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

by: Frank Gallinelli (0)

The Classic Guide to Real Estate Investing―Updated for a Re-energized Industry!

Real estate is once again a great investment, and this bestselling guide provides everything you need to know to get in now and make your fortune.

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. Learn how to measure critical aspects of real estate investments, including:

  • Discounted Cash Flow
  • Net Present Value
  • Capitalization Rate
  • Cash-on-Cash Return
  • Net Operating Income
  • Internal Rate of Return
  • Profitability Index
  • Return on Equity

Whether you’re just beginning in real estate investing or you’re a seasoned professional, What Every Real Estate Investor Needs to Know About Cash Flow has what you need to make sure you take the smartest approach for your next investment using proven calculations.

The Reviews

I think the book represents everything you are required to know if you are planning to venture in a world where math matters.

Well written and easy to follow

As a Mega-Realtor (my team sells 250+ homes a year) I can speak to the greatness of this book. I've ordered dozens of copies to give out to my investors.As an author, I can tell you this book is wonderfully crafted and an awesome read.Tim Sojka, author of Politikill and #1 Thriller Payback Jack, owner of the See TIM Sell Real Estate Team

Excellent reference material for real estate investors. But, sometimes I'm left questioning when to apply tax benefits in calculations, loan servicing fees, and appreciation. These are all basic questions that he usually addresses. But, you have to do a lot of cross checking in different parts of the book to know if an underlying formula includes depreciation, tax deductions, etc.Frank lays out examples for each calculation, including the sub-calculations that make up larger formulas. This helps a lot.I'd add that this seems to be a problem in the industry, not just the book.For example, using the Cash on Cash (CoC) formula, do you include debt service? Some investors do, and that's wrong. Frank explains the purpose of the formula well, and why debt service is not included.With CoC do you include repairs and renovations in Total Cash Invested? The book doesn't seem to explain why not to include these expenses. From my perspective, this makes an investment appear better than it is.So, some words of wisdom.1. Get to know everything involved in the investment analysis. That includes CoC, ROI, depreciation/appreciation, debt servicing, closing costs, renovation costs, ongoing maintenance, the effects of inflation to rent and expenses.This is even MORE important if you are trusting someone else's reports for your investment. Whether that is the seller, an investment group, or someone offering a "turn-key" property for an investment.2. Make your own calculations and ALWAYS use them to evaluate potential investments and your existing properties. Are they performing as expected? Are your expenses in line with the building for its location, condition, age, and quality of build/features?I see a lot of individuals and companies picking up investment properties that just don't have the income potential to support renovation or maintenance. These are properties destined to drag down a neighborhood. I don't want to be a slum lord.For me, it has to be a good investment property, a good home, and good for the community.

While this book does share some similarities with a math textbook, the author does a great job of breaking down the concepts in a way that makes them much easier to understand and is constantly providing both examples and sample scenarios. He gets you to frequently test your knowledge to ensure you understand the concepts before moving on to the next section. He also interjects humor into what could otherwise be fairly dry content since it is a lot of formulas. Many books introducing you to real estate investing will push you to their websites so that they can get you to sign up for an expensive service or otherwise get you to spend a lot of money with them, whereas this author instead points you to free resources. Additionally, other books tend to focus on motivation or getting you to dream big, whereas this book focuses on giving you the tools you need to be successful by building a solid foundation and helping you understand the critical numbers. I highly recommend this book.

Once you decide to invest in rental properties, this book really helps explain how to analyze deals. It allows investors to fully analyze properties from so many angles. It allowed me to build a spreadsheet to quickly put in values and instantly come up with NOI, ADS, CFBT, CFAT, etc. The author also has a great sense of humor and makes the topics super fun. Highly recommend!

This book will teach you to come up a measurement before buying real estate for cash flow. The author used foundational formulas in investments to help investors to buy an income-generating property based on numbers not just on feelings.

Talks a lot about commercial real estate so if you are dealing with residential, you might find part of this book as irrelevant

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