Real-rate-of-return

Goodman's secret to having an income stream is to write flimsy, useless books. After 38 years in the industry you would think he would spend more than an afternoon rehashing common knowledge.

Large print, double spaced lines with common sense advice that you would know without reading the book left me angry.

This book addresses the 4 yields or "tributaries" to the Income Stream: Cash yield, tax shelter yield, equity build-up yield, and appreciation yield. After explaining and discussing each of these yields in depth, the author combines them into one figure: Internal Rate of Return (IRR). This is the magic number that all investors must look at before making any investment decisions. The problem is, without looking at the 4 yields that comprise IRR, you will never find it.

There are 3 important worksheets that are provided and used to gather all of the data needed to derive the 4 yields: Annual Property Operating Data (APOD), Cash Flow Analysis Worksheet (CFAW), and Alternative Cash Sales Worksheet (ACSW). Goodman explains all of the sheets and how to use them.

This is the science of evaluating real estate with hard data. Once the data is gathered, you can make the most informed decision possible. It also leaves no room for surprises: if an investment isn't good, it will be very apparent. The math used is relatively simple, so anyone can comprehend this treatment of the topic.

The techniques can't be argued with. I wonder how many real estate investors actually do this kind of analysis. I know it's the ONLY way I would invest in real estate: real analysis, real answers.

My husband and I just did our first real estate investment. For many weeks I tried to educate myself on this subject via conversations with Real Estate Agents, Property Managers, Tax Accountants, books, etc. I had lots of great information, but all of it in bits and pieces. I struggled with many spreadsheets trying to get to that elusive IIR number that would justify the investment. I was very excited to run across this book. It presented the material in a very logical sequence, re-inforced the concepts along the way, and wrapped it all up in an easy to understand "bow".

It is surprising how few people in the industry really understand the full financial picture of REI -- many went with their 'instincts', which may be fine for some, but I needed hard numbers. [...] With a little extra work, I will also be able to generate the graphs and other information that was illustrated in the book. Thank you Mr. Goodman.