REI Wealth Monthly Issue 01 | Page 36

5 MISTAKES EVERY REAL ESTATE INVESTOR SHOULD AVOID FRANK GALLINELLI n my nearly 30 years of providing analysis software to real estate investors, and almost a decade of writing books and teaching real estate finance at Columbia University, I’ve had the opportunity to talk with thousands of people who were analyzing potential real estate investments. Some of these people were seasoned professionals, many were beginners or students, but just about all were highly motivated to analyze their deals to gain the maximum advantage. I’ve seen some tremendous creativity in their simplest of these is an incorrect reference. analyses, but I’ve also seen some huge missteps. entered your purchase price in cell C12 and meant Here are some of the pitfalls you will want to be to refer to it in a formula, but you typed C11 in that sure to avoid. formula by mistake. You may (or perhaps may not) You notice that your evaluation of the property doesn’t 1. The Formula That Doesn’t Compute look right, but it can be difficult for you to find the source of the problem. If you are attempting any kind of financial analysis, then a full-featured spreadsheet program like Excel is almost certainly your tool of choice. You might opt for professionally built models, like my company’s RealData software, or you could attempt to construct your own. • One of the most common problems I see in doit-yourself models is the basic formula error. A robust financial analysis involves the interaction of many elements, and it is really easy to make any of several errors that are hard to detect. The