From the Author
Can a book filled with numbers possibly be exciting? If youre truly interested in real estate investing then you must first realize that investing in income properties is all about the numbers. Its about discounted cash flow and rates of return and net operating income and cap rates. If you understand how these and other key concepts work, then youre on your way to success and thats exciting.
I also believe you'll find the presentation of this material entertaining. I sought to write this in a way that would make it accessible to beginners and professionals alike.
I present more than three dozen key concepts and calculations. The book is peppered with "Rules of Thumb" that you can use as benchmarks when you evaluate potential investment properties. I also provide numerous examples and sample problems that you can use to check your understanding. As you progress youll learn how to read a propertys vital signs and how to put financial concepts to work for successful investing in real estate.
As important as these financial measures are, some can be tedious to perform manually. For those I show you how to use simple spreadsheet models to accomplish those tasks. I also provide you with a link to a special website we created where readers of the book can download many of these models as well as other valuable tools.
I hope that you'll find many good ideas here and that you'll use what you learn to help you make solid investment choices.
From the Inside Flap
An arsenal of powerful calculations that can the difference between winning and losing the real estate investment game
Real estate investing is a numbers game, and the only way to win is by understanding the numbers. "What is a property really worth? How do I determine a buildings value based on current rents? How much will I make if I hold onto a building for five, ten, fifteen years?" Real estate investment pro Frank Gallinelli arms you with 37 basic formulas for calculating these and other critical aspects of real estate investments, including:
Discounted Cash Flow Net Present Value Capitalization Rate Cash-on-Cash Return Debt Coverage Ratio Gross Operating Income Net Operating Income Internal Rate of Return Profitability Index Return on Equity Long-Term Gain Depreciation And Many More
You dont have to be a rocket scientist to use the formulas in this book. For each formula, Gallinelli clearly explains why its important, how to calculate it, and provides examples and sample problems to help you master it. On a companion website, he supplies useful forms and spreadsheet templates that simplify many of the calculations.
With this handy reference, youll quickly master the financial formulas you need to be a winner in the real estate investment game.