If you are a real estate investor, this is the book! As one reader says, “It’s a must-have reference for anyone from new to seasoned investors.”
Gallinelli divides his book into two parts.
In part one – Chapters 1-6, Gallinelli discusses the various topics investors need to understand.
In chapters one and two, we discover how crucial it is to do your homework –From a preliminary analysis when finding and verifying whether a property makes sense to being a financial detective and digging deep to discover the truth behind the seller’s claims. Chapter three explains the time value of money, and four teaches the reader how to estimate property value –accurately and realistically. Chapter five is all about measuring your return on real estate investments. He covers cash on cash returns, internal rates of returns, and others, sharing the different metrics and why it’s good to evaluate from more than one angle. Finally, in chapter six, he closes part one with a series of case studies, applying the information you gleaned in the first five chapters.
In part two – Gallinelli covers every calculation a real estate investor needs to know how to perform, when, and why. Real estate is about numbers – you don’t have to be intimidated – it’s not about advanced math but knowing which formula to apply. Gallinelli provides the formulas, showing the reader step-by-step how to create proforma and scenarios to understand what value a property can bring. Some examples include –
- Simple and compound interest
- Rule of 72s
- Present value of future cash flow
- Gross rent multiplier, gross scheduled, and operation income
- Operating expense, break-even, and loan-to-value ratios
- Several chapters on various mortgage calculations as well as taxes, depreciation, gains, the new present value, profitability, and cash flow.
There’s more, but that’s enough to whet your appetite.
Summary: Gallinelli defines the math you must know before investing in real estate. He breaks down the concepts to make them much easier to understand. He provides all the financial formulas in one place, laying out examples for each calculation, including the sub-calculations that comprise the more extensive formulas. He presents opportunities to test your knowledge, ensuring you understand each concept before moving on to the next. Gallinelli focuses on giving you the tools to be successful –directing readers to free resources. And finally, lessons in real estate might be considered a dry topic, Gallinelli interposes humor along the way.
About Rentals America
Rentals America provides full-service property management for residential rental properties. Our team is completely dedicated to property management and we’re here to help landlords navigate the rental market.
