5 MISTAKES EVERY REAL ESTATE INVESTOR SHOULD AVOID FRANK GALLINELLI
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You used to have a formula in a particular cell,
expected. The formula that does what you
but you accidentally overwrote that formula by
intended would be =(A1+B1)/C1, where the sum of
typing a number in its place. The calculation is
A1 and B1 is treated as a single value, divided by
gone from the current analysis, and if you re-
C1.
use the model, you’ll always be using that
number you typed in, not the calculated value
2. The Modern Art Syndrome
you expect.
Even if you get all of your formulas correct, your
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Cutting and pasting numbers seems innocent
enough, but it can scramble your model’s logic
by displacing references. Simple rule: Never
cut and paste in a spreadsheet.
job is only half done. I harangue my grad students
constantly with this pearl of wisdom: Sometimes
you create a pro forma analysis of a property
strictly for your own interest. You will never show it
to anyone else. Most of the time, however,
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Perhaps the most insidious is the formula that
doesn’t do what you thought it did. Let’s say
you have three values that you enter in cells
successful completion of a real estate investment
deal means you have to “sell” your point of view to
one or more third parties:
A1, B1, and C1. You want to write a formula
that adds the first two numbers and divides
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the result by the third. It’s easy to say this in
plain English: “I want A1 plus B1, divided by
seller that your offer is reasonable;
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C1.” So you write the formula as =A1+B1/C1.
Wrong.
Division
and
multiplication
take
precedence, so the division happens first and
that result gets added to A1. Not what you
You may be the buyer, trying to convince the
You may need to convince the lender that the
deal should be financed; or
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You may need to show an equity partner that
his or her participation would be profitable.