Customer Reviews

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

5 star:		(4)
4 star:		(4)
3 star:		(1)
2 star:		(1)
1 star:		(2)

 

 

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.

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.

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.

It's about time somebody wrote a book that really deals with the financial aspects of real estate in an in-depth and informative way. I've seen a couple of other real estate finance books that sell for over $100 that are intended to be used as text books and deal more in the realm of theory. Steve Berges' book takes the theory found in college level text books and simplifies it so that the average person can understand it. He then takes it a step further by showing the reader how the theory can be applied to real world situations by providing actual examples. According to the jacket of the book and some of the comments inside, the author has an MBA in finance and is also an active real estate investor, which suggests to me that he knows what he's talking about.

Since math never was one of my best subjects, I found the step-by-step examples and analysis to be very helpful. Berges covered many topics related to finance including future value and present value concepts, understanding income capitalization, IRRs, ROIs, NPVs, income and balance statements, and much more. All in all, the book was very helpful to me in understanding how to analyze income producing properties such as apartments and commercial buildings. The author did an excellent job in writing about a topic that has been all but neglected by the so-called TV gurus.

The author actually described the valuation of a bank CD as simply dividing the cash flow by the interest rate - a perpetuity valuation! But one does not receive the CD cash flow for eternity. A CD is a single cash flow that requires a simple time-value discounting.

This teaching is akin to describing how the planets orbit the sun based on the theory of electromagnetics, or how a hybrid car runs so efficiently because a little gnome is in the engine turning a handcrank! A complete lack of conceptual understanding.

The author also goes on to define "single-family housing" as having 4 or fewer units and "multi-family housing" as having 5 or more units - a definition that is cumbersome at best and downright knuckleheaded at worst. This distinction is important, but it is the distinction between residential (single, duplex, triplex, or quadraplex) housing and commercial (multifamily) housing.

Other organization of the book is just poor. For example, in discussing useful financial ratio, the author introduces ratios using the net operating income (NOI) before actually defining the NOI a few pages later. (I won't get into the fact that NOI is introduced as another "ratio", although it's not; it's a dollar value off of the income sheet.)

I study with this book in my Real Estate Finance class. It's terrible. There is nothing new here. It's only about basic finance but, he changed the terms to look fancier. These new named financial terms are so much confusing. There are also so many errors in this book. Moreover, the author never stops talking about his achievements. I'm so sick of this book. I can't believe that they pick up this book for us to study.

This book is excellent for learning the basics in real estate financing. It leads us to the items that we should consider before making investment decisions. However, two aspects in the book disturbs me. One, the author makes undisguised effort to use the book as a meadium to promote his other products, such as books or computer softwares. Two, he allocates about one chapter to preach his life philosophy that is wholy unrelated to the subject matter of the book. Although I am glad that I have learned basics about real estate financing from this book, I don't think I will buy another book from this author.

As a former commercial real estate broker, I was always amazed at how much time investors, even experienced ones, would spend analyzing where they can cut operational costs, while paying so little to financing costs. A half of one percent reduction in your interest rate can make a huge difference because debt service is the biggest expense, far outweighing real estate taxes, utilities, and maintenance. If you do not understand real estate financing, you really have no idea what you are doing.

This book does a good job showing readers how to use different financial calculations for single-family and multifamily properties, but it is not as good for commercial properties. I am not surprised because the author is an expert in residential properties, including multifamily. Retail and industrial properties, both of which fall under commercial properties, are governed by longer leases and many times require investors to use a software program called Argus.

The other thing that I will say is that even though these calculations can be used for small residential properties, you have to realize that the smaller you get, the less sophisticated the buyers and sellers are. So, if you think you can sell your property for $X amount because that's what the formula is telling you, it doesn't mean anything if your buyer does not understand your formula. From my experience, if you are dealing with properties under $3 million, most buyers and sellers are not very knowledgeable in finance.

- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market

This book arrived quickly. I was able to apply the knowledge in the proceeding chapters immediately after I read them. This book could have included more on quick ways to research demographics and population cycles.

This book is detailed and gives you the answers you seek in analyizing investment real estate. I am considering single family and multi-familiy properties. This book is accurate for estimating costs and not buying an overpriced property, which is when you make your money. As of 3-20-09 Real Estate is on sale AND rates are low. Both these do not always happen at the same time, so take advantage. Good luck with your investments!Trump Strategies for Real Estate: Billionaire Lessons for the Small InvestorListening: The Forgotten Skill: A Self-Teaching Guide (Wiley Self-Teaching Guides)The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich