The Fastest Way to Tell if a Property Makes Financial Sense

The Fastest Way to Tell if a Property Makes Financial Sense

Most buyers either overthink real estate with endless spreadsheets, or they underthink it and buy based on feelings. The smartest approach is in the middle: a quick filter that tells you whether a property deserves deeper analysis.

Here’s the 3-number rule. Before you fall in love, get clarity on these three numbers.

Number 1: Total entry cost

Not just the price. The full cost to own it.

Include:

Purchase price

Transaction fees and taxes

Renovation or furnishing

Setup costs (appliances, lighting, basic upgrades)

This is your real “buy-in.” If you ignore this, you overestimate your return from day one.

Number 2: Net annual income

Not the rent someone claims. The income after reality.

Include:

Expected rent

Minus running costs (fees, maintenance, insurance)

Minus management costs

Minus a vacancy buffer

If you calculate only gross rent, you are calculating a fantasy.

Number 3: Exit realism

The most ignored number is the one you can’t see on a listing: the resale story.

Ask:

How easy is it to sell this in a slower market

Who is the buyer, and why would they choose it

Does the layout and location appeal to a wide buyer pool

A property can have good rent on paper, but if it’s hard to resell, it becomes a trap when you need flexibility.

The quick decision filter

If the total entry cost is high, net income is weak, and exit is uncertain, walk away.

If the entry cost is clean, net income is strong, and exit is clear, you have a deal worth pursuing.

Real estate wins come from discipline, not complexity. The 3-number rule helps you spot solid deals fast, anywhere.