What Every Real Estate Investor Needs to Know About Cash Flow And 36 Other Key Financial Measures

The author really knows his stuff and this serves its purpose well! Just enough humor to keep you interested and the subjects are broken down very well. I would recommend this to anyone interested in the financial aspect of real estate.

A must-have for investors new to apartments and other income properties. Every newbie should read it, with a pencil and paper in hand to follow-along on how to do the calculations. You'll be amazed at what you don't know. But, if you're already comfortable with calculating DCR, Cap Rate, IRR, DCF, etc. you don't really need this one.

Everything I learned in my first Finance class in my MBA program is covered in this book. It has examples for you try out on your own to test your understanding - IRR, NPV, etc calculations with real estate examples. This book is an invaluable tool for anyone deciding to invest in real estate! I highly recommend it!

at some point, every investor needs this information. figuring out whether something is a good investment or not basically boils down to Return on investment. also figuring out when to sell is important. (basically when the Internal Rate of Return decreases).

must read!

I'm a university business teacher and have an MBA, and I've taught a number of introductory courses in business finance, including processes for sizing up general corporate investments. I'm also familiar with methods for valuing stocks and bonds. I'm also a bit new to the United States so the implications of U.S. tax laws aren't entirely second-nature for me. Before reading this book, I had also purchased a couple small, single family investment properties that have worked out satisfactorily so far, but wanted to refine my approach using terms and methods that are native to the real estate investment industry. As an educator, I not only expect authors to provide information, but also, to help you practice your skills. Therefore, I tend to judge a book by how well it guides me in truly learning and understanding its concepts.

Overall, this book stood up well against my goals and expectations. The author's methods seemed consistent with general business practices in the various courses I've taught, but have been modified to fit the nuances of the real estate investment industry. I picked up a few things as well, mostly surrounding the impact of accounting rules on taxable income and financial ratios that are specific to real estate investments. I also liked how the author wasn't short on examples of the math in action. Within each chapter there is usually one or two example calculations, and then, at the end of the book, he repeats each calculation or ratio giving it a bit more explanation. He also gives you a problem to solve, with a solution provided at the end of the chapter to check your knowledge. In this end-section of the book, he also provides a bit more detail for each ratio than you find in the body of his work.

I also liked how he appears to have provided some realistic figures in his examples, inadvertently producing some benchmark values for certain key ratios. For example, expected rates of return of 10-12 percent for real estate, debt coverage ratios of 1.2 to 1.3 for most banks, and vacancy allowance rates of 3% to 6% came through consistently. He covers himself by encouraging you to do research to verify these numbers in your specific locality, but they gave me a ballpark figure to which I could compare my own research and make some preliminary judgments.

And, to test my knowledge, I ran the numbers for a real estate investment I was considering using his methods. I did this in a spreadsheet I created from scratch. Then I ran those same numbers through Turbo Tax and compared it to the figures the author would have recommended to forecast the tax liability of the investments. I got the same numbers as the author would have, although I did have to research current rules on real estate investments from the IRS website because some of his tax rules were out of date (because the book was published years ago; I was using the 2003 version and its 2011 now). But the book got me started in figuring out where to look.

However, I felt there were a few ways the book could have been improved. First, I felt he might have talked about the modified internal rate of return (MIRR) for the investment. This measure takes into account the rate at which proceeds from the property are reinvested, which his Internal Rate of Return measure doesn't account for. The MIRR is therefore more accurate, in my view, producing a lower rate of return that needs to be recognized if you want to hit your investment goals. Second, I thought he could have given a comprehensive example which uses all of the important ratios he describes in the book. He does a good job of describing each ratio in isolation; however, I think it would best to see the important ratios all in one place, their tradeoffs, and an overall interpretation of the investment in terms of net income, cash flow, return, value, debt coverage etcetera. I would have also liked to have seen him analyze two potential properties, and explain which one is the better investment based on the numbers given a fictitious investor's characteristics such as preference for cashflow versus capital appreciation, etcetera.

I also thought he ducked out of some of the finer points of sizing up a real estate investment, telling you in a few spots to see your accountant about certain issues, such as rules on gains, disposal, depreciation, passive loss rules, etcetera. The reason I bought the book was to help me make these decisions without a high-priced accountant. So, I felt the need to buy a second book after reading this one - one on current real-estate taxation rules. But he did point me in the right direction, and perhaps this expecation was beyond the scope he intended for this book.

Also to fully internalize the ratios, I would have liked to have seen a summary of all the ratios in table format, showing their formula, when you use the ratio, and its general meaning. And last of all, I feel his book is skewed a bit toward multi-unit investments rather than single-family residential properties I'm interested in. For example, he recommends a vacancy allowance of 3-6%. However, for a a single-family dwelling, if you budget only one month's vacancy, you get 1/12 or 8.3%. So, if you blindly use his vacancy allowance, you'll overestimate your gross operating income (gross rental receipts).

However, for the price you pay for a used book on the store, I got more than my money's worth, and I won't be selling this one any time soon. Although I've given a few criticisms here, I think this is quite and excellent book, and I recommend it quite highly. I therefore gave it five stars.

Great book that covers a lot of landscape. A great "second book" if you want a little bit deeper information than a standard "real estate is a good idea" book. Still basic enough to follow, but not fluff like other books.

The book is truely an informative read. It answers all those subtle questions that Finance text books neglect to cover, but somehow you know the answers are out there. In clear and precise language financial concepts are explained with full clarity. Crunching the numbers is an essential exercise in the due diligence process of investing. Every investor and potential investor should read this book. I praise Mr. Gallinelli for this excellent book and look forward to other books yet to be written.

Highly recommend that anyone who wants (or thinks they want) to be a RE investor should read this book BEFORE they begin purchasing properties. Had i taken my own advice i would've saved several thousands.

Overall, a great book for anyone looking to get his/her foot in the door with a real estate venture. It is entry level yet has enough detail to get you up to speed with the big boys. It's a tough book to read cover to cover because it covers a ton of topics, but it has been a great reference guide.

I have been appraising commercial real estate for 20 years. I buy real estate books all the time to see if I can pick up new ideas or see some insightful advice. This book is like many others in the same segment that re-state the formulas investors use to analyze property. It won't tell someone where to look for a deal or how to negotiate the best price possible though. it won't give you a good look at the impact of finance or taxes for someone looking to buy and flip a home versus buy, renovate and rent or just buy and hold. This book is a decent look at the language of real estate investing. It IS useful in the respect that any attempt to buy, finance or invest will require a person to at least have a familiarity with these terms and formulas.

If you have studied real estate concepts, or taken any finance class with TVM, IRR, NPV, etc, this book contains a lot of regurgitated material. I found the examples to be very basic. I'm looking forward to reading "Mastering Real Estate Investment," with the hopes that it will be more advanced.