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If we’ve seemed a bit quiet lately…

“You never write. You never call.”

Well, not exactly, but if we’ve seemed a bit quiet lately it’s not because we’re ignoring our loyal followers and customers. Rather, our email service provider hit a bump in the road over the past few weeks, so we’ve been kind of trapped under the cone of silence.

We won’t bother you with the techy details, but they’ve got it all sorted now, so we’re back on track. But if you tried to sign up for the RealData Dispatch or our real estate investor education newsletter recently, there’s a good chance that you never saw your confirmation email and so you’re not on our list.

That would be a shame, because we send out a stream of good, informative material to our subscribers. That includes ebooks, videos, and other resources. We do that because we value our followers, we want you to do well in your real estate activities – and, of course, we want you to remember who we are. And yes, we do mix in an occasional marketing message, but not terribly often.

If you tried to subscribe recently – or even if you didn’t and would like to do so now – we encourage you to use the sign-up box in the right-hand column of this page.

Then check your email inbox for a message asking you to confirm that it was really you who subscribed.

Thanks. As always, we wish you spectacular success in your real estate investing.

— Frank Gallinelli

Macintosh Users – Important Info Regarding Excel Compatibility

We have been enthusiastic users of Macintosh computers since the early days of RealData. In fact ours were among the first business applications available on the Mac in 1984. There are plenty of die-hard Mac users in our customer ranks, but even they will be frustrated with an apparent Excel 2016 bug which now affects our products.

At this time, all RealData software for Mac will run on both Excel 2011 and Excel 2016 (aka Office 365).  However, if you have the latest Excel 2016 for Mac, then you will not be able to print any images, including graphs, to PDF reports. Thankfully this does not affect hard printing of reports.  We have not been able to come up with a workaround, so wait we must until Microsoft patches this issue.  UPDATE!  This issue has been fixed in the May 23, 2018 release of Office 2016.  Be sure to update to the latest release.

An important tip for all Mac users – be sure to update Excel to the latest release and also be sure to use the latest build release of your RealData products.  For most of our products, only the latest release of the latest version of each will run on Excel 2016.

For more info on updating Excel, see our knowledge base article: https://www.realdata.com/docs/excel-2011-how-to-check-version-and-how-to-update/

2018 Tax Reform and our REIA Software

A number of customers have asked if we’re updating our Real Estate Investment Analysis software because of the passage of the new tax law, effective in 2018. There’s still ambiguity about some provisions of the Tax Cuts and Jobs Act (which some might prefer to call the Law of Unintended Consequences), but we probably can parse it enough to make a few adjustments to the program. It may surprise you to know that, so far, we see the need for only a few simple changes in the software. But, of course, as technical corrections or other updates to the law occur, there could be others.

The most important is that there are new tax brackets:

Tax rate Single
10% Up to $9,525
12% $9,526 to $38,700
22% $38,701 to $82,500
24% $82,501 to $157,500
32% $157,501 to $200,000
35% $200,001 to $500,000
37% $500,001 or more
Tax rate Married filing jointly
10% Up to $19,050
12% $19,051 to $77,400
22% $77,401 to $165,000
24% $165,001 to $315,000
32% $315,001 to $400,000
35% $400,001 to $600,000
37% $600,001 or more


On the assumptions page, you’ll see that we now use 24% as the default entry, but you can enter whatever is appropriate for you.

Other rates and thresholds – such as capital gain and Net Investment Income Tax – appear to be unchanged in the new law.

Under the depreciation choices, we’re removing what had been called “Optional 40-Year Straight Line for Residential or Non-Residential.” That also goes by the name, “Alternative Depreciation System,” and this year is changed to be 40 years for commercial, 30 for residential. We’ve encountered very few of our customers who use that, so we felt we could take this opportunity to simplify the data entry a bit. We’ve kept the choice of “Other Straight Line,” which allows you to accomplish the same result.

These changes are free of charge as part of a “new build” update. Download this latest build by logging into your customer account at https://realdata.com and going to the “Sign In” link at the top right of any page. If you are using the Windows version, you may also click the “check for updates” button on the Welcome sheet of your REIA program. We are happy to assist you via email, so look also to the upper right for a link to email us

Finally, a side note about an interesting tax item that is not in the program:

We have never dealt with income tax issues in our partnership analysis because partnerships typically pass income through to individuals, each of whom in turn pays tax personally on their portion of that income. However, a new provision in the 2018 law may potentially provide a 20% deduction of Qualified Business Income derived from such pass-through entities.

To figure who qualifies and how much might be deducted personally is not for the faint of heart, but if you expect to be the recipient of Qualified Business Income from a real estate partnership, this Cornell law school has a flow chart might be helpful.

Finally, a note on why we don’t try to go beyond a general estimate of tax consequences in our software. Particularly with the changes in the 2013 and 2018 bills, the tax system has taken an increasing holistic approach. Your other investments and income from other sources can impact how much your overall tax liability grows when you add a new investment to the mix. Pretty much everything is connected.

Analysis of a single property cannot realistically address an investor’s entire financial life. We try to gather from you a modest and reasonable amount of information, so we can give you back what we hope will be reasonable estimate of consequences.

As the year goes on, if there are any changes or technical corrections to the law that we feel should affect the program, we’ll let you know here on our blog.

— Frank Gallinelli


Your time and your investment capital are too valuable to risk on a do-it-yourself investment spreadsheet. For more than 30 years, RealData has provided the best and most reliable real estate investment software to help you make intelligent investment decisions and to create presentations you can confidently show to lenders, clients, and equity partners. Find out more at www.realdata.com.


Copyright 2018,  Frank Gallinelli and RealData® Inc. All Rights Reserved

The information presented in this article represents the opinions of the author and does not necessarily reflect the opinions of RealData® Inc. The material contained in articles that appear on realdata.com is not intended to provide legal, tax or other professional advice or to substitute for proper professional advice and/or due diligence. We urge you to consult an attorney, CPA or other appropriate professional before taking any action in regard to matters discussed in any article or posting. The posting of any article and of any link back to the author and/or the author’s company does not constitute an endorsement or recommendation of the author’s products or services.

What Kind of Real Estate Investment Makes Sense for YOU?

If you watch what’s happening with the stock market, you’re probably ready to reach for the Dramamine. It’s like being trapped in a really fast elevator, except the buttons don’t take you where you expect to go. Maybe somebody else is controlling the ride.

You realize that most of the people you see who have achieved genuine financial independence have done so with real estate. Your next step is to figure out how you can do the same.

But… real estate comes in a lot of flavors. There are some fundamental differences among the various types, and you need to understand those differences before you start your investing campaign. One size does not fit all. Let’s look at a few of your options.


REIT (Real Estate Investment Trust)

A REIT is fundamentally a stock investment, a lot like the ones you may have decided to put behind you.

If you buy stock in an oil company, you’re investing in a firm that probably owns and operates wells, refineries, and retail distribution.

If you buy stock in a REIT you’re investing in a company that owns and operates real estate, and probably deals with retail customers, aka tenants. Pretty much the same business model, different industry. The advantage here, as with other stocks, is liquidity. Buy today, sell tomorrow. But remember, it’s someone else’s company, and you’re a few layers away from actually investing in real estate.


Fix and Flip

This is a situation where you buy a property, fix it up, and sell it for a profit. The plan is for the ARV (After Repair Value) to be greater than the sum of the cost to buy plus the cost to repair. The single-family house is probably the most common fix-and-flip.

Sounds good, and plenty of people have made money doing this, but it’s far from the slam dunk you might see on reality TV. The first challenge is in finding a suitable property—one that you can buy on favorable terms, get financed, improve substantially at a reasonable cost, and sell quickly for a profit.

Where many flippers run off the rails is in underestimating their true costs. Besides the cost to buy and fix-up, you have to carry the property. This means loan payments, property taxes, insurance, and utilities during the fix-up period and also while you’re searching for a buyer. In addition, there may be costs of sale (commission and attorney), as well as taxes on the profit. In many circumstances, your profit might be taxed at ordinary income rates, not as capital gain.

All of these are considerations that a real estate developer might routinely take into account—and indeed, one could argue that a flip is essentially a type of development project—but the budding entrepreneur might not start out with so broad a perspective. And you might not have the infrastructure in place—e.g., access to capital and to contractors—that you need to achieve a suitable profit.


Single Family Houses as Rentals

Many first-time investors gravitate toward single-family houses as rental properties.

That choice may be driven more by personal comfort level than by the merits of this approach as an investment strategy. If you have been a residential tenant, then you probably know something about the roles and responsibilities of both tenant and landlord. Even if you don’t know the fine points of leasing and landlording, you understand the basic ground rules and this seems like familiar and comfortable territory.

These are benefits not to be taken lightly, but there are other considerations. Have you made a realistic projection of cash flow? Will your rent revenue be sufficient to cover all of your expenses, including financing? Do you recognize that losing one tenant equates to 100% vacancy? If that occurs, how long can you soldier on without revenue?

Perhaps the most important concept to recognize here is that there is a fundamental difference between a single-family home and a more typical income-property investment. The worth of any investment ought to be related to its ability to produce a return, but generally the value of a single-family home is based on the competitive market for similar properties – in short, comparable sales. So you might be missing out on something here.

Let’s look now at an option that offers what might be the biggest single benefit available to you when you choose real estate as an investment.


View a sample lesson from my online video course,
“Introduction to Real Estate Investment Analysis”


Income-Producing Property, Buy and Hold

In the spirit of full disclosure, my specialty is income-producing property, particularly what is often called “buy and hold.” It’s what I teach and write about, so now excuse me as I get on my soapbox.

This type of property generally includes non-residential (such as office, retail, mini-storage etc.) and apartment buildings with more than four units, though some investors will include four-unit properties as well.

These properties differ in a very important way from those whose main characteristic is to serve as a personal residence. As I mentioned above, the market value of a personal residence is almost always based on comparable sales. Buyers of single-family homes are essentially purchasing a lifestyle – a location and a physical property that offers a basket of amenities. The market value is based on those factors, so they drive what you’ll typically pay to acquire the home, and the price for which you’ll be able to sell.

The value of a true income-property, however, is based on its ability to generate income. The location and attributes of the physical property are not irrelevant, but they matter only insofar as they affect that ability to generate income. You could have two seemingly identical properties side-by-side. One is managed well and produces a strong net income. One is managed poorly, and has a weak bottom line. Physically similar, but the former will command the higher price.

Why does this matter? Unlike with stocks or with personal-residence real estate, you, the investor, have the opportunity to create value, to create equity. How? By increasing the property’s net income.

My favorite personal war story in this regard is about a property that a friend and I bought many years ago. The units were rented significantly below market, and we purchased it at a small premium over what those rents justified. As leases expired we increased rents substantially, just about doubled the bottom line, then sold the property for twice what we paid.

The key point here is that we didn’t have to rely on the sale prices of comparable properties in the neighborhood to increase in order for the value of our property to rise. We were able to create value proactively by doing a better job of managing. We created equity.

This ability to have such a degree of personal control over the success of your investment is something you find in very few investment vehicles outside of income-producing real estate.


The Bottom Line

So what will be your choice, what works best for you?

  • The REIT is certainly easy and liquid, but it is still a stock.
  • The fix-and-flip holds out the possibility of a very big payday, but you need a dependable and capable team that can move quickly; and as with any high upside there is also the greater risk of loss.
  • The single-family rental is an appealing way to break into real estate because of its familiarity, but it’s an investment mainly to the extent that you benefit from external market forces.
  • And then there is my favorite, the buy-and-hold income property. It’s an option that gives you the opportunity to exercise significant personal control over the success of your investment without going into the deep end of the risk pool.

My bias toward the last option notwithstanding, there is no choice that’s right for everyone. Your best decision is an informed decision, and that’s what I hope I’ve helped you reach.

—Frank Gallinelli


Ready to learn more about real estate investing? Visit learn.realdata.com


Your time and your investment capital are too valuable to risk on a do-it-yourself investment spreadsheet. For more than 30 years, RealData has provided the best and most reliable real estate investment software to help you make intelligent investment decisions and to create presentations you can confidently show to lenders, clients, and equity partners. Find out more at www.realdata.com.


Copyright 2018,  Frank Gallinelli and RealData® Inc. All Rights Reserved

The information presented in this article represents the opinions of the author and does not necessarily reflect the opinions of RealData® Inc. The material contained in articles that appear on realdata.com is not intended to provide legal, tax or other professional advice or to substitute for proper professional advice and/or due diligence. We urge you to consult an attorney, CPA or other appropriate professional before taking any action in regard to matters discussed in any article or posting. The posting of any article and of any link back to the author and/or the author’s company does not constitute an endorsement or recommendation of the author’s products or services.

Update to REIA Express

Today we’ve released new build 1.18 of our Real Estate Investment Analysis Express edition.

This build contains a new feature in the Rent Roll: If you select a commercial property type on the General worksheet, it will hide appropriate columns on the Rent Roll, namely Number of Bedrooms and Number of Bathrooms. Placeholder names for unit types adjust according to property type that you select.

This feature is currently available in the Windows release only. We hope to roll out this improvement for Mac users in a few weeks.

Now earn a digital certificate with my video course, “Introduction to Real Estate Investment Analysis”

Professional education is a great thing. And being able to broadcast news of your success makes it even more valuable.

That’s why I’m announcing a new benefit to students who enroll in my course, Introduction to Real Estate Investment Analysis. I’m now awarding a digital Certificate of Achievement and badge to students who successfully complete the course.

Here are some questions you probably want to ask:

What does it cost? For my students: nothing. RealData is picking up the cost of issuing and hosting the certificate.

What do you mean by “digital certificate?” Your certificate will be hosted by Accredible.com, an industry-leading credentialing platform. As you’ll see below, it’s designed so you can share it easily.

Does that mean I don’t get a physical certificate to hang on my office wall? No, you also get a pdf version you can print.

What’s so special about this digitally hosted certificate?  So glad you asked. Here are a few things you couldn’t do with a traditional certificate:

  • You receive a unique url for your Certificate, so you can share it with employers, clients, industry groups, just about anyone.
  • You can share it on any of your social media networks with just a click on a toolbar.

 Your personal certificate page includes a dashboard, as shown at the left. From there you can…

  • Add it to your LinkedIn profile
  • Add it to your email signature
  • Get the code to embed it in your website
  • Email it to anyone
  • Download it as a PDF
  • Download a badge image, which you can attach to your email signature, put on business cards, etc.
  • Add “evidence” to your certificate to increase your credibility — examples of your work, videos about yourself, links to projects you’ve been involved with – and even more

How do I obtain my certificate?Within a few days after you complete the work to earn your certificate, we’ll send you an email with instructions to access it. If you believe you’ve completed the requirements but haven’t heard from us, please contact us at mailto:education@realdata.com

Terms of Use: Please review our common-sense Terms of Use

I believe our online video course provides a solid educational opportunity for those who want to learn about real estate investment and development. I hope this digital certificate will recognize your efforts and will benefit you for devoting the time and effort to pursue that education. I look forward to contacting you when you complete your coursework!

Frank Gallinelli

Learn by Example

I’ve seen a great deal of interest in the real estate investment case studies that are part of my investment analysis video course — so I’ve spun those cases off as a new mini course, one where you can learn by example.

The cases deal with three different property types:

  • apartment building,
  • mixed-use, and
  • triple-net-leased

They’re similar to those I cover in my grad-school course at Columbia, and I’ve designed them with several purposes in mind:

  • To give you practice working through bumper-to-bumper deal analysis. On what terms does each deal make sense to you?
  • To introduce special situations that you need to understand, such as expense recoveries and triple-net leases.
  • To give you an opportunity to put yourself inside the deal as if you were a real participant, to think as an investor thinks — beyond the numbers, beyond the surface data, as if real money were on the table.

Once you’ve learned about deal analysis with this mini course, you’ll probably want to take the complete course, covering detailed real estate investment metrics, partnerships, development, and more. So here’s more good news:

When you upgrade to the bigger course, you’ll get full credit for  this mini course.

Learn more about my case study course

Sharpening Your Pencil – Create Better Analyses With Published Real Estate Data

It’s tempting to rush through a property analysis by simply reviewing the broker’s sell sheet, plugging the data into your favorite software program and printing the results. You’re done, right?

Think again.

We’re not saying the seller isn’t providing accurate income and expense data, but is he or she giving you a complete picture of all the issues? Consider such questions as:

  • What is an appropriate cap rate for the market in which the property is located; and more specifically, what’s the prevailing cap rate for the particular sector, such as multi-family or self-storage?
  • What seems like a realistic assumption for revenue and expense growth over time?
  • How have vacancy rates been trending for the area, and what might those trends say about future leases, renewals, and demand for space?

You’ll probably need to look beyond the owner’s statement to build your best property analysis and thus create your best chance at a successful investment. Thankfully, you can find a number of sources online to help you achieve accuracy, and along with it, some peace of mind.  You can find data on:

  • Metropolitan and submarket area cap rates
  • Average rents by market sector
  • Vacancy rates
  • Number of units available and sold
  • Sales and rental comps
  • Custom reports based on your subject property

The following are some of the best-known sources of data:




You’re probably already familiar with this site, at least in regard to its home value estimates. The focus here is residential but investors can benefit from their extensive rental information, which is provided by county, metro area, city, zip code, and even neighborhood.  You download data in Excel format. We found their series of 5 to 7 years of data particularly useful for evaluating rental trends.

You can also learn about their methodology here.


Moody’s Analytics (formerly Reis)


Reis has been a source of commercial real estate data for nearly four decades, and say they are a “…source for property and market intelligence, including vacancy rates, rent levels, cap rates, new construction, rent comparables, sales comparables, valuation estimates, and capital market trends across eight major commercial real estate sectors.

You can get more info about their data products at https://cre.moodysanalytics.com/products/




Really big data commercial real estate here, for owners, brokers, appraisers, lenders, even institutional investors

They say you can search up to 1 million sales records, across all property types at https://www.costar.com/products/costar-comps or access property-level data, including vacancy, rents, sales comps for multifamily, office, industrial, or retail property at https://www.costar.com/products/analytics.




Compstak serves up office, retail and industrial lease data for “leading institutional investors, lenders, and owners across the US and UK.”  Subscribe to their entire database or, if you are broker, appraiser or researcher, trade your own data for theirs and gain access to Compstak data for free.

Real Capital Analytics


From macro trends to extensive data on individual properties, Real Capital Analytics offers data on “$18 trillion of sales, recapitalizations and financings.”  Contact them for pricing.




Redfin is a residential brokerage firm but offers a wide variety of property sales and trend data.  Of particular note is their annual report of the “Hottest Neighborhoods in the US.”

While you may not be an investor in single family homes, consider that the market for your commercial property is linked to the health of the local residential market.




Gain access to their database of 1.6 million sales listings.  Cost is $175 per month.  They also offer, at no charge, sales and lease trends for hundreds of localities across the US.  See http://www.loopnet.com/markettrends/


What data sources do you use? Share your thoughts by commenting below.

New Software Updates, Equity Multiple Calculation

This week marks the release of a new feature in our REIA product line as well as important updates to our development programs for the Mac.

We have just added the Equity Multiple calculation to both REIA Express and Pro, for both Windows and Macintosh. Download the latest builds of these products to view this metric on the Analysis of Resale and Summary Cash Flow and Resale Analysis reports. You will also find Equity Multiple on our Decision Maker sensitivity analysis dashboard.

Also newly released are updates to C/I Development and On Schedule for the Mac.  These two updates bring these products in line with their Windows counterparts by adding features such as waterfall returns in the Partnership modules.

RealData customers should open their software and look for the “Check for Updates” button on the Welcome worksheet, or login to their customer account to download the latest release of these products.


New REIA v18 Releases for the New Year – Mac and Windows

With the new year comes the release of REIA version 18 for Mac. This release has all the same features, calculations and reports that are found in the Windows release. Like all of our Mac  products, it will run under Mac Excel/Office 2011 only. We continue to wait for Microsoft to make fixes and improvements to Excel 2016 so that our software will run correctly in that version. REIA v18 on the Mac runs on Excel 2011, Excel 2016 and Excel/Office 365.

Also available for immediate download is a maintenance update for REIA v18 Windows. This update fixes minor issues in the Cover Sheet and Cash Flow / Resale Assumptions reports. Customers who own a license of the software can download the latest build 1.07 from either the Welcome worksheet of their product or via their customer account at realdata.com

Keep track of all latest releases on our builds page.


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