Investing in Real Estate E-Book

Gary W. Eldred

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 620

Veröffentlichungsjahr: 2012

Beschreibung

The bestselling guide to real estate, newly revised for today's investors More than ever, investing in property today will set you on track to conquer financial uncertainty and build your long-term net worth. Investing in Real Estate, Seventh Edition offers dozens of experience- proven methods to convert these challenging times into the best of times. Whether you want to fix and sell or buy, improve, and hold, market savvy real estate investor Gary W. Eldred shows you how to achieve your goals. He provides time-tested ways to grow a profitable portfolio and shows you how property investing can deliver twenty-two sources of financial return. You'll learn how to negotiate like a pro, read market trends, and choose from multiple possibilities to finance your properties. This timely new edition also includes: * Historical context to emphasize how bargain prices and near record low interest rates now combine to offer unprecedented potential for short- and long-term profits * Successfully navigate and meet today's loan underwriting standards * How to obtain discounted property prices from banks, underwater owners, and government agencies * How to value properties accurately--and, when necessary, intelligently challenge poorly prepared lender appraisals * Effective techniques to acquire REOs and short sales on favorable terms within reasonable time frames * How to market and manage your properties to outperform other investors * And much more! Join the pros who are profiting from today's market. All you need is the knowledge edge provided by Investing in Real Estate, Seventh Edition--the most favored and reliable guide to gaining the rewards that real estate offers.

Leseprobe

CONTENTS

Cover

Content

Praise for Gary Eldred

Title Page

Copyright page

ACKNOWLEDGMENTS

Prologue

CHAPTER 1: ACHIEVE A PROSPEROUS FUTURE: 22 WAYS YOU CAN EARN PROFITS WITH PROPERTY

22 SOURCES OF PROFIT FROM INVESTMENT PROPERTY

IS PROPERTY YOUR BEST INVESTMENT CHOICE?

CHAPTER 2: OPM: BORROW SMART, RAISE CASH, BUILD EQUITY

THE BIRTH OF “NOTHING DOWN”

SHOULD YOU INVEST WITH LITTLE OR NO CASH OR CREDIT?

MAXIMIZE LEVERAGE WITH OWNER-OCCUPANCY FINANCING

WHAT ARE THE LOAN LIMITS?

HIGH LEVERAGE FOR INVESTOR-OWNER FINANCING

BUILD CONFIDENCE WITH LENDERS, INVESTORS, SELLERS, AND SALES AGENTS

CHAPTER 3: APPRAISAL: INS AND OUTS OF MARKET VALUE

WHAT IS MARKET VALUE?

HOW TO ESTIMATE MARKET VALUE

PROPERTY DESCRIPTION

THE COST APPROACH

THE COMPARABLE SALES APPROACH

THE GRM INCOME APPROACH

INCOME CAPITALIZATION

VALUATION METHODS: SUMMING UP

CHAPTER 4: MAXIMIZE CASH FLOWS AND GROW YOUR EQUITY

WILL THE PROPERTY YIELD GOOD CASH FLOWS?

WILL THE PROPERTY YIELD PROFITABLE INCREASES IN PRICE?

SUMMING UP

CHAPTER 5: PAY LESS THAN MARKET VALUE

WHY PROPERTIES SELL FOR LESS (OR MORE) THAN MARKET VALUE

PREPARE SCREENING CRITERIA

BARGAIN SELLERS

SELLER DISCLOSURES

SUMMARY

CHAPTER 6: PROFIT WITH FORECLOSURES

THE FORECLOSURE PROCESS

BUY PREFORECLOSURES FROM DISTRESSED OWNERS

PREQUALIFY HOMEOWNERS AND PROPERTIES

FINDING HOMEOWNERS IN DEFAULT (PREFILING)

FIND HOMEOWNERS (POSTFILING)

SATISFY LENDERS AND LIEN HOLDERS

PROFIT FROM THE FORECLOSURE AUCTION

THE FORECLOSURE SALE: SUMMING UP

CHAPTER 7: PROFIT FROM REOS AND OTHER BARGAIN SALES

SAD FOR SELLERS AND BUILDERS, BARGAINS FOR YOU

HOW TO FIND REOS

HUD HOMES AND OTHER HUD PROPERTIES

DEPARTMENT OF VETERANS AFFAIRS (REOS)

FANNIE MAE AND FREDDIE MAC REOS

FEDERAL GOVERNMENT AUCTIONS

BUY FROM FORECLOSURE SPECULATORS

PROBATE AND ESTATE SALES

PRIVATE AUCTIONS

CHAPTER 8: PROFIT BY CREATING VALUE

FIX, SELL, PROFIT!

YOUR FIXER-UPPER SEARCH

IMPROVEMENT POSSIBILITIES

REQUIRED REPAIRS AND IMPROVEMENTS

YOU CAN IMPROVE EVERYTHING ABOUT A PROPERTY—INCLUDING ITS LOCATION

WHAT TYPES OF IMPROVEMENTS PAY THE GREATEST RETURNS?

BUDGETING FOR RESALE PROFITS

COMPLY WITH LAWS AND REGULATIONS

SHOULD YOU BUY A FIXER-UPPER?

CHAPTER 9: MORE TECHNIQUES TO PROFIT WITH PROPERTY

LEASE OPTIONS

LEASE PURCHASE AGREEMENTS

CONVERSIONS

TENANTS IN COMMON

MASTER LEASES

ASSIGNMENTS: FLIPPING PURCHASE CONTRACTS

SUMMARY

CHAPTER 10: NEGOTIATE A WIN-WIN PURCHASE AGREEMENT

WIN-WIN PRINCIPLES

THE PURCHASE CONTRACT

SUMMARY

CHAPTER 11: STRATEGIC MANAGEMENT BUILDS EQUITY

THE 10:1 RULE (MORE OR LESS)

SMART STRATEGIC DECISIONS

CUT OPERATING EXPENSES

ADD VALUE: CLOSING WORDS

CHAPTER 12: DEVELOP THE BEST LEASE

THE MYTHICAL STANDARD LEASE

CRAFT YOUR RENTAL AGREEMENT

TENANTS’ RIGHTS LAWS

LANDLORDING: PROS AND CONS

CHAPTER 13: CREATE PROMOTIONS THAT SELL

DESIGN A WINNING VALUE PROPOSITION

CRAFT YOUR SELLING MESSAGE

REACH POTENTIAL BUYERS

SHOULD YOU EMPLOY A REALTY AGENT?

CHAPTER 14: PAY LESS TAX

THE RISKS OF CHANGE AND COMPLEXITY

HOMEOWNER TAX SAVINGS

ALTERNATIVE MINIMUM TAX

CAPITAL GAINS

TAX-FREE EXCHANGES

REPORTING RENTAL INCOME AND DEDUCTIONS

TAX CREDITS

PROPERTY TAXES

SUMMARY

CHAPTER 15: MORE IDEAS FOR PROFITABLE INVESTING

OUT-OF-AREA INVESTING

EMERGING GROWTH AREAS

EMERGING RETIREMENT AND SECOND-HOME AREAS

OUT-OF-AREA CAVEATS

COMMERCIAL PROPERTIES

TRIPLE NET (NNN)

SELF-STORAGE

MOBILE HOME PARKS

PROFITABLE POSSIBILITIES WITH ZONING

TAX LIENS AND TAX DEEDS

DISCOUNTED PAPER

SHOULD YOU FORM AN LLC?

CHAPTER 16: OPPORTUNITY FOR A LIFETIME

USA: RIGHT TIME, RIGHT PRICE, RIGHT PLACE

PERSONAL OPPORTUNITY

INDEX

END USER LICENSE AGREEMENT

List of Illustrations

CHAPTER 2: OPM: BORROW SMART, RAISE CASH, BUILD EQUITY

Figure 2.1 Wraparound Loan Example

CHAPTER 3: APPRAISAL: INS AND OUTS OF MARKET VALUE

Figure 3.1 Appraisal Report

CHAPTER 11: STRATEGIC MANAGEMENT BUILDS EQUITY

Figure 11.1 Old Kitchen Design

Figure 11.2 New Kitchen Design

Guide

Cover

Table of Contents

Begin Reading

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Investing in Real Estate

Seventh Edition

Gary W. Eldred

Praise for Gary Eldred

“Donald Trump and I have created Trump University to offer the highest quality, success-driven education available. Our one goal is to help professionals build their careers, businesses, and wealth. That’s why we selected Gary Eldred to help us develop our first courses in real estate investing. His books stand out for their knowledge-packed content and success-driven advice.”

—Michael W. Sexton, CEO Trump University

“Gary has established himself as a wise and insightful real estate author. His teachings educate and inspire.”

—Mark Victor Hansen, Coauthor, Chicken Soup for the Soul

“I just finished reading your book, Investing in Real Estate. This is the best real estate investment book that I have read so far. Thanks for sharing your knowledge about real estate investment.”

—Gwan Kang

“I really enjoyed your book, Investing in Real Estate. I believe it’s one of the most well-written books on real estate investing currently on the market.”

—Josh Lowry Bellevue, WA President of Lowry Properties

“I just purchased about $140 worth of books on real estate and yours is the first one I finished reading because of the high reviews it got. I certainly wasn’t let down. Your book has shed light on so many things that I didn’t even consider. Your writing style is excellent. Thanks again.”

—Rick Reumann

“I am currently enjoying and learning a lot from your book, Investing in Real Estate. Indeed it’s a powerful book.”

—Douglas M. Mutavi

“Thanks so much for your valuable book. I read it cover to cover. I’m a tough audience, but you’ve made a fan here. Your writing is coherent, simple, and clean. You are generous to offer the benefits of your years of experience to those starting out in this venture.”

—Lara Ewing

Copyright © 2012 by Gary W. Eldred, PhD. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, [phone], fax [phone], or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, [phone], fax [phone], or online at http://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at [phone], outside the United States at [phone] or fax [phone].

Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com.

Library of Congress Cataloging-in-Publication Data:

Eldred, Gary W.

Investing in real estate / Gary W. Eldred. — 7th edition.

pages cm

ISBN 978-1-118-17297-1 (pbk.); ISBN 978-1-118-22696-4 (ebk); ISBN 978-1-118-24002-1 (ebk); ISBN 978-1-118-26460-7 (ebk)

1. Real estate investment—United States. I. Title.

HD255.M374 2012

332.63’24—dc23

2011046343

ACKNOWLEDGMENTS

Many people have contributed directly and indirectly to this 7th edition of Investing in Real Estate. Because of their efforts, this popular classic text on property investing will continue to provide beginning and experienced investors the timely, no-nonsense, practical know-how that has kept this book a bestseller for the past 25 years.

Accordingly, I thank Donald Trump and Michael Sexton for inviting me to work with them to help create some of the best real estate educational products and services available (especially Trump University books—all published by John Wiley & Sons). Working with the Trump team has provided me new perspectives on property investing.

I also express my appreciation to Dr. Malcolm Richards, dean of the School of Business and Management at the American University of Sharjah (AUS). In recognizing the critical need for real estate education in the Middle East—and the hypergrowth Sharjah/Dubai metroplex—Dean Richards designed a rewarding position for me from which I have added substantively to my knowledge and analytical abilities as they apply to international property markets. Under Dean Richards, the School of Business and Management of AUS has established itself as the premier school for business education in the Middle East—and I am pleased to have been able to participate in its development. Also, I thank Dennis Olsen, chair of the Department of Finance at AUS, for the counsel, insights, and collegial support that he has offered to facilitate my work and working environment at AUS.

My valued assistants at AUS, Mohsen Mofid, Faiza Farooq, Omer Shabbir, and Sadaf Ahmad Fasihnia, too, deserve recognition for their cheerful and competent assistance in my writing and teaching. (Alas, all have now graduated and I miss them greatly.)

My best-selling real estate titles—including Investing in Real Estate—have been translated into foreign languages such as Russian, Indonesian, Vietnamese, and Chinese. Thanks go to the skillful translators of these volumes and to my Asian property advisor Sit Ming (Laura) Lee.

Last, but far from least, I thank my supervising editor Shannon Vargo, senior production editor Deborah Schindlar, and the entire staff at John Wiley & Sons with whom I always enjoy working. This edition of Investing in RealEstate marks the 24th book manuscript that I have written for this 200-year-old company that represents the finest of publishing traditions. I look forward to completing many more.

—Gary W. Eldred

Prologue

INVEST IN PROPERTY NOW

Invest in property now. Or forever live with your regrets.

Listen to the wealth-building wisdom of Warren Buffett: “Invest when fear, doubt, and uncertainty grip the mind of the crowd; sell when wild hopes and speculative fever burn away reason.”

The emotional herding of the crowd allows you and me to buy cheap and sell dear. Think through that wise advice offered by the Sage of Omaha. What type of markets offer the best opportunities for future profits? What type of market alleviates risk? To answer these questions, contrast those boom market conditions of yesteryear with the potential-filled market we experience today:

Boom:

Builders brought to market more than 2 million housing units a year.

Today: Housing starts have fallen to fewer than 400,000 per year (the lowest level of building since World War II).

Boom:

Buyers crowded into open houses and model homes to beg sellers or builders to accept their above-asking-price bids. Sellers set prices. No matter how high, buyers willingly paid on the ill-founded assumption that any price would look cheap compared to 12 months later.

Today: A majority of potential investors and home buyers remain cautious, uncertain, and fearful. Open houses remain sparsely attended. To attract mere lookers, builders are slashing prices and doling out buyer concessions and incentives.