The Complete Guide to Real Estate Finance for Investment Properties: How to Analyze Any Single-Family, Multifamily, or Commercial Property [Hardcover]

Steve Berges (Author)

Book Description

Publication Date: September 6, 2004

This practical, real-world guide gives investors all the tools they need to make wise decisions when weighing the value and potential of investment properties. Written for old pros as well as novice investors, this friendly, straightforward guide walks readers step by step through every stage of property analysis. Whether you're buying or selling, investing in big commercial properties or single-family rentals, you'll find expert guidance and handy resources on every aspect of real estate finance, including:
* Proven, effective valuation techniques
* Finance tips for all different kinds of property
* How various financing strategies affect investments
* Structuring financial instruments, including leverage, debt, equity, and partnerships
* Measurements and ratios for investment performance, including capitalization rates and gross rent multiplier ratios
* Future and present value analysis
* How the appraisal process works
* Primary appraisal methods-replacement cost, sales comparison, and income capitalization-and how to know which one to use
* How to understand financial statements, including income, balance, and cash flow
* Case studies for single-family rentals, multifamily conversions, apartment complexes, and commercial office space
* A detailed glossary of important real estate terminology

Editorial Reviews

From the Inside Flap

More and more Americans are getting out of the stock market for the relative safety and predictability of real estate. But buying real estate willy-nilly is a recipe for disaster. If you don’t do your homework, you could lose your shirt–just like you would in the stock market.

For novice investors and old hands alike, The Complete Guide to Real Estate Finance for Investment Properties focuses on the fundamentals of financial analysis and the key principles in property valuation as they apply to real estate investing. This practical guide provides all the tools and tactics investors need to accurately gauge both the present and future value of properties.

Whether they’re buying or selling, investors must base their decisions on the fundamental principles of real estate finance. Failing to do so will definitely mean failing to make a profit. This handy guide doesn’t offer long-winded theories on finance or quick schemes for making a bundle in real estate, but proven real-world knowledge every investor needs to feel secure that they’ve made a wise investment.

This is not another real estate book about how to creatively finance a purchase or get a nothing-down deal. Instead, author Steve Berges explains the basic theories of real estate finance, simplifies them for the average investor, and demonstrates how to use them in real-world situations. Using case studies and examples to illustrate these principles, Berges shows investors how to use traditional property valuation methodologies and how to understand such concepts as cash flow, rate of return, and return on investment. Investors will find everything they need to know about financial statements and schedules, investment performance measurements, the structure of financial instruments, and valuation techniques for any kind of property.

Real estate is only a smart investment if you’re a smart investor. In this book, Steve Berges walks readers step by step through all the financial analysis techniques needed to get the most out of their real estate investments.

From the Back Cover

This practical, real-world guide gives investors all the tools they need to make wise decisions when weighing the value and potential of investment properties. Written for old pros as well as novice investors, this friendly, straightforward guide walks readers step by step through every stage of property analysis. Whether you’re buying or selling, investing in big commercial properties or single-family rentals, you’ll find expert guidance and handy resources on every aspect of real estate finance, including:

• Proven, effective valuation techniques
• Finance tips for all different kinds of property
• How various financing strategies affect investments
• Structuring financial instruments, including leverage, debt, equity, and partnerships
• Measurements and ratios for investment performance, including capitalization rates and gross rent multiplier ratios
• Future and present value analysis
• How the appraisal process works
• Primary appraisal methods–replacement cost, sales comparison, and income capitalization–and how to know which one to use
• How to understand financial statements, including income, balance, and cash flow
• Case studies for single-family rentals, multifamily conversions, apartment complexes, and commercial office space
• A detailed glossary of important real estate terminology

See all Editorial Reviews

Product Details

• Hardcover: 288 pages
• Publisher: Wiley; 1 edition (September 6, 2004)
• Language: English
• ISBN-10: 0471647128
• ISBN-13: 978-0471647126
• Product Dimensions: 9.3 x 6.3 x 1 inches
• Shipping Weight: 1 pounds (View shipping rates and policies)
• Average Customer Review: 3.6 out of 5 stars  See all reviews (12 customer reviews)
• Amazon Best Sellers Rank: #203,302 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

103 of 105 people found the following review helpful:

4.0 out of 5 stars Great Book, but be aware of what it isn't, May 12, 2005

By 

Rick Talcott (Berkeley, CA USA) - See all my reviews

This review is from: The Complete Guide to Real Estate Finance for Investment Properties: How to Analyze Any Single-Family, Multifamily, or Commercial Property (Hardcover)

This is a great book, and well worth purchasing if you want to learn about finances for investment properties. It is not all that it could be, but don't let that stop you from using it to get started. All that having been said, here are the things that I had to be careful about: 1) Ten performance measurements and ratios are presented in chapter 6, and they represent the heart of the book. There is little overview of which ones are most importance or how to use or weigh conflicting or offsetting results. 2) The book is heavily centered on spreadsheets, which the author offers to sell to you. Others have criticized the spreadsheets for being locked. I used the book to recreate my own version of the spreadsheets, and the extensive explanations in the book helped, mostly, to make sure that I got the underlying formulas correct. What I noticed, however, is that the book sorely needed a financially sophisticated editor. For example, the spreadsheet on page 193 has an entry for "Expense/Foot." In fact, this entry is none other than the OER - Operating Expense Ratio - that was developed in Chapter 6. Why go to all the trouble to create and define ratios, if you aren't then going to use them. Other parts of the spreadsheets were equally problematic. For example, the Net CF's - presumably "cash flow" - for a 3 year exit only had the receipts for years 1 and 2, and not for year 3. Lastly, the book has nothing to say about (a) maintaining and growing a real estate portfolio of multiple properties as opposed to a single property, or (b) evaluating the relatively new 1031 multiple tenants in common investments that some long time owners are trading into in order to stop being a full time property manager as well as an investor.

45 of 46 people found the following review helpful:

2.0 out of 5 stars Not the book for new investors or for financial analysis, March 20, 2006

By 

Ann "Ann" (Raleigh, NC) - See all my reviews

Amazon Verified Purchase

This review is from: The Complete Guide to Real Estate Finance for Investment Properties: How to Analyze Any Single-Family, Multifamily, or Commercial Property (Hardcover)

In my opinion, as a non-author, this book is poorly written.

The book gives examples on financial calculations that can be done to determine if a piece of property is a good investment. However, the examples given are either too complex to be meaningful outside of the specific situtation or too simple to gain any understanding.

The second section of the book on "case studies", is not made for new investors. The examples involve huge sums of money and very complex situations. Two examples come to mind: One case study discussed buying an apartment complex in an overpriced area, another rambled on about legal trouble he had with a local zoning board. A simpler more straight forward example of properties would be much more valuable.

I also did not appreciate the fact that his company is plugged throughout the book. I guess it offers some value in that he has actually experienced the situations in the book but I cannot help but think this book was written only for the benefit of his company and not to eduate the readers. I have read many real estate books written by many successful investor who never mention their company's name. He mentions his constantly.

This book may make sense for investors with large cash reserves($500,000+) in that it explains some creative ways to identify ways to improve a property and it is written from real experience, but in general I do not recommend it.

44 of 47 people found the following review helpful:

5.0 out of 5 stars Great book for the beginner and good review for the pro, November 24, 2004

By 

Hoppaguy (San Diego) - See all my reviews
(VINE VOICE)   

Amazon Verified Purchase

This review is from: The Complete Guide to Real Estate Finance for Investment Properties: How to Analyze Any Single-Family, Multifamily, or Commercial Property (Hardcover)

I have read many books dealing with real estate finance and while they all have some merits, this seems to cover most areas sufficiently. The only caveat is do not buy this book if you are going into commercial property because it does not cover triple net leases or any other analysis that might come up with commerical properity. However if you want to learn about returns with single family or multi family buildings, then this is the book for you. Berges other book on multi family buildings is also quite informative.