The Beginner's Guide to Real Estate Investing E-Book

Gary W. Eldred

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

Seitenzahl: 403

Veröffentlichungsjahr: 2011

Beschreibung

Start making money today--with the ultimate guide for first-time investors No matter what the market does, real estate stilloffers plenty of money-making opportunities. In this new edition of The Beginner's Guide to Real Estate Investing, Gary W. Eldred presents the toolsand knowledge new investors need to get started profitably. Packed with smart money-making strategies and real-life stories from successful investors, this edition also covers the latest information on financing, foreclosures, cash flow, and much more. You'll not only master the basics of investing, but also discover specialized techniques that the pros rely on to grow their long-term wealth. Concise yet comprehensive, this practical guide shows you how to: * Find great deals on properties with big potential * Get started with low- or no-down payment financing * Utilize creative financing options and otherpeople's money * Buy low-cost foreclosures and REOs * Make value-adding improvements to any property * Craft winning offers and negotiate like a pro * Manage rental properties hassle-free * Flip investment properties for fast profit In addition, Eldred shows you how to tailor your investment strategy to make money almost anywhere, in any type of market. With proven techniques, timeless principles, and totally up-to-date information, The Beginner's Guide to Real Estate Investing, Second Edition is the perfect place to start building a prosperous future--today.

Leseprobe

Table of Contents

Title Page

Copyright Page

ABOUT THIS BOOK

CHAPTER 1 - Start Now

Just Say No to Excuses

You Must Believe It to See It

Set Goals Now

CHAPTER 2 - Multiple Paths to Building Wealth

Appreciation in Market Values

Inflation

Cash Flows

Mortgage Payoff (Amortization)

Buy at a Bargain Price

Create Value with Property Improvements

Improve the Neighborhood and the Neighbors

Convert the Use

Manage and Market Your Properties More Profitably

Protect Your Profits from the IRS (Tax Shelter)

Discounted Notes, Tax Liens, Tax Deeds, and Realty Stocks

PART TWO - How to Raise Money

CHAPTER 3 - Strengthen Your Credit Power

Consistency: Fast Track or Flake

Character Counts

Credit Scores Count Most

Summing Up

CHAPTER 4 - How to Invest Using Little (or None) of Your Own Cash

Why Low-Cash Deals Magnify Your Returns

Minimize Your Down Payment with Owner-Occupant Financing

Don’t Overlook FHA

Discover FHA’s Best Kept Secret: The 203(k) Program

Too Many Vets Pass Up VA Loans

Even Fannie and Freddie Accept Little- or Nothing-Down Loans

Summing Up

CHAPTER 5 - Avoid Banks, Seek Seller Financing

How to Persuade the Sellers

What Type of Seller Financing?

Try a Contract-for-Deed

Assume a Low-Interest-Rate Mortgage

“Assume” a Nonassumable Mortgage

CHAPTER 6 - Five More Techniques to Finance Your Investments

Wraparounds Benefit Buyers and Sellers

Lease Option

Lease-Purchase Agreements

Master-Lease an Apartment Building

CHAPTER 7 - How to Come Up with the Cash to Close

Cash Out Some of Your Current Home’s Equity

Bring in Partners

Attract Money with a Business Plan

Second Mortgages

Personal Savings

Sell Unnecessary Assets

Easy Money—Hard Terms

Use Credit Cards

Personal Loans

Sweat Equity (Create Value Through Improvements)

Eliminate Your Down Payment with Pledged Collateral

Student Loans

Use Creative Finance

CHAPTER 8 - Here’s How to Qualify

Be Wary of Prequalifying (and Preapproval)

You Can Make Your Qualifying Ratios Look Better

The Application Itself Contains Many Clues to Your Integrity

No Preset Qualifying Income Applies to Commercial Properties

PART THREE - How to Invest for Maximum Gain

CHAPTER 9 - Twenty-Seven Ways to Find or Create Below-Market Deals

Why Properties Sell for Less (or More) than Their Market Value

Don’t Dilly-Dally with Due Diligence

How to Find Bargain Sellers

CHAPTER 10 - Make Money with Foreclosures and REOs

The Stages of Foreclosure

Approach Owners with Empathy: Step One

Some Investors Profit from the Foreclosure Auction: Step Two

The Benefits of Buying REOs: Step Three

CHAPTER 11 - More Sources of Bargains

Federal Government Auctions

Sheriff Sales

Buy from Foreclosure Speculators

Probate and Estate Sales

Private Auctions

Short Sale Bargains

CHAPTER 12 - Run Numbers Like a Pro

Monitor the Construction Cycle

How to Profit from the Construction Cycle

Per-Unit Measures

Gross Rent Multipliers (GRMs)

Capitalized Value

Cash Flow Returns

Create Your Own Appreciation

CHAPTER 13 - Greatly Increase the Value of Your Investment Property

Search for Competitive Advantage

First, Verify Actual Rent Collections, Not Merely Rental Rates

Talk with Tenants

Set Your Rents with Market Savvy

Your Apartment Checklist

Give the Interior a Martha Stewart Makeover

Safety, Security, and Convenience

Rightsize the Rooms

Create More Storage

Check Noise Levels

Overall Livability

CHAPTER 14 - Twenty-One More Ways to Push Up the Value of Your Properties

Create Strikingly Attractive Curb Appeal

Collect More than Rent

Convert a Garage, Attic, or Basement

Create an Accessory Apartment

Create a Special Purpose Use

Change the Use of a Property

Cut Operating Expenses

Gentrification and Other Value Plays

PART FOUR - Onward and Upward to Build Wealth

CHAPTER 15 - Win What You Want through Negotiation

How to Define Win-Win

Know Thyself

Know the Property and Neighborhood

Know the Sellers

Establish Favorable Benchmarks

Tit for Tat

Get Seller Concessions Early

Come Ready to Buy

Ask for More than You Expect

Establish Credibility

Never Offer to Split the Difference

List Your BATNAs

Negotiate for Yourself

Leave Something on the Table

CHAPTER 16 - Write Your Purchase Offer

No Single Contract Form

Draft Clauses with Understanding

Summing Up

CHAPTER 17 - Craft Your Lease to Increase Profits

Achieve Competitive Advantage

Craft Your Rental Agreement

Landlording: Pros and Cons

CHAPTER 18 - The 12 Secrets of Successful Landlording

The Good News

Hired Management versus Self-Management

Before You Buy, Verify, Verify, Verify

Prepare the Property for Rental

Craft a Winning Value Proposition

Attract Topflight Tenants

Set Up a Flawless Move-In Policy

Retain Topflight Residents

Strong Market? Raise Rents

Prepare for Special Problems

Maintain the Property

Process Move-Outs Smoothly

Persistently Seek Ways to Increase Your Cash Flow

Keep Trading Up

INTERNET APPENDIX

INDEX

This book is printed on acid-free paper.

Copyright © 2008 by Gary Eldred, PhD. All rights reserved.

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

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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.

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Library of Congress Cataloging-in-Publication Data:

Eldred, Gary W.

Includes bibliographical references and index.

ISBN978-0-470-18342-7 (pbk.)

1. Real estate investment. I. Title.

HD1375.E353 2008 332.63’24—dc22

ABOUT THIS BOOK

The Beginner’s Guide to Real Estate Investing covers all topics that first-time real estate investors need to know—but does so in less depth than I’ve included in my previous Wiley titles.

Here you’ll find discussions about credit scoring, mortgages, seller financing, negotiation, foreclosures, bargain-hunting, appraisal, valuation, creating value, cash flow analysis, property management, and dozens of other topics. In this book, you’ll gain a profit-generating introduction to the complete range of knowledge you need to begin building wealth in real estate.

In other words, we might have titled this book Real Estate Investing in a Nutshell. I have directed chapters toward those readers who want to sample all investment topics in one easy-to-read volume.

In contrast, for those readers and experienced investors who prefer depth on each of the topics discussed herein, I suggest that you select from some combination of these titles: Investing in Real Estate, 5th ed., Make Money with Flippers, Fixers, and Renovations, 2nd ed., Make Money with Affordable Apartment Buildings and Commercial Properties , 2nd ed., Make Money with Condominiums and Townhouses, The 106 Mortgage Secrets All Borrowers Must Learn—But Lenders Don’t Tell, 2nd ed., The 106 Common Mistakes Homebuyers Make—and How to Avoid Them, 4th ed., and The Complete Guide to Second Homes for Vacations, Retirement, and Investment.

Either way, whether you select this abridged volume or some combination of my other titles, you will find that I offer readers the most detailed and practical guides to investing in real estate that are available. Although property offers you your best opportunity to build wealth and financial freedom, I never mislead you into thinking that such wealth will come without applying knowledge, time, and effort. Anyone who believes those gurus who promise an “easy, no cash, no credit, no knowledge” system to build wealth is headed for disappointment.

You can still profitably invest in real estate. But you must learn to analyze properties, neighborhoods, risks, and potential rewards. And that’s exactly what this book (and my other Wiley books) shows you.

In closing, I would like to acknowledge special people who have contributed to my work and this book. First and foremost, I want to thank His Highness Sheikh Dr. Sultan Bin Mohammed Al Qassimi, Supreme Council Member, UAE, Ruler of Sharjah and Founder and President of the American University of Sharjah (AUS). Due to his generosity, leadership, and vision, in less than a decade, the American University of Sharjah has emerged as the leading university in the Middle East.

My thanks, too, go to Dr. R. Malcolm Richards, Dean of the School of Business and Management, for inviting me to AUS to develop a curriculum in real estate and for providing a first-class working environment in what has become the world’s most dynamic and fastest growing property market. In addition, my student assistants at AUS, Mohsen Mofid, Omer Shabbir Ahmed, and Sadaf A. Fasihnia, deserve recognition for their research help, without which I could not have made my publisher’s deadlines. For her long-term help (20 manuscripts) and continued assistance, I owe a deep debt of appreciation to Barbara Smerage of Santa Fe, New Mexico.

Gary W. Eldred, PhD

PART ONE

CHAPTER 1

Start Now

With this book, you will become motivated and educated. You will get started in real estate. From this book, you will see that real estate investing still leads you to a lifetime of wealth and personal fulfillment. No matter what financial goals you set for yourself, no matter how little cash, credit, or income you currently possess, if you choose to, you can build your fortune in real estate.

You can still build wealth in real estate.

Just Say No to Excuses

“But hold on,” you might say. “You can’t be talking to me. In my town, property prices have climbed sky-high. Besides, I don’t think I have enough cash, credit, or time to get started. And even if I did, real estate seems too difficult. I don’t know how to begin.”

As I travel throughout the country and talk with would-be property investors, I repeatedly hear excuses. But it may surprise you to learn that I’ve heard similar excuses repeated over and over for 30 years.

Naysayers Thrive in All Times and Places

When times are good, people fret over the deals they’ve missed. When markets slow down, folks claim that real estate no longer makes a good investment. Either way, they always find some way to color the future bleak (see Box 1.1).

Yet, since the early 1970s I have seen all types of booms and busts. I have seen 18 percent mortgage interest rates. I’ve lived through the multiple turmoils of double-digit rates of inflation, the disastrous 1986 Tax Reform Act (which reduced profitable real estate tax shelter techniques), and the recent market of sky-high prices. Yet I (and nearly all other savvy investors) have figured out how to make money in every one of these markets and all of the other types of markets in between.

For the past several years, the media have headlined the so-called subprime mortgage meltdown, increasing foreclosures, and a growing inventory of listings for sale. Just as occurred during previous decades—and previous housing cycles—financial journalists fail to recognize that we have once again entered a great buyers’ market.