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