Coming from an engineering background, the title of this book caught my attention: “What Every Real Estate Investor Needs to Know About Cash Flow …and 36 Other Key Financial Measures” (ISBN 0-07-142257-9) by Frank Gallinelli. Could it be that I had actually found a book that would show me how to crunch the numbers on an investment property?

After taking that real estate investing course at my local high school, I didn’t want to get my hopes up. It was probably one of those get rich quick books like those late night infomercials.

Within the first couple of pages, the authors states:

“This book is not about how to make millions while starting off with no money, no credit, and no time. Instead, You’ll learn here about cash flow, rates of return, property value, financing guidelines, and a few dozen key measures. With a bit of practice, you’ll be able to read a property’s vital signs and judge its health as an investment.”

So far so good. The author goes into a discussion of how income properties provide return: cash flow, appreciation, loan amortization, and tax shelter. He details each one of these potential returns with very clear examples.

The book takes you through the steps of gathering the data and running through the calculations of several different income producing properties. The examples are well written and show how the numbers can sometimes lie about the property. It even shows how you would do calculations in Excel.

The book goes on to measure the return on a real estate investment using such calculations as payback period, cash on cash return, debt coverage ratio, discounted cash flows, and internal rate of return,

You know what? This book is an absolute MUST-HAVE for any real estate investor. It was exactly what I was looking for. Although the book is American, all the calculations are pertinent to the Canadian real estate investor.

I’ll end this review with a quote from the author:

“Investors don’t buy properties; they decide to buy the income streams of the properties.”

Table of Contents

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
2. Financial Detective Work Before You Buy: Finding the Truth Behind What the Seller Is Telling You
3. How the “Time Value of Money” Should Influence Your Real Estate Investing Decisions
4. How to Estimate What an Income Property is Really Worth
5. Measuring the Return on a Real Estate Investment

Part II: Thirty-Seven Calculations Every Real Estate Investor Needs to Know

Thinking of purchasing this book? Please use my affiliate link below.