Real Estate by the Numbers A Complete Reference Guide to Deal Analysis

At a Glance: The PRIME Breakdown

This card provides a snapshot of the book’s core focus, helping you decide if it aligns with your learning goals.

The PRIME Takeaway:

This book is the definitive “math textbook” for real estate investors, built on the philosophy that great investors aren’t just people who have all the answers—they’re people who know what questions to ask.

Who Is This Book For?

This book is essential for any investor who is past the initial “motivation” phase and is ready to get serious about financial analysis.

It is perfect for new investors who want to build a rock-solid, professional-grade foundation in financial literacy. It is also a must-have for intermediate investors who have been “winging it” with their numbers and need to fill in the gaps in their knowledge to analyze deals more accurately and scale with confidence.

In-Depth Review & Analysis

Real Estate By the Numbers — Real Estate by the Numbers A Complete Reference Guide to Deal Analysis 4

For many aspiring investors, “the numbers” are the most intimidating part of real estate. We love the idea of owning property, but we dread the spreadsheets, formulas, and financial jargon. Real Estate by the Numbers demystifies this entire process. J Scott and Dave Meyer have crafted the ultimate reference guide that transforms complex financial concepts into accessible, practical tools.

The book’s guiding philosophy, shared in the introduction, is that investing isn’t about memorizing formulas—it’s about learning which questions to ask. This book is your arsenal for finding the answers.

From a PRIME Framework perspective, this book is an absolute powerhouse in the Prepare and Research phases.

Part 1: Prepare. The book begins by forcing you to get your own financial house in order. It provides a clear [Strategy] for creating a Personal Financial Statement (PFS), Balance Sheet, and Profit & Loss Statement (P&L). This section treats your personal finances like a business, giving you the clarity needed to build a strong foundation.
Part 2 & 3: Research. This is the core of the book. It’s a deep dive into the essential concepts (Part 2) and metrics (Part 3) needed to analyze any deal. It provides the fundamental [Mindset] of the Time Value of Money (TVM)—the idea that a dollar today is worth more than a dollar tomorrow. It then hands you the [Tools] to act on that concept: Discounted Cash Flow (DCF), Net Present Value (NPV), and Internal Rate of Return (IRR). It also provides a masterclass in the core real estate metrics like Cap Rate and Cash-on-Cash Return (COC).
Part 4 & 5: Invest & Expand. These sections cover the financial [Strategy] behind executing and scaling your portfolio. Part 4 is a masterclass in financing, detailing Capital Stacks, the difference between positive and negative leverage, and how to use Return on Equity (ROE) to know when to refinance. Part 5 brings it all together, applying these [Tools] to specific deal types, including Buy-and-Hold and BRRRR deals.

This book doesn’t cover the Manage phase at all—you won’t find tips on tenant screening or handling repairs. It is a pure, focused guide on financial analysis, and it is one of the best there is.

Chapter-by-Chapter Deep Dive: The Heart of the Review

This book is densely packed into 47 chapters. We’ve broken it down by its five main parts to give you a clear view of its powerful structure.

Part 1: Personal and Business Performance (Chapters 1-4)

Summary: This section covers the foundational financial statements every investor must master before buying a single property: the Personal Financial Statement (PFS), the Balance Sheet, and the Profit and Loss Statement (P&L). It concludes by applying these concepts to a cash-flowing property.
Our Takeaway/Insight: This is the “put your own oxygen mask on first” section. It’s a brilliant [Strategy] that forces investors to stop dreaming about deals and first get a cold, hard look at their own financial reality. The authors’ approach of treating your personal finances just like a business (with a balance sheet and P&L) is transformative for building a scalable investing operation.
Impactful Quote: “Your Personal Financial Statement is basically just a balance sheet for your life. … Calculating your burn rate is just making a profit and loss statement for your spending habits.”
Quote Analysis: This quote perfectly demystifies “scary” corporate-sounding terms. It makes them personal, actionable, and non-negotiable for anyone serious about building wealth.

Part 2: The Concepts (Chapters 5-13)

Summary: This is the “theory” section of the book, and it’s essential. It provides a university-level (yet accessible) education on the core concepts that power all finance: Interest, Compounding, Time Value of Money (TVM), Discounted Cash Flow (DCF), Net Present Value (NPV), Internal Rate of Return (IRR), and Taxes.
Our Takeaway/Insight: This is the most crucial, and likely most challenging, part of the book. Mastering TVM is the dividing line between an amateur and a professional investor. The [Tool] of Net Present Value (NPV), in particular, is a game-changer, as it’s the only way to definitively answer the question, “What should I really be willing to pay today for a stream of future cash flow?”
Impactful Quote: “Time value of money (TVM) is the concept that money in hand today is worth more than money in hand at some future time.”
Quote Analysis: This simple definition is the bedrock of the entire book. Every advanced metric that follows—DCF, NPV, IRR—is just a different application of this single, powerful idea.

Part 3: The Key Return Metrics (Chapters 14-24)

Summary: If Part 2 was the theory, Part 3 is the practical toolbox. It details how to calculate and when to use the key metrics investors throw around every day: Profit, ROI, Capitalization Rate (Cap Rate), Cash-on-Cash Return (COC), and Compound Annual Growth Rate (CAGR). It concludes with a critical chapter on Property Valuation.
Our Takeaway/Insight: The “Metric Matrix” in Chapter 14 is a brilliant framework. It perfectly aligns with the book’s theme of “asking the right questions.” It shows that there is no single “best” metric; instead, you choose your [Tool] based on the question you’re asking (e.g., “Am I asking about my total profit, or my compounded return over time?”). The clarification on using Cap Rate as a valuation tool, not just a return metric, is also critical.
Impactful Quote: “…there is no ‘best’ metric—only a best metric for the specific task.”
Quote Analysis: This reinforces the book’s core philosophy. It empowers the reader to think critically and analytically, not just plug numbers into a single “magic” formula they heard on a podcast.

Part 4: Funding and Financing Deals (Chapters 25-37)

Summary: This section is a masterclass in financing. It visually breaks down Capital Stacks, details the pros and cons of Equity vs. Debt, and explains the key metrics lenders use (LTV, LTC, DSCR). Its most powerful chapters cover the concept of Leverage and how to use Return on Equity (ROE) to decide when to refinance.
Our Takeaway/Insight: The explanation of positive vs. negative leverage is one of the most important in the entire book. The [Strategy] of using the “Leverage (value)” formula (Leverage = Cap Rate – Loan Constant) is an incredibly powerful [Tool] to instantly determine if a specific loan is helping or hurting your returns. The chapter on ROE is a key [Tool] for the Expand phase, giving you a data-driven reason to sell or refinance a “lazy” asset.
Impactful Quote: “Leverage (the value) is the difference between the cap rate of an investment and the loan constant… If Leverage is a positive number… the loan will provide positive leverage.”
Quote Analysis: This formula is the “secret” to understanding leverage. It moves beyond a vague concept and gives you a hard number to prove whether your debt is making you richer or poorer.

Part 5: Making It Work for You (Chapters 38-47)

Summary: This part is the perfect capstone, applying all the previous tools to real-world deal analysis. It starts with the [Mindset] of Transactional (Active) vs. Residual (Passive) income, details the “Four Ways” real estate generates returns, and then provides step-by-step analysis for Transactional (Flips), Buy-and-Hold, and BRRRR deals.
Our Takeaway/Insight: This section brings everything home. The “Four Ways” (Cash Flow, Appreciation, Amortization, and Tax Benefits) is a foundational [Mindset] that every investor must grasp to see the full picture. The detailed walkthroughs of a buy-and-hold and a BRRRR deal are incredibly practical, showing exactly how to combine all the metrics to make a final, confident “go/no-go” decision.
Impactful Quote: “Instead of trying to decide between transactional income and residual income (flipping or rentals), our recommendation is to pick at least one primary method of generating transactional income and at least one primary method of generating residual income.”
Quote Analysis: This is a profound strategic insight. It reframes the “flipper vs. landlord” debate, arguing that you need both—one to make money now (a job) and one to build wealth for the future (an investment).

Key MST Highlights

This book is overflowing with actionable strategies and tools. Here are the three most impactful takeaways.

[Mindset] Core Belief: The book’s entire philosophy is built on the [Mindset] that great investors know what questions to ask. Rather than just giving you a fish, it teaches you how to fish by explaining the “why” behind every formula. It trains you to think critically and analytically, which is the most valuable skill an investor can have.
- Further Reading: SEC.gov’s “Questions You Should Ask About Your Investments”
[Strategy] Top Tactic: The BRRRR (Buy, Rehab, Rent, Refinance, Repeat) method is highlighted as a powerful [Strategy] for scaling a portfolio. The book’s analysis of a BRRRR deal shows how it combines forced appreciation (from the rehab) and financing (the cash-out refi) to recycle your initial capital, allowing you to “repeat” the process and acquire more properties.
- Further Reading: BiggerPockets’ Buy, Rehab, Rent, Refinance, Repeat Book Page
[Tool] Most Valuable Resource: The most powerful and practical [Tool] in the book is the “Leverage (value)” formula: Leverage = Cap Rate – Loan Constant. This simple equation is a shortcut that instantly tells you if a specific loan on a specific property is creating positive or negative leverage, allowing you to see if your debt is actually making you more money or just costing you.
- Further Reading: PropertyMetrics’ Guide to Positive & Negative Leverage

Final Thoughts

Real Estate by the Numbers is not a “get rich quick” book. It’s a “get smart quick” book. J Scott and Dave Meyer have created an indispensable reference that should be on the desk of every serious real estate investor.

While the sheer number of formulas may seem intimidating, the authors do a masterful job of explaining why each metric matters and when to use it. It patiently builds your knowledge from a simple Personal Financial Statement all the way to a complex Internal Rate of Return (IRR) analysis.

This book is the essential textbook for the business of real estate investing. It’s the guide that will separate the amateurs from the professionals and give you the confidence to know, without a doubt, whether you’ve truly found a good deal.

Unlock Your Investing Potential with the PRIME Framework

Enjoyed this breakdown? This review was structured using the REI PRIME framework, a comprehensive system for navigating every stage of your real estate journey. While this book offers powerful insights, the PRIME framework provides the overarching roadmap to connect them all. Understanding it will help you identify which books you need to read next and how to systematically build your knowledge from a solid foundation to a scalable empire.