One of the most common questions I hear from new investors is:
How do I know if a property is even worth analyzing?
You can save hours of time (and a whole lot of frustration) by applying a few key filters up front.
Before I highlight the five things I look for in a location and property, I want to start with the overall strategy and priorities.
Start with the Priority: Cash Flow
Before anything else, I come back to one core principle:
Cash flow is king.
That’s the money left over after paying your mortgage, taxes, insurance, and other operating expenses. Yes, appreciation is great when it happens but it’s unpredictable and should never be the reason you buy. Hoping values will go up is speculation.
And while I love tax benefits just like any investor, I always say:
Don’t let the tax tail wag the dog.
Bonus depreciation is amazing. But don’t buy a deal that doesn’t cash flow just because it helps your taxes.
The Strategy: Buy Smart and Think Long Term
Here’s how I frame every deal:
- Buy at a great basis (low price).
- Prioritize cash flow. Tax perks and equity are great, but they’re not the foundation.
- Look for value you can create i.e. can you raise rents, improve curb appeal, add a bedroom or bath?
- Plan your exit. Whether it’s a refinance, 1031 exchange, or long-term hold, know your options and potential exit paths up front.
Cash flow gives you flexibility. It helps you hold during tough market cycles and gives you options to refinance or sell when the time is right.
My Initial Filters: What Makes Me Take a Closer Look
Most deals don’t even make it to the spreadsheet. Here’s what I check first:
- Rent-to-Price Ratio
Does the property rent for close to 1% of the purchase price each month?
If not, I’ll dig deeper to see if I can get close by force appreciating (adding washer/dryer, improving curb appeal, adding a bathroom, etc.) or buying at a lower price point. If it’s not close, I move on. - Neighborhoods
I focus on working-class B neighborhoods. These tend to be stable, in demand, and manageable. A class locations can look great on the surface, but higher prices often make cash flow tougher. That said, when you find a motivated seller or an underpriced opportunity in an A class market, it can be a great play. - Proximity to Jobs and Schools
Good schools signal long-term demand. Proximity to hospitals, colleges, highways, and major employers matters. - Property Condition
I’m fine with light to heavy rehab projects, but I avoid major foundation issues or total overhauls (unless the price is incredible) because they eat up time and budget.
My favorite? Light rehabs with clear value-add potential. - Zoning and Use Potential
Can you convert space, add units, or legally improve the property? A flexible layout and good zoning can unlock huge value.
What I Avoid: Red Flags That Kill the Deal
I won’t waste time on a deep dive if I spot any of these:
- HOA restrictions that block rentals
- High-crime blocks (not just zip codes, check the actual street)
- Weird layouts or unpermitted additions
- Sellers who aren’t realistic or flexible
- Flood zones or very high insurance cost locations
The Gut Check Questions
Before I run any numbers, I ask myself:
- Does this deal fit my buy box?
- Can it put money in my pocket each month?
- Would I feel good about owning this in five years?
- Can I rent and manage it without it becoming a full-time job?
If the answers are “yes,” then I move to the deal analyzer.
Sharpen Your Focus, Strengthen Your Network
The more intentional you are about sourcing deals, the better your results. I don’t just rely on listings. I build relationships with investor-focused agents, property managers, and wholesalers who understand my buy box and bring me opportunities that align.
Not every lead will hit the mark, but each one sharpens your instincts. Over time, your network and filters start doing the heavy lifting, helping you move faster, analyze smarter, and focus your energy where it truly counts.
The sharper your filters, the better your outcomes. And when you’re ready, we’ll show you how to run the numbers with confidence.
