How to Know Which Type of Real Estate Deal You’re Looking At (And What Return to Expect)
I’ve been studying real estate deals for a while now, and one thing I kept doing early on was looking at a property and thinking — okay, is this a flip? A BRRRR? A wholesale deal? The categories felt fuzzy. Like I’d have to figure out the strategy first and then run the numbers.
I came across a video recently that flipped that around completely. A father was teaching his son how to analyze deals, and the framework he used was simple: run the numbers first, and the numbers tell you what kind of deal you’re looking at.
That reframe was genuinely useful to me. So here’s how it works.
The Two Numbers You Need First
Before you can classify any deal, you need two things:
All-in Cost — your purchase price plus your total estimated repair costs. Everything it takes to get the property to finished condition.
ARV (After Repair Value) — what the property will be worth once it’s fully renovated, based on real comparable sales in the area.
Once you have those two numbers, the formula is straightforward:
(ARV – All-in Cost) ÷ ARV = Return on Value
That percentage is what tells you what kind of deal you’re actually looking at.
The Deal Classification Framework
Here’s the breakdown, by return percentage:
25%+ → BRRRR Deal This is the best case scenario. At this return level, the deal has enough meat on the bone to buy, rehab, rent, refinance, and repeat — pulling your capital back out while keeping the asset. These deals are hard to find, but when the numbers hit 25% or above, BRRRR is the move.
15% to 25% → Fix & Flip Deal This is your standard flip territory. There’s enough margin to cover purchase, rehab, holding costs, selling costs, and still walk away with a meaningful profit. Not every flip needs to hit 25% — but if you’re below 15%, the margin gets uncomfortably thin once real-world costs stack up.
10% to 15% → Wholesale Deal At this return level, the numbers don’t work well for a flip or a BRRRR — but there might still be a deal here for someone else. A wholesaler’s job is to find properties with potential and assign the contract to an investor who can make the numbers work at scale. If your analysis lands in this range, the play is to wholesale it, not hold it yourself.
Under 10% → Pass If the return is under 10%, the deal doesn’t pencil out for any of the above strategies. The advice in the video was blunt: list it with a realtor or walk away entirely. There’s not enough margin to absorb the inevitable surprises that come with any renovation project.
A Real Example
The father walked his son through a deal he’d been offered:
- Purchase Price: $600,000
- Repair Costs: $150,000
- ARV: $850,000
All-in Cost: $600,000 + $150,000 = $750,000 Profit: $850,000 – $750,000 = $100,000 Return: $100,000 ÷ $850,000 = 11.7%
Result: Wholesale deal. Not a flip, not a BRRRR — the margin isn’t there for either of those. But there’s potentially something for a wholesaler who can move it to the right buyer.
The math made the decision. No guessing, no gut feeling — just numbers plugged into a formula.
Why This Framework Actually Helps
What I like about this approach is that it removes the backwards thinking I was doing before. I used to look at a property and decide what strategy I wanted to use, then try to make the numbers fit. That’s how you talk yourself into bad deals.
This flips it. You run the numbers with no agenda, and the numbers tell you what the deal is — or isn’t. If it doesn’t hit 10%, no amount of optimism changes that. If it hits 25%, you know you’ve found something worth pursuing hard.
It also gives you a clean way to communicate deals to lenders, partners, or wholesalers. Instead of saying “I think this could be a flip,” you can say “this is an 11.7% deal — wholesale territory.” That’s a language experienced investors understand immediately.
How I’m Using This
I’m getting back into flipping and actively analyzing deals right now. Before I had a framework like this, I’d look at a property, get excited about the potential, and sometimes struggle to articulate clearly why the numbers did or didn’t work.
Now the process is cleaner. Pull the ARV from comps. Estimate the all-in cost honestly — not optimistically. Run the formula. See where it lands on the scale.
If it’s under 10%, I move on without guilt. If it’s in flip territory, I dig deeper. If it ever hits 25% — well, that’s when things get interesting.
Not financial advice — just someone doing a lot of research and asking a lot of questions.