What every real estate investor needs to know about cash flow... and 36 other key financial measures
Book - 2016
"What Every Real Estate Investor Needs to Know About Cash Flow removes the guesswork from investing in real estate by teaching you how to crunch numbers like a pro, so you can confidently judge a property's value and ensure it provides long-term returns. Real estate expert Frank Gallinelli has added new, detailed investment case studies, while maintaining the essentials that have made his book a staple among serious investors." --
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- Subjects
- Published
-
New York :
McGraw-Hill
[2016]
- Language
- English
- Main Author
- Edition
- Updated edition
- Physical Description
- xxvii, 336 pages ; 23 cm
- Bibliography
- Includes index.
- ISBN
- 9781259586187
- Preface
- Introduction
- Part I. How to Analyze a Potential Real Estate Deal
- 1. Do Your Homework: How to Gather the Data Needed to Make an investment Decision
- Property-Related Data
- Ask to See the Leases
- Look at the Property Tax Bill
- Spot-Check Utility Bills
- Ask to See the Appropriate Sections of the Seller's Tax Return
- Recite the Representations about the Leases and the Schedule of Rent Income in the Offer to Purchase
- Market-Related Data
- Investigate Comparable Sales
- Look for Lease Rates and Operating Expense Data
- Find Out About Local Capitalization Rates
- 2. Financial Detective work Before You Buy: Finding the Truth Behind What the Seller Is Telling You
- Basic Definitions
- Analyzing Similar Properties
- Comparing Expense Ratios
- The Annual Property Operating Data Form
- 3. How the "Time Value of Money" Should Influence Your Real Estate Investing Decisions
- Real Estate Applications
- Using Excel to Make Real Estate Calculations
- What Every Investor Needs to Know About Cash Flow: Calculating the Present Value
- Evaluating Leases
- Mortgage Calculations
- 4. How to Estimate What an Income Property Is Really Worth
- Cash Flow and Taxable Income
- Taxable Income or Loss
- Cash Flow before Taxes
- Cash Flow after Taxes
- A Case Study
- Resale-How to Forecast the Appreciation Potential for a Property
- 5. Measuring the Return on a Real Estate Investment
- Payback Period, Cash-on-Cash Return, Gross Rent Multiplier, Debt Coverage Ratio
- Capitalization Rate
- Derived Capitalization Rate
- Discounted Cash Flow
- Internal Rate of Return
- Financial Management Rate of Return and Modified Internal Rate of Return
- The Problems with IRR
- Financial Management Rate of Return
- Modified Internal Rate of Return
- Capital Accumulation Comparison
- 6. Case Studies: Apartment, Mixed-Use, and Triple-Net Lease
- Apartment Building Investment 108
- Mixed-Use Property
- Retail Tenants
- Residential Tenants
- Triple-Net Lease
- Part II. Thirty-Seven Calculations Every Real Estate Investor Needs To Know
- 7. Calculation 1: Simple Interest
- 8. Calculation 2: Compound Interest
- 9. Calculation 3: Rule of 72s
- 10. Calculation 4: Present Value of a Future Cash Flow
- 11. Calculation 5: Gross Rent Multiplier
- 12. Calculation 6: Gross Scheduled Income (Potential Gross Income)
- 13. Calculation 7: Vacancy and Credit Loss
- 14. Calculation 8: Gross Operating Income (Effective Gross Income)
- 15. Calculation 9: Net Operating Income
- 16. Calculation 10: Capitalization Rate
- 17. Calculation 11: Net Income Multiplier
- 18. Calculation 12: Taxable Income
- 19. Calculation 13: Cash Flow
- 20. Calculation 14: Cash-on-Cash Return
- 21. Calculation 15: Sale Proceeds
- 22. Calculation 16: Discounted Cash Flow
- 23. Calculation 17: Net Present Value
- 24. Calculation 18: Profitability Index
- 25. Calculation 19: Internal Rate of Return
- 26. Calculation 20: Price, Income, and Expenses per Unit
- 27. Calculation 21: Price, Income, and Expenses per Square Foot
- 28. Calculation 22: Operating Expense Ratio
- 29. Calculation 23: Debt Coverage Ratio
- 30. Calculation 24: Break-Even Ratio
- 31. Calculation 25: Return on Equity
- 32. Calculation 26: Loan-to-Value Ratio
- 33. Calculation 27: Points
- 34. Calculation 28: Mortgage Payment/Mortgage Constant
- 35. Calculation 29: Principal Balance/Balloon Payment
- 36. Calculation 30: Principal and Interest per Period
- 37. Calculation 31: Maximum Loan Amount
- 38. Calculation 32: Assessed Value, Property Taxes, and Value Indicated by Assessment
- 39. Calculation 33: Adjusted Basis
- 40. Calculation 34: Depreciation
- 41. Calculation 35: Gain on Sale
- 42. Calculation 36: Land Measurements
- 43. Calculation 37: Building Measurements-Gross Building Area, Usable Square Footage Rentable Square Footage, Loss Ratio, Net Rentable Area
- Appendix
- Index