Customer Reviews

The Income Stream

5 star:		(5)
4 star:		(2)
3 star:		(1)
2 star:		(0)
1 star:		(2)

 

 

It is amazing how little most investors understand about how to value
income properties. Most folks think of "cash flow" as the
only variable, but that is only one of five key variables, and it's
not the most important. But by following the principles outlined in
this book, and with the help of a good spreadsheet program, you'll be
able to completely understand how real estate investments stack up
against other investments in the marketplace. Best of all, you'll be
able to analyze the real value of income properties.

Hint
#1...don't spend $300 on the software mentioned in the book...

Hint
#2...After you read this book and work with the above spreadsheets,
you'll know A LOT more than 99% of the Realtors out there. You'll
really learn how little they know.

Financially sophisticated readers would probably be wasting their time by reading this book. Perhaps those people should try Brueggeman and Fisher or Pyhrr et. al. The other "downsides" of the book are these: The production quality is not excellent (looks as if it was published on a xerox machine). Sometimes concepts (e.g. cap rate) are used in the text before they're explained. Those are the reasons for giving a three or four star rating and not a five star rating.

Unfortunately, I have lived my adult life as a financial illiterate. This was one of the first books I read in an effort to self-educate, and I am very glad I read it. It walks the reader through a series of forms which describe the relevant financial profiles of any particular investment real estate opportunity. It then uses the "Internal Rate of Return" concept to evaluate and compare investments. This technique effectively reduces the after-tax income from any particular investment (real estate or not) to an average yearly interest rate. On the way to achieving this apples-to-apples comparison, the author not only points out the time value of money and its importance in the computation but also gives a very clear outline of all the risks that have to be evaluated on the way to making a decision about any real estate investment. It seems to me that this is the easiest and shortest correct way to encapsulate ALL the important issues of such an investment. Einstein said that everything should be made as simple as possible, but not simpler. Most mass market books actually make things much simpler than they really are, and that can be dangerous. For my fellow financial illiterates, it might be too much to step directly into the more advanced texts. This was a good, thorough introduction with minimal pain (not painless).

The book contains no mathematical formulas, really (just IRV, interest is rate times value). This is both an advantage and a disadvantage. For people who dislike math or are afraid of it, there is certainly a chance to "just do it" and make it work without worrying about formulas. On the other hand, for mathematically inclined, it is really not so hard to work out the needed formulas and make it work nicely. You should be warned that you must either make your own formulas or be prepared to purchase a small business-oriented hand calculator if you want to use the techniques in this book well. It also attempts to sell a moderately-priced software package for your spread sheet. That software is not actually required. The calculator (or formulas) are required.

Investment alalysis is one of the cornerstones of real estate. There are many fine books on real estate investing, but this is the first one I have found that patiently, clearly explains the process of using numbers and formulas to evaluate real estate. I have been fairly successful in real estate for several years going on gut instinct, rather than using logical analysis. This book has enabled me to take that additional step to actually use concrete numbers to make decisions. Robert Goodman did not invent this information, but he clearly explains it in a fashion that is actually enjoyable to read. If you do not understand real estate investment and are ready to take the next step, I highly recommend this book.

Bob Goodman "pulls together" the four facets of the real estate investing world, getting each into the most simple of form. In reading the book, I was searching for information on how to estimate the profit on a house, after taxes and selling costs were paid, especially in reference to the various tax liabilities. Page 67 in this book is worth the cost of a bucket full of these books in learning the bottom line in the sale of a commercial, or residential venture in real estate. The entire book is filled with difficult things made simple.

Dr. Alan C. Tibbetts

This book addresses the 4 yields or "tributaries" to the Income Stream: Cash yield, tax shelter yield, equity build-up yield, and appreciation yield. After explaining and discussing each of these yields in depth, the author combines them into one figure: Internal Rate of Return (IRR). This is the magic number that all investors must look at before making any investment decisions. The problem is, without looking at the 4 yields that comprise IRR, you will never find it.

There are 3 important worksheets that are provided and used to gather all of the data needed to derive the 4 yields: Annual Property Operating Data (APOD), Cash Flow Analysis Worksheet (CFAW), and Alternative Cash Sales Worksheet (ACSW). Goodman explains all of the sheets and how to use them.

This is the science of evaluating real estate with hard data. Once the data is gathered, you can make the most informed decision possible. It also leaves no room for surprises: if an investment isn't good, it will be very apparent. The math used is relatively simple, so anyone can comprehend this treatment of the topic.

The techniques can't be argued with. I wonder how many real estate investors actually do this kind of analysis. I know it's the ONLY way I would invest in real estate: real analysis, real answers.

My husband and I just did our first real estate investment. For many weeks I tried to educate myself on this subject via conversations with Real Estate Agents, Property Managers, Tax Accountants, books, etc. I had lots of great information, but all of it in bits and pieces. I struggled with many spreadsheets trying to get to that elusive IIR number that would justify the investment. I was very excited to run across this book. It presented the material in a very logical sequence, re-inforced the concepts along the way, and wrapped it all up in an easy to understand "bow".

It is surprising how few people in the industry really understand the full financial picture of REI -- many went with their 'instincts', which may be fine for some, but I needed hard numbers. [...] With a little extra work, I will also be able to generate the graphs and other information that was illustrated in the book. Thank you Mr. Goodman.

Don't believe what Ryan Rayner and Rachel Quin wrote in Nov. 2002. They are the same person and the only reviewers to rank the book one star. (Funny how they wrote exactly the same things on the same day, huh? I wish Amazon would make a better effort to catch these kinds of frauds before posting them.) And check out the other reviews Rachel Quin has done: Star Wars games and a book on Java programming. Hardly the views of a Real Estate Professional. They can "go sell crazy someplace else."

Yes, The Income Stream is a thin book. Yes, the type is large. But it's what it SAYS that's important. This is a book about real estate ACCOUNTING, a complex subject. It's not a "no money down" or "get rich quick" guide.

The main purpose of the book to show you how to use the forms used by Certificated Commercial Investment Members (CCIM) of the National Assn. of Realtors. The CCIM designation is the "doctorate" degree of investment real estate. One of the most important values they compute on an investment is the Internal Rate of Return. IRR is the only variable that gives you an easy-to-use percentage that you can use to compare a real estate investment with non-real estate investments. It combines the analysis of appreciation, tax effects, and cash flow into one number. It's a very useful figure understood by only the cream of the crop of real estate professionals.

If you buy the book, be sure to download the spreadsheets authored by Gary Tharp, CCIM, which are replicas of those used by Gordon in the book. (...)

If you're looking for a book on real estate investment, this isn't it. But if you want to know what MAKES a good investment financially, this is one of the few.

--Apartment Broker

Good book with very precise instructions to evaluate a real estate investment property. And to estimate a potential growth of a real estate property.

Goodman's secret to having an income stream is to write flimsy, useless books. After 38 years in the industry you would think he would spend more than an afternoon rehashing common knowledge.

Large print, double spaced lines with common sense advice that you would know without reading the book left me angry.

Goodman's secret to having an income stream is to write flimsy, useless books. After 38 years in the industry you would think he would spend more than an afternoon rehashing common knowledge.

Large print, double spaced lines with common sense advice that you would know without reading the book left me angry.