Ep #224: Educating Real Estate Investors on Making Better Data-Driven Decisions – with Frank Gallinelli
April 9, 2019
In this episode of the Real Estate Investing for Cash Flow podcast, Kevin talks to real estate investment expert Frank Gallinelli. Frank is a writer and author of the book “What Every Real Estate Investor Needs To Know About Cashflow.” He has also served as assistant professor of real estate development at Columbia University and is the founder and president of Real Data, a real estate software firm with a focus on income property and cash flow analysis.
Kevin and Frank talk about what metric commercial income property investors should focus on as they’re learning and navigating the business. Frank shows how metrics are interconnected and there’s something to be learned from approaching things in a linear manner. Frank talks about his software Real Data and gives essential tips and perspectives on real estate metrics that can surely help any real estate investor.
“When I teach my grad students at Columbia, I always tell them to think of an analysis in a linear way, kind of a step wise fashion where one thing more or less follows from another and so on.”
“I would always start with NOI- net operating income because the logical place to begin the analysis of a property is to look at its current, and perhaps projected revenue and operating expenses.”
“What’s a good cap rate? Well, there’s no such thing. A good cap rate is just an invention, market cap rate is very much like politics, it’s extremely local and also pertains to a specific property type.”
“You’re more likely to encounter unexpected expenses than you’re going to encounter unexpected revenue.”
“There’s present value and there’s mid-present value and I can tell you, from having taught this to grad students for fifteen years, that no one in this planet knows what the difference is, really.”
- 7:31 How Frank got into the software business
- 14:40 Frank’s approach to analyzing metrics
- 19:04 Kevin and Frank talk about cap rates
- 26:00 Debt service and debt coverage ratio
- 30:01 Frank gets in depth about the income stream, internal rate of return and cash flow
- 40:18 Frank’s advice to beginner investors
- 47:13 What is Real Data?
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