In real estate, a “napkin listing” or “napkin analysis” refers to a quick, simplified method for evaluating a potential deal, focusing on key metrics like gross monthly income and expenses to determine if a deal is worth pursuing, often done on a napkin or in a simple spreadsheet.
Here’s a more detailed explanation:
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Purpose:The “napkin listing” or “napkin analysis” is a quick and dirty way to assess the potential of a real estate deal, helping investors determine if a property warrants further, more in-depth analysis.
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Focus:It focuses on key metrics like gross monthly income, gross monthly expenses, and potentially debt service coverage ratio and cash-on-cash return.
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Simplicity:The goal is to make the analysis quick and easy, allowing investors to quickly screen a large number of potential deals.