Real estate is a numbers game first, last and always! Whether one wishes to discuss purchase price, yield on investment or any other metric, you must know your numbers. Years ago, I ran across a book which to this very day serves as an excellent reference when doing numerical due diligence on an investment property. Although it can be said that it is overly complex and only for ‘math junkies’, its value cannot be understated.
The book is called “What every real estate investor needs to know about cash flow… and 36 other key financial measures” by Frank Galinelli. This time honored classic will ensure you know your numbers inside out. You do not need to go through this much detail to purchase a property but it certainly does not hurt to at least be aware of these calculations.
The book is available on Amazon and some useful pdf and Excel spreadsheets can be downloaded here.