How to Evaluate a Rental Property Like a Pro – Before You Buy

When it comes to real estate investing, your success often comes down to what you buy and how well you analyze it up front.

At P. J. Hussey, we’ve helped hundreds of investors purchase properties across the Valley — and we’ve seen what separates a great rental from a money pit.

Before you make your next offer, here’s how to evaluate a rental property like a pro:

💰 1. Start With the Numbers — Not the Emotions

It’s easy to fall in love with granite countertops or a trendy zip code, but successful investors focus on performance.

Start with these basic calculations:

• Gross Rent Multiplier (GRM): Purchase Price ÷ Annual Rent

• Cap Rate: (Net Operating Income ÷ Purchase Price) × 100

• Cash-on-Cash Return: (Annual Cash Flow ÷ Cash Invested) × 100

👉 Pro Tip: If you’re not sure how to run these, our team can help you crunch the numbers on any property you’re considering.

📍 2. Evaluate Location Through a Renter’s Lens

What makes a good location for you isn’t always what makes a great rental location. Renters often prioritize:

• Proximity to freeways, jobs, schools, or transit

• Safety and walkability

• Access to shopping, entertainment, or parks

Even within a good city, certain streets or subdivisions may rent better than others. Local insight matters.

👉 Pro Tip: Look up vacancy rates and rent comps within a 1-mile radius of the property.

🔧 3. Inspect the Bones — Look for Costly Surprises

A cheap house with expensive problems isn’t a deal — it’s a liability.

Key areas to check before buying:

• Roof, HVAC, plumbing, and electrical age

• Condition of the flooring, windows, and appliances

• Signs of water damage, pests, or foundation issues

👉 Pro Tip: Always get a professional inspection, and build a realistic repair budget into your ROI analysis.

📈 4. Know the Local Rent Potential

Never assume what the rent could be — verify it.

Use rental comps from:

• Your property manager (🙋 That’s us!)

• Zillow, Rentometer, or the MLS

• Nearby active and leased listings

Then ask: Is this area appreciating? Are rents rising or flat? What kind of tenant are you likely to attract?

👉 Pro Tip: A good rent estimate is your foundation for every other financial metric.

🧠 5. Look Ahead: What’s the Exit Strategy?

Before you buy, think about how and when you’ll eventually exit.

Are you planning to:

• Flip it in a few years?

• Hold long-term for appreciation and cash flow?

• Refinance later and pull out equity?

Your exit strategy affects how much you should pay, what kind of loan to get, and even what kind of tenant to place.

👉 Pro Tip: Always buy with the end in mind — even if you’re planning to hold.

🛠️ We’re Here to Help You Buy Smarter

Whether you’re brand new or scaling a portfolio, our team can help you evaluate deals, analyze the numbers, and build a strategy that matches your goals.

We offer:

✅ Investor-focused agents who know the Valley

✅ In-house property management to protect your investment

✅ Realistic rent estimates and renovation advice