How to learn and understand "the numbers"

Question

Hi newbie here. Read many places that you must understand the numbers in evaluating a deal.  Does anyone have a recommendation for a book that deals with this area specifically ?  I've read a fair amount but it seems very generalized information.  Thanks for any suggestions.

Dave Kempster · Answer

Thank you Aaron and Jan for your replies.  I've looked at 32 deals now and couldn't get close to the suggested 70% of ARV - rehab costs.

I read "What every real estate investor needs to know about cash flow... and 36 other key financial measures" by Frank Gallinelli and used some of his metrics, but ended up getting so bogged down in minutae it kinda paralyzed me.

I already have financing set up and looking to get our first SFR or duplex/triplex as a long term rental and the key question for me is what is the maximum price to pay to make it viable ?

Aaron K. · Answer

Search on BP and you'll find the formulas, you may be finding that books are general because they try to appeal to a wide audience and all real estate varies by locality what is true in one city is not true in another.

Jan Kerr · Answer

@Dave Kempster Hi Dave. There are lots of formulas out there and becasue every deal is different, you may want to run the numbers in several different ways to determine the best approach to take with that particular property. If you want to send an example of a deal you are trying to evaluate, I'd be happy to look at it with you and explain the numbers to you in clear laymans terms.  Feel free to PM me.