- Based on a Mixed-Use Property Case Study
- No time limit – self-paced learning
- Access videos online
- Learn the details of due dilligence
- Taught by Frank Gallinelli, founder of RealData, Inc.
- Nearly 2 hours of instruction
Do you know how to create and interpret a real estate investment pro forma?
You’ve done your due diligence (or have you, really?) and now it’s time for you to put all the numbers together and make some sense of this potential income-property investment. Where to start? What to do?
Watch this video series to see how it’s done.
You’ll begin with a “back-of-the-envelope” approach, just to find out if this property holds out enough promise to merit spending your time before you spend your money. Then you’ll proceed logically through a more detailed analysis of revenue, expenses, cash flows, taxes — even partnership possibilities. You’ll end up reshaping the deal on terms that would work for you. You’ll also gain some insight into how to use the REIA software to evaluate a deal.
Start by downloading the written case study — a mixed-use property — so you’ll have the necessary facts and figures. Then purchase the videos, all for just $99.
Lesson 1, Quick Analysis:
For this first video we’re going to start the way many investors might: with a quick and simplified first pass. Our purpose here is to vet some of the key numbers in order to decide if we think this property is worth taking a more careful and in-depth look.
Lesson 2, Revenue:
We’ve decided that this property has potential, so we’ll go forward with a more detailed evaluation. This mixed-use property has revenue from both residential and commercial rental units. We see how the apartment revenue is generally straightforward, but how the commercial units may involve special considerations like step increases, expense recoveries and tenant improvement allowances. We also begin to see how to enter data in the REIA Pro software.
Lesson 3, Expenses:
Now that we’ve accounted for our mixed-use property’s revenue, we’ll look next at operating expenses. In a real estate investment, are there some costs that we can classify properly as operating expenses and some that we cannot? Why does it matter?
Lesson 4, Cash Flow:
In this video we’ll begin with our property’s first cash flow, reviewing the sources and uses of funds at the time of our purchase. We’ll look at our operating cash flows and see what role funded reserves and taxes might play; and we’ll look at the final cash flow that occurs when we sell our investment property.
Lesson 5, Key Metrics:
In this video we look at the calculation of our mixed-use property’s taxable income and again at its cash flow. We also look at debt coverage ratio, depreciation, funded reserves, capital improvements, the eventual resale of the property, and its Internal Rate of Return. Then we’ll cycle back and re-examine some of our assumptions. Do they all seem realistic? What should we pay for this property to achieve a reasonable return? Have we overlooked anything?
Lesson 6, Decision Maker and Partnership Analysis:
We try to reshape this transaction to yield an acceptable Internal Rate of Return. First, we look at alternative methods of financing. Next we stress-test with varying purchase prices and re-sale capitalization rates. Finally we bring in equity investors and try to structure a win-win partnership.
Lesson 7, Advanced Features of the REIA software:
We’ve completed our property analysis, so in this final video we’ll review some additional features of the RealData REIA software, such as: the short-term analysis module, fiscal vs. calendar year headings, the ability to hide tax calculations, the option to highlight potential deal-killers, additional mortgage options, partnership waterfall calculations, and more.