How to Use the Top 11 Real Estate Fin Ratios in the Best Way
What you'll learn
- Basic principles of the real estate deal analysis
- Get familiar with the 11 most used ratios in the real estate deal financial analysis
- The 3 types of financial ratios that are used for analysing of all kinds of assets and how they are applied for the real estate deals
- The advantages and disadvantages of each financial ratio that is presented
- When do you need to apply one or another ratio calculation in order to get the relevant comparison with the market
- Some basic concepts used in the financial analysis as the "Time value of money" concept
- Which of the financial parameters is the KING among them all and is most reliable
- Which parameters could mislead you
- Which ratios have "pitfalls" and how to avoid them
- You should have basic interest in real estate
- You should have basic interest in financial analysis
When you invest and look at potential deals, can you tell a gem from a lemon?
Many people already know that the investing in real estate is one of the possible ways to transform your earned income (income from salary) to a passive income (income from an asset that doesn’t require your time and effort). But the problem is that they are not familiar with the real estate deals, they don’t know how they work and why a particular deal is better than another one.
Everybody of us is afraid that some fast talking real estate agent might push us a lemon and we will have to deal with it for a long period of time and eventually even to lose money. To avoid this you need to know how to tell the good deal from the bad one.
That is the reason why I am creating my courses. I want to try to answer all your questions, to make your fears smaller by sharing with you my experience with the real estate. After I have shown to the very starters among you how and why the real estate is superior asset class and after I have proven (in another course) that the Real Estate market is predictable, now I want to show you how to know whether somebody is selling you a good investment or a lemon.
My name is Svetoslav Deltchev and I invest in income generating real estate for the last 12 years. I am convinced in the advantages of the real estate investments and I will show you in this course how to use them as well.
Who is this course for?
The course is for beginner investors who want to understand how to tell if a particular deal proposed to them is performing well and if it suits their expectations or not. The financial ratios that I am elaborating in the course will help you to compare a property with the market and with the other alternatives that you have. This topic is a bit theoretical and mathematical, but I have tried to give you many practical examples for better understanding. On top you are welcome to ask me questions if you need further explanation or clarifications. We have also a Facebook Group for students questions and discussions. It’s called Udemy SD Academy. You may use the Udemy chat as well of course.
Do you need any prior knowledge?
No. The course is for beginner investors as mentioned and you don’t need prior knowledge. There are some lectures that dig deeper in a specific topic, but I make a note at the beginning of the lecture that you may skip it, if it is too much for you.
Even if you have no experience you will learn the various types of ratios and when to apply each one of them.
This course will be useful for people who are aiming to invest in:
rental properties - multifamily properties, single family houses etc.
What you will NOT find in this course:
I will not cover the topic “WHEN is the right time to invest in properties”. I have mentioned in one of the lectures that the availability of stable market patterns on the real estate market is one of its advantages but I haven’t gone into details.
I will not cover the legal due diligence of a real estate transaction
I have not offered real estate investing strategies
I have not discussed the topic about the financing of the property transaction
I have not covered the topic how to select the best property for our investment.
The course is FOCUSED on the way how YOU could tell the gem from the lemon when you are looking for a good investment!
In particular you will learn:
the 3 groups of financial ratios and when to use each one of them
The economic meaning of the interest rate and how interpret it
The 5 financial ratios from the first group and when they are helpful
The advantages and the disadvantages of the ratios of the first group
The “Time value of money” concept and how it changes the way we look at deals
We will introduce the second group of financial ratios
Main differences between the ratios of the first group and the second group
The 3 ratios of the second group and how to calculate them
Some more advanced topics like the most common mistakes people do when calculating the NPV
The application of the IRR ratio and when to apply it.
Some pitfalls in the calculation and application of the IRR ratio - for more advanced investors.
Why we need debt in the real estate transaction
We will introduce the third group of financial ratios
The 3 financial ratios of the third group and when they are applicable
Which is the ratio that measures YOUR performance and not the performance of the asset
How exactly the debt is boosting the return of the investor
What we should capitalise and what we should expense at once. How this changes the calculation of some ratios
Answers of some students’ FAQ
Frequently asked questions
Why we must differentia three groups of ratios? Can’t we just have directly the formulas of the ratios.
- You could, of course, but when you bring some order in your knowledge it will be easier for you to keep the information for a longer period of time.
Can I use these financial ratios on my market? Can I use them for every deal?
- Of course. They work for everybody and for every market and for every deal. Actually I have also learn them many years ago from foreign language literature. This is universal language. These are mathematical equations and they are valid on the whole planet. For more of this I can’t take any guarantee.
What if I can’t apply everything from the very beginning? Should I bring a financial calculator always with me to calculate the IRR for each and every deal?
- What I am doing is to bring my smart phone with me, when I am going to an inspection of a new potential property. I calculate on the phone the ratios from the first group and it they make sense I continue to calculate the ratios of the other two groups. The ratios of the first group are ideal for a back-of-the-envelop calculation.
Why this course is right for me?
- Because you need to know which deal is good for you and which one is a “no go”. The investors are doing this all the time. The are selecting, carefully choosing their next investment. Nobody is simply buying what is available on the market before making any analysis.
Why I should trust you?
- I am investing in residential real estate for more than 12 years. I have experienced personally the pain of doing a deal without knowing if it will fly or not. The pain to buy a deal that is not working for you is much bigger than the effort to learn how to differentiate and compare the deals. I had to learn this the hard way. Don’t repeat my mistake!
6. What are the best parameters of the financing and ratios that we should look for in a deal?
- The answer of this question require more explanations, so I have tried to give a bit longer answer in my last bonus lecture. Please refer to is for more information.
I wish you successful investing and don’t forget that there is no risk enrolling in this course. You have a 30 days money back guaranty.
See you inside the course!
Who this course is for:
- Potential or existing real estate investors, who want to learn how to analyse quickly and efficiently their deals
- Investors in income generating properties
- Investors in fix&flip real estate deals
- Wholesale real estate investors
As a real estate investor, Svetoslav Deltchev has invested in over 30 rental properties ranging from apartments to beauty studios.
Svetoslav has a degree in Finance and Investments from the Technical University in Berlin, Germany. During the period 2008 – 2014 he was privileged to be the Managing Director of Immorent Bulgaria, part of Erste Bank Group - one of the largest financial services providers in Central and Eastern Europe.
His exceptional ability to create passive income streams through real estate properties allowed him to quit the (highly-paid) 9 to 5 job and focus full-time on property investment, teaching, and his family.