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

Preface xiii Introduction xvii Part I: How to Analyze a Potential Real Estate Deal 1 Do your Homework: How to Gather the Data needed to Make an Investment Decision 3 2 Financial Detective work Before you Buy: Finding the Truth Behind what the Seller is Telling You 9 3 How the "time Value of Money" should Influence your real estate Investing Decisions 27 4 How to estimate what an Income Property Is really worth 51 5 Measuring the return on a real estate Investment 73 6 Case studies: apartment, Mixed-Use, and triple-net Lease 107 Part II: Thirty-Seven Calculations Every Real Estate Investor Needs to Know 7 Calculation 1: Simple Interest 145 8 Calculation 2: Compound Interest 148 9 Calculation 3: Rule of 72s 154 10 Calculation 4: Present Value of a Future Cash Flow 156 11 Calculation 5: Gross Rent Multiplier 160 12 Calculation 6: Gross Scheduled Income (Potential Gross Income) 163 13 Calculation 7: Vacancy and Credit Loss 166 14 Calculation 8: Gross Operating Income (Effective Gross Income) 170 15 Calculation 9: Net Operating Income 174 16 Calculation 10: Capitalization Rate 180 17 Calculation 11: Net Income Multiplier 186 18 Calculation 12: Taxable Income 190 19 Calculation 13: Cash Flow 202 20 Calculation 14: Cash-on-Cash Return 208 21 Calculation 15: Sale Proceeds 213 22 Calculation 16: Discounted Cash Flow 218 23 Calculation 17: Net Present Value 224 24 Calculation 18: Profitability Index 231 25 Calculation 19: Internal Rate of Return 234 26 Calculation 20: Price, Income, and Expenses per Unit 239 27 Calculation 21: Price, Income, and Expenses per Square Foot 242 28 Calculation 22: Operating Expense Ratio 246 29 Calculation 23: Debt Coverage Ratio 250 30 Calculation 24: Break-Even Ratio 254 31 Calculation 25: Return on Equity 257 32 Calculation 26: Loan-to-Value Ratio 261 33 Calculation 27: Points 267 34 Calculation 28: Mortgage Payment/Mortgage Constant 271 35 Calculation 29: Principal Balance/Balloon Payment 276 36 Calculation 30: Principal and Interest per Period 282 37 Calculation 31: Maximum Loan Amount 286 38 Calculation 32: Assessed Value, Property Taxes, and Value Indicated by Assessment 290 39 Calculation 33: Adjusted Basis 294 40 Calculation 34: Depreciation 297 41 Calculation 35: Gain on Sale 301 42 Calculation 36: Land Measurements 304 43 Calculation 37: Building Measurements-Gross Building Area, Usable Square Footage, Rentable Square Footage, Loss Ratio, Net Rentable Area 308 Appendix 313 Index 323