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

ISBN-10: 0071422579

ISBN-13: 9780071422574

Edition: 2004

Authors: Frank Gallinelli

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Every real estate investor needs to know how to calculate cash flow, long-term gain, net operating income, and a few other basic financial formulas. This is a guide to 34 essential calculations that answer crucial questions such as 'What is the building really worth today?'.
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Book details

List price: $19.95
Copyright year: 2004
Publisher: McGraw-Hill Companies, The
Publication date: 11/25/2003
Binding: Paperback
Pages: 261
Size: 6.00" wide x 8.75" long x 0.75" tall
Weight: 0.836
Language: English

Frank Gallinelli is founder and President of RealData‚ Inc, the real estate industry’s leading investment software firm. He is also Adjunct Assistant Professor for Columbia University’s Master of Science in Real Estate Development program.

Prefacep. xi
Downloadable Forms and Excel Templates in This Bookp. xii
Introduction: The Four Ways to Make Money in Real Estatep. xv
How to Analyze A Potential Real Estate Deal
Do Your Homework: How to Gather the Data Needed to Make an Investment Decisionp. 3
Property-Related Datap. 4
Ask to See the Leasesp. 4
Look at the Property Tax Billp. 4
Spot-check Utility Billsp. 4
Ask to See the Appropriate Sections of the Seller's Tax Returnp. 5
Recite the Representations about the Leases and the Schedule of Rent Income in the Offer to Purchasep. 5
Market-Related Datap. 6
Investigate Comparable Salesp. 6
Look for Lease Rates and Operating Expense Datap. 7
Find Out about Local Capitalization Ratesp. 7
Financial Detective Work Before You Buy: Finding the Truth Behind What the Seller Is Telling Youp. 9
Basic Definitionsp. 10
Analyzing Similar Propertiesp. 12
Comparing Expense Ratiosp. 16
The Annual Property Operating Data Formp. 19
How the "Time Value of Money" Should Influence Your Real Estate Investing Decisionsp. 27
Real Estate Applicationsp. 28
Using Excel to Make Real Estate Calculationsp. 30
What Every Investor Needs to Know About Cash Flow: Calculating the Present Valuep. 34
Evaluating Leasesp. 39
Mortgage Calculationsp. 44
How to Estimate What an Income Property Is Really Worthp. 49
Cash Flow and Taxable Incomep. 52
Taxable Income or Lossp. 52
Cash Flow before Taxesp. 54
Cash Flow after Taxesp. 56
A Case Studyp. 56
Resale--How to Forecast the Appreciation Potential for a Propertyp. 62
Measuring the Return on a Real Estate Investmentp. 71
Payback Period, Cash-on-Cash Return, Gross Rent Multiplier, Debt Coverage Ratiop. 71
Capitalization Ratep. 75
Discounted Cash Flowp. 76
Internal Rate of Returnp. 80
Thirty-Seven Calculations Every Real Estate Investor Needs to Know
Calculation 1: Simple Interestp. 93
Calculation 2: Compound Interestp. 96
Calculation 3: Rule of 72sp. 102
Calculation 4: Present Value of a Future Cash Flowp. 104
Calculation 5: Gross Rent Multiplierp. 108
Calculation 6: Gross Scheduled Income (Potential Gross Income)p. 111
Calculation 7: Vacancy and Credit Lossp. 114
Calculation 8: Gross Operating Income (Effective Gross Income)p. 118
Calculation 9: Net Operating Incomep. 122
Calculation 10: Capitalization Ratep. 128
Calculation 11: Net Income Multiplierp. 134
Calculation 12: Taxable Incomep. 138
Calculation 13: Cash Flowp. 149
Calculation 14: Cash-on-Cash Returnp. 155
Calculation 15: Sale Proceedsp. 160
Calculation 16: Discounted Cash Flowp. 165
Calculation 17: Net Present Valuep. 171
Calculation 18: Profitability Indexp. 177
Calculation 19: Internal Rate of Returnp. 180
Calculation 20: Price, Income, and Expenses per Unitp. 185
Calculation 21: Price, Income, and Expenses per Square Footp. 188
Calculation 22: Operating Expense Ratiop. 192
Calculation 23: Debt Coverage Ratiop. 196
Calculation 24: Break-Even Ratiop. 200
Calculation 25: Return on Equityp. 203
Calculation 26: Loan-to-Value Ratiop. 206
Calculation 27: Pointsp. 211
Calculation 28: Mortgage Payment/Mortgage Constantp. 214
Calculation 29: Principal Balance/Balloon Paymentp. 218
Calculation 30: Principal and Interest per Periodp. 223
Calculation 31: Maximum Loan Amountp. 227
Calculation 32: Assessed Value, Property Taxes, and Value Indicated by Assessmentp. 231
Calculation 33: Adjusted Basisp. 235
Calculation 34: Depreciationp. 238
Calculation 35: Gain on Salep. 242
Calculation 36: Land Measurementsp. 245
Calculation 37: Building Measurements--Gross Building Area, Usable Square Footage, Rentable Square Footage, Loss Ratio, Net Rentable Areap. 249
Appendixp. 253
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