real-estate-investment

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:

1. Define scope — Identify property type, investment strategy, and target output format
2. Gather data — Collect property financials, market data, and comps (use API reference if automating)
3. Build pro forma — Construct income statement: Gross Rent → Vacancy → EGI → OpEx → NOI → Debt Service → Cash Flow
4. Calculate returns — Apply appropriate metrics (see Quick Reference below)
5. Stress test — Run sensitivity analysis, scenarios, or Monte Carlo simulation
6. 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 — Run the canonical modules in scripts/ instead of writing models from scratch: scripts/pro_forma.py (full pro forma with IRR/NPV/DSCR), scripts/waterfall.py (IRR-hurdle syndication waterfall), scripts/monte_carlo.py (return distributions), scripts/sensitivity.py (price × rate grid). All are JSON-in/JSON-out CLIs (--sample-input prints the schema); requirements: numpy, numpy-financial. Copy a script into the user's project only when they need to customize the model logic.

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, pro forma construction, amortization schedules	Building a pro forma, calculating returns, generating Python/Excel models
references/advanced-analysis.md	Sensitivity methodology, Monte Carlo distributions, waterfall tier mechanics, syndication LP/GP economics	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