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The second part of the book summarizes each formula, providing basic, easy to understand examples, allowing the reader to jump around and choose which formulas they want to focus on. This book provides concise, to the point, explanations of important formulas that are critical in deciding important real estate investment decisions. Present Value, GRM, NOI, Cap Rates, Taxable Income, Cash on Cash Returns, DCF, Net Present Value, IRR, Debt Coverage Ratio and Depreciation calculations are but a few of the important concepts that are discussed in this book. The author masterfully takes you through each formula, providing you with simple examples,and demonstrates how these formulas are interconnected,and or utilized by themselves, in determing whether an income producing property meets an investors criteria. The first part of the book takes you through an example of the decisions and formulas that experienced real estate investors go through in determining real estate investment decisions using most of the key formulas. For me it tied up a lot of loose ends and showed me how these formulas are interconnected and are great tools in analyzing commercial real estate. A definite must have for any serious real estate investor.
I purchased this book as a gift and have not finished reading it yet myself but have heard many good things and so far has been great.
My Life & 1,000 Houses: Failing Forward to Financial FreedomGood Book. Knowing your numbers is a must but don't forget.trusting your gut is just as important. MS
An excellent resource for those interested in evaluating real estate investments from a mathematical standpoint.
This is the best book on the market covering real estate finance. If you are serious about real estate investment, start with this book first. He also takes you through a very thorough and comprehensive explanation of cash flow, the time value of money and internal rate of return- all of which are important and inter-locking aspects dealing with the proper valuation of commercial real estate. He never talks down to the reader, nor does he assume that the reader is a rocket scientist. In my opinion, that one is somewhat better than this one in one key respect: in that book, he not only imparts a sound investment approach to purchasing commercial real estate for the novice investor, he also gave a clear and crucial warning about the dangers of 'no-money-down' investing. Indeed, most readers, especially those who cringe at math, will come to see how easy the financial figuring side really is after reading this book. Gallinelli teaches you how to 'run the numbers' with a fair amount of good humor and practicality. In it, you will learn the four principal ways money is made in real estate, how to convert features of a property such as location and size into cash flow, how to comparison shop between different properties, and most important, the key questions to ask when presented with all of those rosy financial statements for properties.
This is the book to read BEFORE you read all those other formula-laden tomes. After reading this book, I now have a much better understanding of REIT financial statements. Once you are done with this little gem of a book, consider picking up a copy of his other book on financing commercial real estate purchases. I believe that both books are a good form of positive reinforcement.
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