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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 4How to Estimate What an Income Property Is Really Worth

Whether you’re a buyer, a seller, or a mortgage lender, one of the most important questions you need to answer is, “What is this property really worth?” It may be argued that value, like beauty, is in the eye of the beholder. This argument tends to ring true in regard to single-family homes, where conventional wisdom has always held that a house is worth what someone is willing to pay for it. Income-producing property, however, is different. Value is determined by the numbers. The owner of the Yankees may admire a batter’s graceful swing, but he pays for that player’s batting average.

Let’s begin this discussion with a subject that always warms your heart: income.

Everyone in business ...

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