# Investor Checklist: Analyze Any Rental Deal
Evaluating a short-term rental or furnished property investment requires systematic analysis across multiple dimensions—financials, operations, regulations, market dynamics, and physical condition. Missing a critical factor can turn a promising investment into a costly mistake.
This comprehensive checklist provides a framework for analyzing any rental deal, whether you're evaluating a turnkey STR, a corporate housing property, or a conversion opportunity.
Table of Contents
1. [Quick Summary](#quick-summary) 2. [Pre-Screening Checklist](#pre-screening-checklist) 3. [Financial Analysis Checklist](#financial-analysis-checklist) 4. [Operational Due Diligence](#operational-due-diligence) 5. [Regulatory and Legal Review](#regulatory-and-legal-review) 6. [Physical Property Inspection](#physical-property-inspection) 7. [How This Affects Investors](#how-this-affects-investors) 8. [How This Affects Operators and Sellers](#how-this-affects-operators-and-sellers) 9. [Master Investment Checklist](#master-investment-checklist) 10. [Worked Example: Deal Evaluation](#worked-example-deal-evaluation) 11. [Common Mistakes to Avoid](#common-mistakes-to-avoid) 12. [FAQ](#faq)
Quick Summary
- **Pre-screen quickly** on location, regulations, and asking price before deep analysis
- **Verify all revenue claims** with platform statements, bank records, and occupancy calendars
- **Regulatory due diligence is non-negotiable**—permits, zoning, and trend direction matter
- **Physical inspection should assess STR-specific factors** like furnishing condition, not just structure
- **Total cash requirement** includes down payment, closing, furnishing, startup reserves, and operating float
Pre-Screening Checklist
Quick Pass/Fail Criteria
Before investing analysis time, quickly assess:
``` PRE-SCREENING (5-10 Minutes)
LOCATION [ ] In market you're willing to invest in? [ ] Accessible for management (remote or local)? [ ] Tourism/business demand drivers present?
REGULATIONS [ ] STR permitted in this jurisdiction? [ ] Any obvious red flags (pending bans, moratoriums)? [ ] Permit transferable or new application required?
BASIC FINANCIALS [ ] Asking price in range for market? [ ] Claimed revenue reasonable for property type? [ ] Cap rate appears achievable (rough calculation)?
PROPERTY TYPE [ ] Matches your investment criteria? [ ] Manageable size for your capacity? [ ] No obvious deal-breakers (HOA ban, shared walls)?
DECISION: [ ] PASS - Continue analysis [ ] FAIL - Move on ```
Red Flags That Kill Deals Immediately
- STR explicitly prohibited by zoning or HOA
- Active moratorium on new permits
- Seller unable to provide revenue documentation
- Property in flood zone without adequate insurance
- Significant deferred maintenance visible
- Title issues or liens
Financial Analysis Checklist
Revenue Verification
``` REVENUE VERIFICATION
DOCUMENTATION REQUIRED [ ] 12-24 months platform statements (Airbnb, VRBO) [ ] Occupancy calendar for verification period [ ] Bank statements showing deposits [ ] Revenue breakdown by source (platform vs. direct) [ ] Personal use days identified and excluded
REVENUE ANALYSIS Gross Booking Revenue: $___________ Platform Fees Paid: $___________ Cleaning Fees Collected: $___________ Net Revenue to Owner: $___________ Occupancy Rate: ___% Average Daily Rate: $___________
VERIFICATION CHECKS [ ] Platform statements match bank deposits [ ] Occupancy calendar supports claims [ ] Seasonal patterns make sense [ ] No unusual one-time spikes distorting average [ ] Revenue trend (growing, flat, declining) ```
Expense Verification
``` EXPENSE VERIFICATION
DOCUMENTATION REQUIRED [ ] Property tax bills (current year) [ ] Insurance policy and premium [ ] Utility bills (12 months) [ ] HOA statements (if applicable) [ ] Cleaning invoices/contracts [ ] Property management agreement (if applicable) [ ] Maintenance records and invoices [ ] Software/tool subscriptions
EXPENSE ANALYSIS Platform Fees: $___________ Cleaning: $___________ Supplies/Consumables: $___________ Property Taxes: $___________ Insurance: $___________ Utilities: $___________ HOA Fees: $___________ Lawn/Pool: $___________ Property Management: $___________ Other Fixed: $___________ Total Operating Expenses: $___________ Expense Ratio: ___%
VERIFICATION CHECKS [ ] Insurance is STR-specific (not standard HO) [ ] Cleaning costs reasonable for property size [ ] Utilities normal for climate/size [ ] No missing expense categories [ ] Property management contract reviewed ```
Investment Metrics
``` INVESTMENT METRICS
Net Operating Income: $___________ Cap Rate: ___% Target Cap Rate: ___% Price Implied by Target Cap: $___________
FINANCING ANALYSIS Down Payment (___%): $___________ Loan Amount: $___________ Interest Rate: ___% Monthly P&I: $___________ Annual Debt Service: $___________
- CASH FLOW NOI: $___________
- Debt Service: $___________ = Annual Cash Flow: $___________
CASH REQUIRED Down Payment: $___________ Closing Costs: $___________ Furnishing (if needed): $___________ Startup Reserves: $___________ Operating Float: $___________ Total Cash Required: $___________
RETURNS Cash-on-Cash: ___% DSCR: ___x ```
Operational Due Diligence
Current Operations Review
``` OPERATIONAL DUE DILIGENCE
LISTING QUALITY [ ] Listing reviewed on all platforms [ ] Photos professional quality [ ] Description optimized [ ] Reviews read (last 20+) [ ] Review rating: ___/5 [ ] Response rate visible: ___% [ ] Superhost/Premier status: [ ] Yes [ ] No
GUEST EXPERIENCE [ ] Welcome guide reviewed [ ] Check-in process documented [ ] Local recommendations provided [ ] Response time under 1 hour: [ ] Yes [ ] No
OPERATIONAL SYSTEMS [ ] Pricing tool used: ___________ [ ] Channel manager: ___________ [ ] Property management software: ___________ [ ] Smart lock/keyless entry: [ ] Yes [ ] No [ ] Noise monitoring: [ ] Yes [ ] No
VENDOR RELATIONSHIPS [ ] Cleaning company/person identified [ ] Cleaning quality verified [ ] Backup cleaners available [ ] Maintenance contacts documented [ ] Handyman/contractor relationships
TRANSFERABILITY [ ] Listing transferable (or new listing needed)? [ ] Reviews transfer with listing? [ ] Vendor relationships transferable? [ ] Existing bookings transfer? ```
Guest Demand Assessment
``` GUEST DEMAND ANALYSIS
DEMAND DRIVERS [ ] Tourism attractions identified [ ] Business/corporate demand present [ ] Events and seasonality mapped [ ] Competitive landscape assessed
MARKET DATA AirDNA Market Score: ___ Market Occupancy Average: ___% Market ADR Average: $___________ Supply Growth Rate: ___% Demand Growth Rate: ___%
COMPETITIVE POSITION Number of comparable listings: ___ This property ranking (estimate): ___/___ Differentiation factors: ___________ ```
Regulatory and Legal Review
Regulatory Compliance
``` REGULATORY CHECKLIST
CURRENT STATUS [ ] STR permit/license exists: [ ] Yes [ ] No [ ] Permit number: ___________ [ ] Permit expiration: ___________ [ ] Permit transferable: [ ] Yes [ ] No [ ] Business license required/in place [ ] Tax registration (occupancy tax)
ZONING VERIFICATION [ ] Zoning designation: ___________ [ ] STR explicitly permitted: [ ] Yes [ ] No [ ] Conditional use required: [ ] Yes [ ] No [ ] Owner-occupancy required: [ ] Yes [ ] No
REGULATIONS RESEARCH [ ] Local STR ordinance reviewed [ ] Permit requirements understood [ ] Operating restrictions identified: - Night caps: ___ - Occupancy limits: ___ - Parking requirements: ___ - Noise ordinances: ___ [ ] Tax obligations identified
REGULATORY TREND [ ] Recent regulatory changes (last 2 years) [ ] Pending legislation or proposals [ ] Political climate assessment [ ] Enforcement activity level
HOA REVIEW (if applicable) [ ] CC&Rs reviewed for STR language [ ] STR explicitly permitted: [ ] Yes [ ] No [ ] Minimum rental period: ___ [ ] Recent HOA actions on STR ```
Legal Documentation
``` LEGAL REVIEW
TITLE AND OWNERSHIP [ ] Preliminary title report reviewed [ ] No liens or encumbrances [ ] Easements understood [ ] Seller has clear ownership
CONTRACTS TO REVIEW [ ] Property management agreement [ ] Cleaning contracts [ ] Vendor agreements [ ] Pending bookings and obligations
DISCLOSURE REVIEW [ ] Seller disclosure statement [ ] Known material defects [ ] Environmental concerns [ ] Insurance claims history ```
Physical Property Inspection
Standard Inspection Items
``` PHYSICAL INSPECTION
STRUCTURAL [ ] Foundation condition [ ] Roof age and condition [ ] HVAC system age and function [ ] Plumbing condition [ ] Electrical system (panel, wiring) [ ] Windows and doors condition [ ] Exterior condition (siding, paint)
MAJOR SYSTEMS [ ] Water heater age/condition [ ] Appliances working [ ] Pool/spa equipment (if applicable) [ ] Garage door/opener [ ] Irrigation system
SAFETY [ ] Smoke detectors [ ] Carbon monoxide detectors [ ] Fire extinguisher [ ] Handrails and safety features [ ] Pool fence (if applicable) ```
STR-Specific Inspection Items
``` STR-SPECIFIC INSPECTION
FURNISHINGS [ ] Complete inventory received [ ] Furniture condition assessed [ ] Mattresses age/quality: ___________ [ ] Sofas/seating condition: ___________ [ ] Dining set condition: ___________ [ ] Estimated replacement needs: $___________
GUEST EXPERIENCE ITEMS [ ] Kitchen fully equipped [ ] Linens/towels quantity and quality [ ] Entertainment (TV, streaming) [ ] WiFi speed tested: ___ Mbps [ ] Outdoor furniture (if applicable) [ ] Decor and ambiance
AMENITIES VERIFICATION [ ] Hot tub/pool functioning [ ] Grill condition [ ] Washer/dryer functioning [ ] All amenities as advertised
WEAR AND TEAR [ ] High-traffic area condition [ ] Paint condition [ ] Flooring condition [ ] Bathroom condition [ ] Kitchen condition ```
How This Affects Investors
This checklist serves as your protection:
- **Before Making Offers:**
- Complete pre-screening to avoid wasted effort
- Preliminary financial analysis to establish offer range
- Regulatory research to assess deal viability
- **During Due Diligence:**
- Systematic verification prevents surprises
- Documentation supports negotiation
- Identified issues inform contingencies
- **Before Closing:**
- All checklist items completed
- No unresolved red flags
- Clear path to profitable operation
A marketplace connecting sellers with investors provides structured access to properties with documentation supporting due diligence.
How This Affects Operators and Sellers
- **For Sellers:**
- Understanding buyer checklist helps prepare
- Having documentation ready speeds process
- Proactive disclosure builds trust
- Well-documented properties sell faster
- **Preparation Tips:**
- Compile 24 months of financial records
- Document all operating systems
- Gather permit and regulatory documentation
- Create comprehensive inventory
- Address obvious maintenance items
Master Investment Checklist
``` MASTER INVESTMENT CHECKLIST
PRE-SCREENING [ ] Location acceptable [ ] Regulations allow STR [ ] Price in range [ ] Property type fits criteria [ ] No immediate deal-killers
FINANCIAL ANALYSIS Revenue Verification: [ ] Platform statements (12-24 months) [ ] Bank deposits matched [ ] Occupancy calendar reviewed [ ] Revenue trend analyzed
Expense Verification: [ ] All expense categories documented [ ] Insurance is STR-specific [ ] Property taxes confirmed [ ] Utilities reviewed
Investment Metrics: [ ] NOI calculated [ ] Cap rate acceptable: ___% [ ] Cash-on-cash acceptable: ___% [ ] DSCR adequate: ___x
OPERATIONAL DUE DILIGENCE [ ] Listing quality reviewed [ ] Reviews analyzed [ ] Systems documented [ ] Vendor relationships confirmed [ ] Transferability assessed [ ] Market demand verified
REGULATORY REVIEW [ ] Permit status confirmed [ ] Zoning verified [ ] Local ordinance reviewed [ ] Regulatory trend assessed [ ] HOA compliance confirmed
PHYSICAL INSPECTION [ ] Standard inspection completed [ ] Major issues identified/addressed [ ] STR-specific items inspected [ ] Furnishing condition assessed [ ] Replacement needs estimated
LEGAL REVIEW [ ] Title clear [ ] Contracts reviewed [ ] Disclosures received [ ] Insurance transferable
FINAL CHECKS [ ] All contingencies satisfied [ ] Financing approved [ ] Insurance secured [ ] Management plan in place [ ] Transition timeline set
DECISION [ ] PROCEED TO CLOSE [ ] RENEGOTIATE (issues: ___________) [ ] TERMINATE (reasons: ___________) ```
Worked Example: Deal Evaluation
Property Overview - 4BR/3BA house in Destin, FL - Asking price: $750,000 - Operating as STR for 3 years - Seller claims $120,000 gross revenue
Pre-Screening (Pass) - Location: Destin vacation market (strong) - Regulations: STR permitted with license - Price: Reasonable for 4BR beachside - Type: Fits investment criteria
Financial Analysis
- **Revenue Verification:**
- Reviewed 24 months of Airbnb/VRBO statements
- Platform revenue: $108,000 average
- Direct bookings: $12,000 average
- Total verified: $120,000 (matches claim)
- Occupancy: 71%
- ADR: $325
**Expense Analysis:**
| Category | Documented | Verified | |----------|-----------|----------| | Platform fees | $15,120 | Yes | | Cleaning | $14,400 | Yes (30 turnovers × $480) | | Supplies | $3,600 | Yes | | Taxes | $9,500 | County records | | Insurance | $5,200 | Policy verified (STR) | | Utilities | $6,400 | Bills reviewed | | Lawn/Pool | $4,200 | Invoices provided | | Total | $58,420 | 49% ratio |
- **Investment Metrics:**
- NOI: $120,000 - $58,420 = $61,580
- Cap Rate: $61,580 / $750,000 = 8.2%
- Down Payment (25%): $187,500
- Debt Service: $44,800/year
- Cash Flow: $16,780
- Cash-on-Cash: 7.4% (on $226,500 total cash)
Regulatory Review - STR license in place, transferable - No pending regulatory changes - Beach community supportive of tourism - Risk assessment: Low
Physical Inspection Results - Structure: Good condition - Roof: 8 years old, good shape - HVAC: 5 years old, functioning - Furnishings: Good condition, some replacement needed - Estimated furnishing refresh: $8,000
Decision - Metrics meet criteria - Regulatory risk low - Property in good condition - Offer: $725,000 (accounting for furnishing needs)
Common Mistakes to Avoid
1. **Skipping pre-screening:** Detailed analysis on every property wastes time. Pre-screen to focus efforts.
2. **Trusting seller financials without verification:** Always verify with primary documents. Trust but verify.
3. **Ignoring regulatory trends:** Current legality doesn't mean future legality. Research the direction.
4. **Overlooking operational complexity:** Remote properties in different time zones add management burden.
5. **Underestimating transition challenges:** New owners often see revenue dip. Budget for ramp-up period.
6. **Forgetting total cash requirement:** Down payment is just the start. Factor all startup costs.
7. **Skipping STR-specific inspection items:** Standard inspection misses furnishing condition and guest experience factors.
FAQ
How long should the due diligence period be for STR properties?
Request 30-45 days minimum. STR due diligence requires more verification than traditional properties—platform statements, regulatory research, and operational review take time.
What if the seller can't provide documentation?
Major red flag. No documentation means you can't verify claims. Either walk away or assume worst-case scenario and adjust offer significantly (50%+ discount to claimed revenue).
Should I hire an inspector who knows STRs?
Standard home inspectors cover structural issues. For STR-specific items (furnishing condition, guest experience factors), you can often assess yourself during walkthrough. Some markets have STR-specialized inspectors.
How do I verify a permit is transferable?
Contact the permit-issuing authority directly. Ask specifically if the permit transfers with property sale and what (if any) requirements apply to new owners.
What's a reasonable furnishing replacement budget?
Expect to refresh 20-30% of furnishings when acquiring an operating property. Budget $5,000-15,000 for typical homes, focusing on mattresses, high-traffic furniture, and worn items.
How do I assess regulatory risk when laws are unclear?
Research recent history: any enforcement actions, news articles, city council discussions, pending proposals. Talk to local STR operators. When in doubt, assume stricter regulations are coming.
Should I complete the checklist for every property?
Complete pre-screening for every property. Complete full checklist only for properties that pass pre-screening and are under serious consideration. This preserves your time.
What's the most commonly missed item on this checklist?
Insurance verification. Many sellers have inadequate coverage, and buyers assume existing insurance is sufficient. Always verify that coverage is STR-specific and adequate.
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*Looking for investment-ready properties with documentation? Browse listings on a marketplace connecting sellers with serious investors, or list your property to reach qualified buyers.*
- **Internal Links:**
- [Underwriting a Short-Term Rental Property](/blog/underwriting-short-term-rental-property)
- [How to Reduce Vacancy in Furnished Rentals](/blog/reduce-vacancy-furnished-rentals)
- [Insurance Essentials for Furnished Rentals](/blog/insurance-essentials-furnished-rentals)
- [How Corporate Leases Work for Landlords](/blog/corporate-leases-landlords)
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*Consult a professional for your specific situation.*
Jordan Solomon
Published 12 months ago
