| Preface | xi |
| Downloadable Forms and Excel Templates in This Book | xii |
| Introduction: The Four Ways to Make Money in Real Estate | xv |
| 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 |
| Property-Related Data | 4 |
| Ask to See the Leases | 4 |
| Look at the Property Tax Bill | 4 |
| Spot-check Utility Bills | 4 |
| Ask to See the Appropriate Sections of the Seller's Tax Return | 5 |
| Recite the Representations about the Leases and the Schedule of Rent Income in the Offer to Purchase | 5 |
| Market-Related Data | 6 |
| Investigate Comparable Sales | 6 |
| Look for Lease Rates and Operating Expense Data | 7 |
| Find Out about Local Capitalization Rates | 7 |
| 2 | Financial Detective Work Before You Buy: Finding the Truth Behind What the Seller Is Telling You | 9 |
| Basic Definitions | 10 |
| Analyzing Similar Properties | 12 |
| Comparing Expense Ratios | 16 |
| The Annual Property Operating Data Form | 19 |
| 3 | How the "Time Value of Money" Should Influence Your Real Estate Investing Decisions | 27 |
| Real Estate Applications | 28 |
| Using Excel to Make Real Estate Calculations | 30 |
| What Every Investor Needs to Know About Cash Flow: Calculating the Present Value | 34 |
| Evaluating Leases | 39 |
| Mortgage Calculations | 44 |
| 4 | How to Estimate What an Income Property Is Really Worth | 49 |
| Cash Flow and Taxable Income | 52 |
| Taxable Income or Loss | 52 |
| Cash Flow before Taxes | 54 |
| Cash Flow after Taxes | 56 |
| A Case Study | 56 |
| Resale--How to Forecast the Appreciation Potential for a Property | 62 |
| 5 | Measuring the Return on a Real Estate Investment | 71 |
| Payback Period, Cash-on-Cash Return, Gross Rent Multiplier, Debt Coverage Ratio | 71 |
| Capitalization Rate | 75 |
| Discounted Cash Flow | 76 |
| Internal Rate of Return | 80 |
| Part II | Thirty-Seven Calculations Every Real Estate Investor Needs to Know | |
| 6 | Calculation 1: Simple Interest | 93 |
| 7 | Calculation 2: Compound Interest | 96 |
| 8 | Calculation 3: Rule of 72s | 102 |
| 9 | Calculation 4: Present Value of a Future Cash Flow | 104 |
| 10 | Calculation 5: Gross Rent Multiplier | 108 |
| 11 | Calculation 6: Gross Scheduled Income (Potential Gross Income) | 111 |
| 12 | Calculation 7: Vacancy and Credit Loss | 114 |
| 13 | Calculation 8: Gross Operating Income (Effective Gross Income) | 118 |
| 14 | Calculation 9: Net Operating Income | 122 |
| 15 | Calculation 10: Capitalization Rate | 128 |
| 16 | Calculation 11: Net Income Multiplier | 134 |
| 17 | Calculation 12: Taxable Income | 138 |
| 18 | Calculation 13: Cash Flow | 149 |
| 19 | Calculation 14: Cash-on-Cash Return | 155 |
| 20 | Calculation 15: Sale Proceeds | 160 |
| 21 | Calculation 16: Discounted Cash Flow | 165 |
| 22 | Calculation 17: Net Present Value | 171 |
| 23 | Calculation 18: Profitability Index | 177 |
| 24 | Calculation 19: Internal Rate of Return | 180 |
| 25 | Calculation 20: Price, Income, and Expenses per Unit | 185 |
| 26 | Calculation 21: Price, Income, and Expenses per Square Foot | 188 |
| 27 | Calculation 22: Operating Expense Ratio | 192 |
| 28 | Calculation 23: Debt Coverage Ratio | 196 |
| 29 | Calculation 24: Break-Even Ratio | 200 |
| 30 | Calculation 25: Return on Equity | 203 |
| 31 | Calculation 26: Loan-to-Value Ratio | 206 |
| 32 | Calculation 27: Points | 211 |
| 33 | Calculation 28: Mortgage Payment/Mortgage Constant | 214 |
| 34 | Calculation 29: Principal Balance/Balloon Payment | 218 |
| 35 | Calculation 30: Principal and Interest per Period | 223 |
| 36 | Calculation 31: Maximum Loan Amount | 227 |
| 37 | Calculation 32: Assessed Value, Property Taxes, and Value Indicated by Assessment | 231 |
| 38 | Calculation 33: Adjusted Basis | 235 |
| 39 | Calculation 34: Depreciation | 238 |
| 40 | Calculation 35: Gain on Sale | 242 |
| 41 | Calculation 36: Land Measurements | 245 |
| 42 | Calculation 37: Building Measurements--Gross Building Area, Usable Square Footage, Rentable Square Footage, Loss Ratio, Net Rentable Area | 249 |
| Appendix | 253 |
