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What Every Real Estate Investor Needs to Know About Cash Flow... And 36 Other Key Financial Measures, Updated Edition, 2nd Edition by Frank Gallinelli

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CHAPTER 2Financial Detective Work Before You Buy: Finding the Truth Behind What the Seller Is Telling You

Whether you own a shopping mall in the suburbs or a duplex around the corner, the basic principle of income property remains essentially the same. You expect to collect money, mainly in the form of rent, and you expect to spend money to pay for the operating expenses and the loans against the property. When you’re done for the year, you hope to have a surplus and to keep as much of it as you can in your own pocket and out of the hands of the tax collector. Perhaps someday you can also sell the property at a handsome profit. In other words, you’re looking for cash flow, appreciation, amortization, and tax shelter—the four basic returns.

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