Customer Reviews

Mastering Real Estate Investment: Examples, Metrics And Case Studies

5 star:		(11)
4 star:		(2)
3 star:		(1)
2 star:		(0)
1 star:		(0)

 

 

I was trying to decide whether to buy this book or the "cash flow" one, since my library had the cash flow book I purchased this one. However, the cash flow book turned out to be superior and much of this book simply rehashes it but with less detail. Basically, the cash flow book as a section on valuation then details on the 37 calculations he uses; this book has the 37 calculations again, but in less detail, then has a section on example valuations.

Overall, this book is okay, but stand-alone the cash flow book is superior.

Congratulations Frank, you've hit another one out of the park. The third in your series is another addition to my reference library. As an instructor who teaches post secondary real estate investment courses, I've added this excellent analysis to my "must read" list of reference texts. Frank's 37 baseline chapters provide clarity and insight into basic investment measures. His examples demonstrate uncluttered applications of complex ideas in a logical and 'makes sense' manner. The sequence of chapters builds on basic concepts of measurement and carries the reader through reversion. The case studies provide concrete examples of investment scenarios which are applicable in real life real estate investing. Candidly,I feel that if novice real estate investors had read Frank's books prior to "pulling the trigger", I truly believe they would have made more prudent decisions and saved themselves a lot of money and anxiety. This book is definitely a good read and a must for every real estate investor's library!

"You should recognize that investing is a program for the long-term building of wealth, and it has little or nothing to do with speculation."

The above quote, directly from the book, instantly resonated with me. Frank Gallinelli wants to help you become the (unassuming) 'millionaire next door.' Not with get-rich-quick, info-mercial jargon, but by prodiving the reader with real, wealth-building knowledge. The book spills over with pearls of analytical wisdom specific to real estate investing. The current market is ripe with opportunity and this book does a great job of simply explaining complex calculations that should be part of every real estate investor's evaluation process. All the best to you.

This book is similar to What Every Real Estate Investor Needs to Know about Cash Flow by the same author, but I think it takes readers to another level. The author cover 37 key real estate measures such as simple interest, compound interest, present value, gross rent multiplier, net operating income, discounted cash flow, and internal rate of return (IRR). Each metric gets its own chapter. In addition, there are four chapters dedicated to case studies that show how to use some of these metrics within the analysis.

I appreciate that the author decided to write this book after getting comments and questions from readers about the book mentioned above. I am a big fan of this author, and I highly recommend all three of his books. They are not the get-rich-quick-schemes, and they provide good education.

- 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

Gallinelli does a good job with this book, as he presents everything one needs to know to evaluate an income property as a potential investment. In terms of its presentation, the book is very basic and bare-bones, featuring text and numbers primarily, with a few tables, also full of numbers, interspersed at various points. Some may find this to be a bit boring and off-putting, and though I would have liked to have seen a chart or graph or two thrown in here and there to break up the monotony, the format does seem to play well and adhere to Gallinelli's upfront approach (I also suspect it makes for an easy-to-deploy electronic/Kindle version, too!).

The book is organized simply around two (2) interacting parts. Part One of the book contains all of the metrics, each presented separately, and each introduced metric builds logically upon those that preceded it. All of the examples in Part One are simple and straight-forward (the reader could use them to build more complicated examples), and each of the thirty-seven (37) chapters ends with at least three (3) worked problems and solutions. Subsequently, all that is learned in Part One is then put to rigorous work in Part Two, where the reader can see how all the metrics and the various statements come together.

Part One builds up to enabling the reader to set up an annual property operating data (APOD) sheet, and income and cash flow statements for each property under consideration for investment. The only thing that I found missing here was a work-up of detailed, initial and projected balance sheets for each property (so that one can keep track of one's all-important equity stake).

Part Two of the book presents the case studies, of which there are four: the single family residential rental property, the small commercial multi-family (read apartment) building, the conversion (featuring a Victorian-style home with `historical' value being turned into a mixed-use commercial property featuring office suites and separate living units), and the small strip mall featuring four (4) distinct tenants. Each represents some of the more typical investment scenarios that a small investor in real estate would come across. Unfortunately, Gallinelli doesn't cover certain specialized niches of real estate that are typically of unceasing and great interest to the small investor, such as office properties, (whether large or small, metro or suburban), medical office/practice properties, mobile home (read `trailer') parks, parking lots, warehouses and self-storage facilities. Here, after setting up the initial conditions governing each property purchase, projections over a five-year holding period are made and an APOD sheet, income and cash flow statements are generated. Each case study features various permutations of the projections, with things like the mortgage interest rate, size of down payment, and final sales price among others being altered to see how they affect cash flow and return on equity.

Although Gallinelli drops little insights here and there about real estate investment, the book is all about presenting the key calculations to determine if an investment property is a diamond (very likely in the rough) or a dud, and demonstrating how these calcs are applied. He pretty much modeled the `best case' scenarios- and fudged the rate of return metrics a bit (for which he can be forgiven). Cautious readers will note that he does engage in a couple of sleights of hand, particularly in the case studies, and it is up to the careful reader to glean from these (which, by the way, were overly optimistic, if-all-goes-well type situations) that 1) the typical rates of return on equity are low (one sleight of hand involves the use of cash flow to compute ROE- never mind that part of your cash flow is depreciation- a return OF capital and not return ON capital), 2) a large, upfront cash investment is required of the small investor (OK, he quickly and grudgingly came clean here) and 3) most important, all of those rosy projections one often makes abut real estate investment may not stand up to close scrutiny in the real world (Gallinelli gets five stars just for this, and he did a good job demonstrating it).

Overall, Gallinelli successfully managed to put together a very basic, straight-forward and comprehensive treatment of real estate investment aimed particularly at the investor of modest means. A reader could even use this book as a basis or template for modeling potential real estate investments. As such, the reader gets a lot for her money here. Serious small investors looking to invest in real estate in an intelligent and business-like manner would do well to purchase and thoroughly read this book.

This book provides a general overview of a broad range of financial metrics applicable to real estate investment analysis, and then sets up and explores investment case scenarios to demonstrate how these metrics may be applied in the real world. Financial metrics are introduced from the ground up, making this book particularly valuable to those investors who lack a firm grounding in investment valuation analysis. Those with a background in finance may quickly skim through the basics and zero in on those issues and perspectives most applicable to real estate investments, be they single or multi-family residential, commercial or mixed use opportunities. Problem examples and investment cases provide excel-type spreadsheets to illustrate the math behind the metrics. Writing style is easy-going and humorous. In general this is an excellent introduction to the world of real estate investment analysis that will benefit those with and without a financial background.

This is the third book I've read from Frank and I keep learning from him. Frank provides an organized way of determining if a particular real estate property makes business sense. Frank reviews various types of real estate properties (single family, apartments, etc) and analyzes them in a very logical and easy to understand way.

Unlike other 'get rich quick' books, Frank isn't out to convince the world that everyone should acquire real estate 'with no money down'. Instead, Frank advocates a quantitative approach towards deciding to make an investment in real estate.

Frank goes well beyond the theory (e.g., why single family homes aren't priced based on the revenue they generate) of investing in real estate. Very significantly, Frank provides numerous quantitative tools to help the investor understand and use in deciding whether a particular investment makes sense.

In fact, the book is devided into two main parts: the first part (37 chapters) consist of a series of formulas and examples such as simple interest, capitalization rate, amoritzation, etc. This part is more of a reference section.

The second part of the book applies the first part in a series of case studies, which are very easy to follow and interesting. You can see yourself wanting to 'run your own numbers' using his formats and tables to see if you are indeed acquiring profitable properties.

All in all, well worth reading and having handy as a reference book when looking to acquire real estate properties.

Mke

This is a great book for those just getting into real estate investing that do not have a financial background. The examples for each section really help you understand what the particular formula is supposed to tell you. Overall, I am glad I purchased this book.

I was very impressed with this book on Financial formulas. This was much more than the money's worth. I have heard many gurus talk of getting "good investments." But how? Let's face the facts- this is based on formulas. It takes a litte time and discipline to become familiar with. I am very happy that Frank took the time to put this book out. This is exactly what the doctor ordered! Now I understand when gurus, mentors, coaches, agents refer to terms like "cap rate," "cash on cash return," "net present value," "apod statement," "gross operating income," etc etc.

Thanks!

I have not read the whole book yet, but so far, I am very impressed with the writing style. Very valuable information for anyone entering the investing world. It's also fun to read, and not dry like many of these books can be. Good sense of humor. Well done!