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Comps Analysis

05 What Is Underwriting

Underwriting is the process of calculating whether a deal makes financial sense. You take a property's purchase price, add your costs, subtract your expenses, and see what profit or cash flow remains.

3 min read

Why Underwriting Matters

Without underwriting, you are guessing. A property can look like a great deal on the surface but fail once you account for repairs, holding costs, and selling expenses. Underwriting turns assumptions into numbers you can compare and challenge.

ReiSearch's underwriting tools handle the calculations. You enter the numbers, the platform shows you the results.

What Underwriting Includes

A complete underwriting considers:

Purchase costs: - Purchase price or offer amount. - Closing costs. - Financing costs (loan origination, points, appraisal). - Due diligence costs (inspections, survey).

Holding costs: - Property taxes during the hold period. - Insurance. - Utilities. - HOA fees. - Loan payments (if financing).

Repair costs: - Estimated repair and renovation costs. - Contingency reserve (typically 10-20% of repair estimate).

Selling costs: - Real estate commission. - Closing costs for the sale. - Concessions or credits to the buyer. - Transfer taxes.

Multi-Exit Underwriting

ReiSearch supports multiple exit strategies in a single underwriting run. Instead of running separate calculations for each approach, the platform processes all selected strategies and presents side-by-side results.

Available exit strategies:

  • Wholesale — Assign the contract to another investor. Profit is the assignment fee.
  • Fix and flip — Purchase, renovate, and resell. Profit is sale price minus all costs.
  • Rental (buy and hold) — Purchase and hold for rental income. Returns are measured by cash flow, cash-on-cash return, and cap rate.
  • BRRRR — Buy, Rehab, Rent, Refinance, Repeat. Calculates the refinance amount, cash-out, and ongoing cash flow.

What You Get from Underwriting

  • ARV (After-Repair Value) — Estimated value after renovations.
  • MAO (Maximum Allowable Offer) — The highest price you can pay and still hit your profit target.
  • Profit projections — Estimated profit for each exit strategy.
  • ROI and cash-on-cash return — Return on investment percentages.
  • Cash flow (rental) — Monthly and annual cash flow projections.

When to Underwrite

Every property you are serious about should be underwritten before you make an offer. A quick underwriting takes 5 minutes with ReiSearch and can save you from making an expensive mistake.

Next steps: - How to Run Comps on ReiSearch - Running a Multi-Exit Underwriting - Comparing Exits and Making a Decision - Adjusting Comps Filters