family Rental | 35-50% | 8-10% |
| Small Multifamily (2-4) | 35-45% | 8-10% |
| Large Multifamily (5+) | 35-45% | 5-8% |
| Office | 35-55% | 3-5% |
| Retail (NNN) | 15-25% | 3-5% |
| Retail (Gross) | 60-80% | 3-5% |
| Industrial | 15-25% | 3-5% |
| Short-Term Rental | 50-65% | 20-25% |
Key Tax Thresholds (2025-2026)
| Strategy | Key Detail |
|---|---|
| Depreciation | Residential: 27.5yr, Commercial: 39yr (straight-line) |
| Bonus Depreciation | 100% for property placed in service Jan 20, 2025 – Dec 31, 2030 |
| Cost Segregation | Reclassify 15-40% of building into 5/7/15-yr assets |
| Section 179 | $2.5M max deduction (2025), phase-out at $4M |
| 1031 Exchange | 45-day ID period, 180-day closing, like-kind real property only |
| Opportunity Zones | Made permanent (2025), 10-year gain exclusion on QOF investment |
For complete tax analysis with IRS code references → load references/tax-strategy.md
API Quick Reference
| Provider | Best For | Pricing | Auth |
|---|---|---|---|
| Mashvisor | STR + LTR rental data | $30-$120/mo | x-api-key header |
| AirDNA | STR performance data | $12-$599/mo | Bearer token |
| ATTOM | Deep property data (155M+ properties) | $850-$2K/mo | apikey param |
| Rentcast | Rental estimates | Free-$449/mo (50 free/mo) | X-Api-Key header |
| Census Bureau | Demographics, housing | Free (API key required) | key param |
| Redfin Data Center | Market trends | Free (CSV download) | None |
For endpoint URLs, Python examples, and integration patterns → load references/market-analysis.md
Waterfall Distribution Quick Reference
Standard syndication tiers:
| Tier | IRR Hurdle | LP Share | GP Share |
|---|---|---|---|
| 1 (Return of Capital + Pref) | 0-8% | 100% | 0% |
| 2 (First Promote) | 8-12% | 90% | 10% |
| 3 (Second Promote) | 12-18% | 80% | 20% |
| 4 (Final Split) | 18%+ | 60% | 40% |
Market data: 8% pref in 40% of deals, 10% pref in 30% of deals. 85% of waterfalls use IRR hurdles.
For complete waterfall mechanics, catch-up provisions, and Python calculator → load references/advanced-analysis.md
Reference File Index
Load the appropriate reference file based on the analysis need:
| File | Contents | When to Load |
|---|---|---|
references/financial-metrics.md | 12 metrics with formulas, Python functions, Excel formulas, complete RealEstateProForma class, amortization schedules | Building a pro forma, calculating returns, generating Python/Excel models |
references/advanced-analysis.md | Sensitivity tables, Monte Carlo simulation (Python), waterfall calculator, syndication LP/GP mechanics | Stress testing deals, modeling risk, syndication analysis |
references/property-types.md | BRRRR framework, house hack analysis, commercial underwriting, STR revenue modeling, land development feasibility | Analyzing a specific property type with tailored frameworks |
references/market-analysis.md | Market scoring with 15+ indicators, 6 API integrations with Python code, comp adjustment methodology, submarket signals | Comparing markets, pulling data via APIs, running comps |
references/tax-strategy.md | Depreciation schedules, cost segregation savings, 1031 exchange rules, bonus depreciation (2025-2030), opportunity zones, entity structure comparison | Tax-optimizing a deal, choosing entity structure, planning exchanges |
Audience Adaptation
- Beginner investors: Explain metric meanings, recommend starting with the 1% rule and cash-on-cash return, walk through pro forma line by line
- Experienced investors: Skip basics, lead with IRR and equity multiple, provide code/spreadsheet output, focus on sensitivity analysis and tax optimization
- Default to expert-level analysis unless context suggests otherwise