## Real Estate Expense Recoveries—What are they, how do they work? (part 1)

If you’ve gotten involved as a landlord or tenant with non-residential real estate, such as retail or office buildings, then you have probably encountered a phenomenon that may go by any of several names: expense recoveries, expense reimbursements, pass-throughs, or common area maintenance (CAM) charges. What exactly is this phenomenon and how does it work?

The typical commercial lease will specify a base rent, sometimes as a dollar amount per month or year, but more often as an annual number of dollars per rentable square foot of space occupied by the tenant. Many leases also call for additional rent over the base amount in the form of expense reimbursements.

How it Works—The Math

Let’s take a simple example. Say that you own a single-tenant property with 10,000 rentable square feet. The lease specifies a base rent of \$30 per square foot. It also says that the tenant is obligated to reimburse you, the landlord, for all property taxes in excess of \$4,000 per year. The \$4,000 cut-off is called an expense stop.

In the first year of the lease, the total property tax bill is \$12,000. How much will the tenant pay during the first year? Start with the base rent:

area x rate = base rent

10,000 square feet x \$30 per sf = \$300,000 base rent

Now calculate the reimbursement:

property tax expense — expense stop = expense reimbursement

\$12,000 — \$4,000 = \$8,000 expense reimbursement

So the tenant is going to pay a total of \$308,000 in the first year.

What happens if the space is divided among multiple tenants? While the leases for these tenants could be structured in any way to which the parties agree, the most common arrangement would be to allocate the reimbursements according to each tenant’s pro-rata share of the total rentable square footage.

Let’s say now that instead of occupying the entire rentable area, the tenant we’ve been discussing takes up only 2,000 square feet and the remainder is rented to other businesses. The calculation of the base rent works just as it did before (area x rate = base rent), but the reimbursement involves an additional factor, the tenant’s pro rata share. Since the tenant occupies 2,000 of the 10,000 square feet total, its share is 20%

pro rata share x (property tax expense — expense stop)
= expense reimbursement

20% x (\$12,000 — \$4,000) = expense reimbursement

20% x \$8,000 = \$1,600 expense reimbursement

As before, we add that to the tenant’s base rent

2,000 square feet x \$30 per sf = \$60,000 base rent

to get a total of \$61,600.

In this example, we have been passing through just one expense, but the landlord and tenant can agree to pass through as many or as few as they like. Property tax is probably the most common, and a lease that has just that single reimbursement is called a net lease. If the lease passes through both taxes and insurance, it is called a net-net lease. And if it adds tenant responsibility for repairs and maintenance into the deal, it is called a triple-net lease.

How it Works—The Practical Issues

All this is nice in theory, but how does it work in practice? Does the property owner let the tenant pay the bills?

Hardly ever. If you as a property owner pass property taxes or insurance cost–or any other expense for which you are responsible–on to a tenant, what you should do is pay those expenses directly yourself and send your tenant a bill for the reimbursable amount. A moment’s reflection will make the reason for this immediately obvious. Do you really want to rely on a third party to pay your tax or insurance bill on time? What if they don’t? You’re probably already picturing the nightmare scenario, where the insurance bill was left unpaid by the tenant, and then a catastrophic uninsured loss occurred. Or the tax bill was ignored, and you end up with a lien against your property and a black mark on your credit. If it’s your bill, pay it yourself and then collect from the tenant.

More…

Now that we’ve nailed down the basic mechanics of expense reimbursements, we want to go a bit further. There are some variations we should look at, like base-year reimbursements and CAM charges; there are some accounting and presentation issues worth considering; and there is the fundamental question as to why commercial landlords and tenants follow this pass-through practice at all. Come back for Part 2 to find out more.

—-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. Learn more at www.realdata.com.

## New Short-Term Analysis Mode in REIA Pro

Today we are releasing build 1.07 for Windows and build 1.13 for Macintosh of our REIA Professional product to add a third “short term” analysis mode.  This is a free update for all those who have a license for REIA Pro v17.

Select the mode on the General Settings worksheet:

By making this selection, the software reveals a set of worksheets that are specific to a 24 month analysis.  In a typical short-term scenario, you plan to purchase a property, do some renovations, and then resell within two years.

With the addition of this feature, we can now say that REIA Pro has all the features that REIA Express has, plus many more.  See a feature comparison of the two REIA Products for more information.

## The Cash-on-Cash Conundrum – a Postscript

A while back, I posted a two-part series called “The Cash-on-Cash Conundrum.” In the first installment I explained the calculation and underlying logic of CoC, and in the second I discussed some of the pitfalls of overreliance on this particular measure.

I try to keep my ear to the ground by reading and sometimes contributing to investor forums, where I continue to see a good deal of discussion on the question of what is or what should be the metric of choice for real estate investors. My unofficial and unscientific gauge of the general sentiment is that most investors agree that cash flow is king. Although I would be reluctant to crown any single measure as the absolute be-all and end-all for property analysis, I agree that cash flow is indeed a critical measure of the health of an investment property.

So what’s the big deal? What concerns me is that I see a kind of tunnel vision on this topic. I frequently hear some variation of these two statements bundled together: “Cash-on-cash return is the only reliable metric and the only one I really need,” and “IRR and Discounted Cash Flow analysis are bogus – they’re a waste of time because you just can’t predict the future.” To put it simply, these folks are saying that they trust CoC because it looks at the here and now, and they distrust IRR/DCF because it tries to look into the future.

On the surface, that argument might seem reasonable enough. Cash-on-Cash return is the property’s expected first-year cash flow before taxes, divided by the amount of cash invested to make the purchase; it’s quick and easy to calculate, and it does indeed focus on a more-or-less tangible present. A strong CoC unarguably provides a good sign that your investment is off on the right foot.

Is that the end of the story – or should it be? I think this narrow focus can cause an investor to miss some vital issues.

By adopting the “can’t predict the future” argument, aren’t you ignoring what investing is all about? You don’t have a crystal ball, but still — isn’t investing about the future, and isn’t the ability to make sensible choices in an uncertain environment a key trait of the successful investor?

I find it difficult to accept the argument that I should make a decision to buy or not to buy an investment property based on its first-year cash flow alone and without regard to projections of future performance. Ironically, there is a hidden message in this point of view: If the first year performance data is sufficient, then apparently I should believe that such data will be representative of how well the property will perform all the time. In other words, it really is OK to predict the future, so long as I believe the future will always be like the present.

I would argue that it is in fact less speculative to make the kind of projections that you typically see in a Discounted Cash Flow analysis, where you look at the anticipated cash flow over a period of time and use those projections to estimate an Internal Rate of Return over the entire holding period.

With any given property, there may be items that you can forecast with a reasonable degree of confidence. For example, on the revenue side you may have commercial leases that specify the rent for five years, ten, or even more. You may even be able to anticipate a potential loss of revenue at a point in the future when a commercial lease expires and you need to deal with rollover vacancy, tenant improvements, and leasing commissions.

You could be looking at a double- or triple-net property where you are insulated from many or most of the uncertainties about future operating expenses like taxes, insurance and maintenance.

Or, with residential property, you may have a history of occupancy percentage and rent increases that permit a credible forecast of future revenue.

Then there is the more basic question, why are you analyzing this property at all? Why are you running the numbers and making this CoC calculation? Are you trying to establish a current market value, as a commercial appraiser might? Or are you trying to make a more personal decision, i.e., will this particular property possibly meet your investment goals? And what are those goals?

Seems like I just took a nice simple metric and wove it into a more complicated story. Sorry, but in your heart of hearts you know if investing really were that simple, then everyone with a pulse would be a huge success. At the same time, it doesn’t have to be so complicated either, so long as you approach it in a reasonable and orderly way.

That orderly approach begins with deciding what you are looking to get out of this investment. Maybe you want to hold it for a few years to get strong cash flow and then sell it, hopefully for a profit. Perhaps you intend to hold it long term, less concerned with immediate cash flow (so long it as it positive), and then sell the property much later to fund your children’s college costs or your own retirement. In either case, if your plan is to buy and hold then there is one thing you can’t ignore: the future.

This approach continues with projection of the revenue, expenses, potential resale, and rate-of-return metrics, running out to your intended investment horizon. Perhaps key here is the realization that you shouldn’t really expect to nail your projections with a single try. Consider several variations upon future performance: best-case, worst-case and somewhere in-between scenarios to give yourself a sense of the range of possible outcomes.

All this brings us back to the duel between the Cash-on-Cash metric and DCF/IRR. I believe if you rely only on the former, then you are not just saying, “You can’t predict the future.” You’re saying, “If the first year looks good, then that’s all I need to know.” This is, quite literally, a short-sighted investment strategy. The takeaway here is that there should be no duel between metrics at all; that prudent investors can use Cash-on-Cash to get an initial reading of the property’s immediate performance, but they should then extend their analysis to encompass the entire lifecycle of the investment. To quote the folks at NASA (who, after all, really are rocket scientists), “It takes more than one kind of telescope to see the light.”

—-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. Learn more at www.realdata.com.

## C / I Development build 1.12 “Better in Blue”

Today we are releasing a build 1.12 of Commercial Industrial Development in version 6. In this build we have completely changed the color / theme from green to blue.  At one time, we used color to differentiate the products but currently we are standardizing on a business blue appearance.

This update also includes a number of fixes to the printed reports and provides a bit more uniformity in the presentation.  It’s a free update for anyone who has a license of version 6 of the software.

## New, Improved PDF Printing for Macintosh Products

Yesterday, we released free updates across all of our Macintosh products that brings new PDF printing functionality and ease of use for PDF report creation.  Our new solution includes a utility file (called rdpdfutil) which resides in the same folder as the RealData software product and replaces the need for CUPS-PDF.

### What exactly does this new utility do?

In short, it wraps up individual PDF files into one single document just as we do on our Windows products.  It also allows you to save your reports to any location that you choose, unlike CUPS.  Printing to PDF on a Mac now is equivalent to the advanced functionality we have had on Windows.

### How does it work?

Print reports like you have always done by opening the RealData Menu and selecting Print Reports.  Tick the “Print to PDF” checkbox, then click the Print button.

Soon after, a dialog box will appear that asks you where you would like to save the PDF report.  Be sure to rename the report to something that makes sense for your project.

### What else do I need to know?

When you install your Mac product, by default we prompt you to save the product to your Mac’s Applications folder.  Some users may wish to move this folder to another location, but note that in order for our PDF printing solution to work, you must retain the default install location with Applications.  Do not change the folder name.  Unfortunately, this is a limitation of the Mac OS that we could not work around.

## Crowdfunding Real Estate Investments

Pooling of resources, passing the hat — call it what you will, but collaborative underwriting has probably been around for a couple of centuries. Never one to leave well enough alone, the internet has again risen to the role of game-changer, extending a global reach to individuals and companies looking for backers.

You have probably heard of the crowdfunder Kickstarter, which is a popular donation-based site, aimed primarily at creative projects. Backers who donate to such projects don’t become shareholders or expect any financial return. They may be more akin to patrons than to investors.

But investment-based crowdfunding sites have also emerged. I can’t say that I knew much about them, but I recently attended the annual Yale Alumni Real Estate Association’s National Conference where one of the sessions was devoted to this subject, with presentations by two of the top players in this field: Daniel Miller of Fundrise and Rodrigo Nino of Prodigy Network.

Although this method of funding real estate projects may be just a blip on the radar at present, it does appear that more and more real estate crowdfunding sites like these are cropping up and deals actually are getting funded. So just what is this all about and how is it supposed to work? I’ve tried to take what I learned at the Yale conference and have expanded on it a bit; and so, the following are a few observations from an interested outsider.

For the Project Developer Seeking Financing

Among the top arguments for crowdfunding a real estate project are these:

• It offers an opportunity to get a project financed more quickly and easily than it would through more conventional channels.
• By eliminating some of the middlemen usually involved, it can lower transaction costs.

The arguments seem credible, since most bank and institutional financing has become a test of endurance. Some crowdfunding sites offer both debt and equity investments, and most are quite specific as to the types of properties with which they deal. The process may not be entirely a walk in the park, because the typical site screens developers by taking them through a rigorous application and evaluation process.

For the Investor

One attraction for investors is that they typically don’t have to pony up a huge commitment to participate in a single project. Hence, they could spread smaller chunks of cash among several properties or even several developers, thus spreading their risk.

There would appear to be a few murky areas, however. Successful commercial real estate investors generally apply a laser focus on their due diligence. In a crowdfunded scenario one should expect that the developer will be doing that, carefully vetting the property and supplying detailed financial information and projections to the potential investor; but how much detail will they provide and can the investor independently verify that information? With the proliferation of crowdfunding sites, will there be consistency among them in the amount and quality of data they provide? A prudent investor must be certain at least to take a very careful look at the track record of the developer.

Investing through crowdfunding may have particular appeal to inexperienced investors. They should be particularly cautious, understanding that there is not likely to be any liquidity, that their cash could be tied up for a considerable time, and of course that there is no guarantee of an acceptable return or of recovering the initial investment. Sometimes deals simply fail.

How is Crowdfunding Even Possible?

It should come as no surprise that there are plenty of regulations that govern these investment offerings. It appears that most of the crowdfunding sites have been operating under SEC Regulation D, which limits general solicitation and restricts participation to “accredited investors.” These generally include investors with a net worth of at least \$1 million (not including the value of their home) and income of \$200,000 for the past two years, or \$300,000 together with spouse.

One site, which at present seems to be unique, is Fundrise. They have been able to use an obscure SEC Regulation A that allows non-accredited investors to participate in community-based deals with investments as little as \$100. There is apparently plenty of hoop-jumping for them to deal with, since this regulation also involves state approvals as well as a limit on capital that can be raised in a 12-month period.

In 2012, Congress passed the JOBS Act (Jumpstart Our Business Startups)  and in September 2013, Title II of that act became effective. Title II allows general solicitation, but only to accredited investors.

Title III of the JOBS Act is called the “Crowdfunding Exemption.” Expected to work its way through the SEC rule-making process sometime later this year, it would allow non-accredited investors to participate in equity offerings. The proponents of investment crowdfunding see this as the real game-changer.

Conclusion

Crowdfunding could revolutionize how real estate investments are financed, but not everyone is convinced that it is the Next Big Thing. A recent BusinessWire article cites a number of concerns, including one that this writer has seen elsewhere:  “Will crowdfunding expose innocent, small-time investors to fraudsters and scam artists?”

Both real estate crowdfunding itself and the regulatory environment that will govern it are in their infancy, so how this will all play out must be a matter of conjecture for now. On the one hand, the real estate industry — to put it as politely as possible — has a long history of being resistant to change. On the other, technology in the 21st century has had a habit of sweeping away things that we confidently viewed as permanent cultural fixtures. To be convinced, I need only to rummage in my basement to dig out my old rotary-dial wall phone and my case of incandescent lightbulbs.

Time will tell the story.

—- Frank Gallinelli

Crowdfunding’s Latest Invasion: Real Estate

How Crowdfunding Could Reshape Real Estate Investing

The Big Five in Real Estate Crowdfunding

####

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. Learn more at www.realdata.com.

## How to Look at Reserves for Replacement When You Invest in Income-Property

It may sound like a nit-picking detail: Where and how do you account for “reserves for replacement” when you try to value – and evaluate – a potential income-property investment? Isn’t this something your accountant sorts out when it’s time to do your tax return? Not really, and how you choose to handle it may have a meaningful impact on your investment decision-making process.

What are “Reserves for Replacement?”

Nothing lasts forever. While that observation may seem to be better suited to a discourse in philosophy, it also has practical application in regard to your property. Think HVAC system, roof, paving, elevator, etc. The question is simply when, not if, these and similar items will wear out.

A prudent investor may wish to put money away for the eventual rainy day (again, the roof comes to mind) when he or she will have to incur a significant capital expense. That investor may plan to move a certain amount of the property’s cash flow into a reserve account each year. Also, a lender may require the buyer of a property to fund a reserve account at the time of acquisition, particularly if there is an obvious need for capital improvements in the near future.

Such an account may go by a variety of names, the most common being “reserves for replacement,” “funded reserves,” or “capex (i.e., capital expenditures) reserves.”

Where do “Reserves for Replacement” Fit into Your Property Analysis?

This apparently simple concept gets tricky when we raise the question, “Where do we put these reserves in our property’s financial analysis?” More specifically, should these reserves be a part of the Net Operating Income calculation, or do they belong below the NOI line? Let’s take a look at examples of these two scenarios.

Now let’s move the reserves above the NOI line.

The math here is pretty basic. Clearly, the NOI is lower in the second case because we are subtracting an extra item. Notice that the cash flow stays the same because the reserves are above the cash flow line in both cases.

Which Approach is Correct?

There is, for want of a better term, a standard approach to the handling capital reserves, although it may not be the preferred choice in every situation.

That approach, which you will find in most real estate finance texts (including mine), in the CCIM courses on commercial real estate, and in our Real Estate Investment Analysis software, is to put the reserves below the NOI – in other words, not to treat reserves as having any effect on the Net Operating Income.

This makes sense, I believe, for a number of reasons. First, NOI by definition is equal to revenue minus operating expenses, and it would be a stretch to classify reserves as an operating expense. Operating expenses are costs incurred in the day-to-day operation of a property, costs such as property taxes, insurance, and maintenance. Reserves don’t fit that description, and in fact would not be treated as a deductible expense on your taxes.

Perhaps even more telling is the fact that we expect the money spent on an expense to leave our possession and be delivered to a third party who is providing some product or service. Funds placed in reserve are not money spent, but rather funds taken out of one pocket and put into another. It is still our money, unspent.

What Difference Does It Make?

Why do we care about the NOI at all? One reason is that it is common to apply a capitalization rate to the NOI in order to estimate the property’s value at a given point in time. The formula is familiar to most investors:

Value = Net Operating Income / Cap Rate

Let’s assume that we’re going to use a 7% market capitalization rate and apply it to the NOI. If reserves are below the NOI line, as in the first example above, then this is what we get:

Value = 55,000 / 0.07

Value = 785,712

Now let’s move the reserves above the NOI line, as in the second example.

Value = 45,000 / 0.07

Value = 642,855

With this presumably non-standard approach, we have a lower NOI, and when we capitalize it at the same 7% our estimate of value drops to \$642,855. Changing how we account for these reserves has reduced our estimate of value by a significant amount, \$142,857.

Is Correct Always Right?

I invite you now to go out and get an appraisal on a piece of commercial property. Examine it, and there is a very good chance you will find the property’s NOI has been reduced by a reserves-for-replacement allowance. Haven’t these people read my books?

The reality, of course, is that diminishing the NOI by an allowance for reserves is a more conservative approach to valuation. Given the financial meltdown of 2008 and its connection to real estate lending, it is not at all surprising that lenders and appraisers prefer an abundance of caution. Constraining the NOI not only has the potential to reduce valuation, but also makes it more difficult to satisfy a lender’s required Debt Coverage Ratio. Recall the formula:

Debt Coverage Ratio = Net Operating Income / Annual Debt Service

In the first case, with a NOI of \$55,000, the DCR would equal 1.41. In the second, it would equal 1.15. If the lender required a DCR no less than 1.25 (a fairly common benchmark), the property would qualify in the first case, but not in the second.

It is worth keeping in mind that the estimate of value that is achieved by capitalizing the NOI depends, of course, on the cap rate that is used. Typically it is the so-called “market cap rate,” i.e., the rate at which similar properties in the same market have sold. It is essential to know the source of this cap rate data. Has it been based on NOIs that incorporate an allowance for reserves, or on the more standard approach, where the NOI is independent of reserves?

Obviously, there has to be consistency. If one chooses to reduce the NOI by the reserves, then one must use a market cap rate that is based on that same approach. If the source of market cap rate data is the community of brokers handling commercial transactions, then the odds are strong that the NOI used to build that market data did not incorporate reserves. It is likely that the brokers were trained to put reserves below the NOI line; in addition, they would have little incentive to look for ways to diminish the NOI and hence the estimate of market value.

The Bottom Line – One Investor’s Opinion

What I have described as the standard approach – where reserves are not a part of NOI – has stood for a very long time, and I would be loath to discard it. Doing so would seem to unravel the basic concept that Net Operating Income equals revenue net of operating expenses. It would also leave unanswered the question of what happens to the money placed in reserves. If it wasn’t spent then it still belongs to us, so how do we account for it?

At the same time, it would be foolish to ignore the reality that capital expenditures are likely to occur in the future, whether for improvements, replacement of equipment, or leasing costs.

For investors, perhaps the resolution is to recognize that, unlike an appraiser, we are not strictly concerned with nailing down a market valuation at a single point in time. Our interests extend beyond the closing and so perhaps we should broaden our field of vision. We should be more focused on the long term, the entire expected holding period of our investment – how will it perform, and does the price we pay justify the overall return we achieve?

Rather than a simple cap rate calculation, we may be better served by a Discounted Cash Flow analysis, where we can view that longer term, taking into account our financing costs, our funding of reserves, our utilization of those funds when needed, and the eventual recovery of unused reserves upon sale of the property.

In short, as investors, we may want not just to ask, “What is the market value today, based on capitalized NOI?” but rather, “What price makes sense in order to achieve the kind of return over time that we’re seeking?”

How do you treat reserves when you evaluate an income-property investment?

—-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. Learn more at www.realdata.com.

## Results of our first real estate investor survey

We would like to thank all those who took a few minutes to respond to the first of our investor surveys; and we’d like to share the results:

Q1: What type of real estate investment property do you buy, or plan to buy? Check all that apply.

 Multifamily, 2-5 units 52% Apartment Building, >5 units 54% Mixed-Use 20% Retail Strip Center 26% Retail, Larger Shopping Center 9% Free-Standing NNN 4% Office Building 30% Self-Storage 24% Industrial 7% Hotel 9% Other (please specify) Single-family 22% Land 2%

Keep in mind that we asked respondents to “check all that apply,” so that is why these don’t–and shouldn’t– add up to 100%.  The results show that many investors buy more than one type of property.

Clearly, residential property was more popular than commercial, and what may have been a bit surprising to us was the number of “write-in” votes for single-family.  Combining these with the 2-5 unit multifamilies, it would appear that many investors are currently leaning toward smaller residential–at least among our pool of survey-takers. This may be a reflection of the inventory of homes that ended up in foreclosure, and could perhaps be purchased at prices that woulf make them attractive to investors.

Q2: Thinking about your cash flow projections for your potential investment, why do you make those projections? Check all that apply.

 To decide if I believe the property is worth considering. 87% To help me to decide on an appropriate offer price (or selling price). 78% To show to a lender in support of my request for financing. 61% To show to a potential equity partner. 48% I don’t make cash flow projections. 7%

We’re certainly not surprised to see that the great majority of  investors want to vet their deals and scrutinize the pricing by performing a cash flow analysis; and also that a good pro forma can bring you some credibility when dealing with a lender.

We find it very interesting that almost half of our respondents said they use a cash flow projection to show to a potential equity partner. That would certainly seem to suggest that a lot of investors are pooling their resources in order to do deals. Just anecdotally, we believe we’ve seen a lot more investment partnerships since the 2008 meltdown, probably because of the difficulty that many have encountered finding financing.

One general note: Before the statisticians in the audience take us to task, we should impose a caution in regard to interpreting these survey results. A truly scientific study would have avoided what is called “self-selection,” where responses come strictly from those who are willing to volunteer their point of view.

Nonetheless, we believe this simple and informal survey offers a fairly good window into investor thinking.

We would be very interested in hearing your take on these survey results. We hope you’ll send us your comments.

And finally, we didn’t forget about that bonus:  We promised to give away three signed copies of What Every Real Estate Investor Needs to Know About Cash Flow… , and that’s up next.  This week we’ll pick three email addresses from among those who opted-in to the drawing and contact them so we can send them their copies.  If you participated, please keep an eye out for that email from us.

## Podcast: “Learn the key principles to effectively analyzing and evaluating your real estate deals”

I had the pleasure of recording a podcast recently with real estate entrepreneur Kevin Bupp. We discussed what I feel are some of the key principles that every real estate investor ought to understand — and so, I invite you to listen to that podcast here.

## Software updates: All Macintosh products, REIA Pro and Express

Today we have completed many updates which span the entire product line for both Windows and Macintosh. The changes include:

– code modification for all Mac products to accommodate changes in the new Mavericks operating system. If you are using Mavericks, then be sure to login to your customer account and download the latest release of your software. The new code fixes problems when printing both to physical printers and to PDF.

– In REIA Pro we have added PV, CFAT and Sale Proceeds after Taxes to our popular Decision Maker dashboard. We also have improved error reporting on both the Commercial Income and Residential Income worksheets as well as several bug fixes for printing and data display.

– IN REIA Express we have fixed several display issues in the Residential Income worksheet which have been reported by some users.

All of these updates are free of charge for those who have a licence for a current version of the software product. RealData maintains separate product releases for Windows and Macintosh users as part of our effort to provide an optimal user experience in each operating system.