Do the Math

The Real Estate Investor’s Pocket Calculator: Simple Ways to Compute Cashflow, Value, Return, and Other Key Financial Measurements by Michael C. Thomsett.  2006.  AMACOM, New York.  263 pp.

Given the foreclosure epidemic and the transition of owner-occupied housing to rental units in the U.S., a timely look back at a collection of calculations can serve the scattered-site asset management crowd well.  With The Real Estate Investor’s Pocket Calculator, author Michael Thomsett discusses components of value and sets out pertinent equations.  Early in the book, Thomsett dispels the notion that it’s a quick and easy process to locate what he calls “sensible” property acquisitions.  But with the right type of research and the proper use of math, your chances are improved.     

Thomsett condenses essential calculations and examples of when you’d use them.  The book will help you estimate and compare rental property values, calculate expense ratios, and take you through the gymnastics of exercising lease options.  He points out the many meanings of return on investment.  Plus, from high school geometry days gone by, he'll express the volume of a cylinder so you can get at the rental value of your silo storage.  Yes, this is a pocket calculator in book form.

The Real Estate Investor’s Pocket Calculator is a useful reference manual for veteran real estate professionals, assessors, and appraisers, too.  Dog-ear Appendix B, Real Estate Formulas: 120 formulas, one right after another.  More market confidence will be had after dutiful cover-to-cover readings of the book by the fresh, new investors, agents, and appraisers—bold, bright entrants toting this instructive computational resource.

- August 2011