The beginner's guide to real estate investing [real-life moneymaking examples ; multiple ways to build wealth ; practical hands-on tips]

About This Book xi Part One: Mindset + Knowledge = Wealth 1 Chapter 1 Start Now 3 Just Say No to Excuses 3 You Must Believe It to See It 7 Set Goals Now 12 Chapter 2 Multiple Paths to Building Wealth 19 Appreciation in Market Values 19 Inflation 21 Cash Flows 24 Mortgage Payoff (Amortization) 24 Buy at a Bargain Price 25 Create Value with Property Improvements 26 Improve the Neighborhood and the Neighbors 27 Convert the Use 28 Manage and Market Your Properties More Profitably 30 Protect Your Profits from the IRS (Tax Shelter) 30 Discounted Notes, Tax Liens, Tax Deeds, and Realty Stocks 34 Part Two: How to Raise Money 37 Chapter 3 Strengthen Your Credit Power 39 Consistency: Fast Track or Flake 39 Character Counts 40 Credit Scores Count Most 42 Summing Up 51 Chapter 4 How to Invest Using Little (or None) of Your Own Cash 52 Why Low-Cash Deals Magnify Your Returns 52 Minimize Your Down Payment with Owner-Occupant Financing 56 Don’t Overlook FHA 59 Discover FHA’s Best Kept Secret: The 203(k) Program 62 Too Many Vets Pass Up VA Loans 63 Even Fannie and Freddie Accept Little- or Nothing-Down Loans 65 Summing Up 66 Chapter 5 Avoid Banks, Seek Seller Financing 68 How to Persuade the Sellers 69 What Type of Seller Financing? 71 Try a Contract-for-Deed 74 Assume a Low-Interest-Rate Mortgage 77 “Assume” a Nonassumable Mortgage 80 Chapter 6 Five More Techniques to Finance Your Investments 84 Wraparounds Benefit Buyers and Sellers 84 Lease Options 85 Lease-Purchase Agreements 91 Master-Lease an Apartment Building 92 Chapter 7 How to Come Up with the Cash to Close 96 Cash Out Some of Your Current Home’s Equity 96 Bring in Partners 97 Second Mortgages 99 Personal Savings 100 Sell Unnecessary Assets 100 Easy Money—Hard Terms 101 Use Credit Cards 105 Personal Loans 105 Sweat Equity (Creating Value through Improvements) 105 Eliminate Your Down Payment with Pledged Collateral 106 Student Loans 107 Use Creative Finance 107 Chapter 8 Here’s How to Qualify 109 Be Wary of Prequalifying (and Preapproval) 109 You Can Make Your Qualifying Ratios Look Better 111 The Application Itself Contains Many Clues to Your Integrity 121 No Preset Qualifying Income Applies to Commercial Properties 122 Part Three: How to Invest for Maximum Gain 127 Chapter 9 Twenty-Seven Ways to Find or Create Below-Market Deals 129 Why Properties Sell for Less (or More) than Their Market Value 129 Don’t Dilly-Dally with Due Diligence 135 How to Find Bargain Sellers 137 Chapter 10 Make Money with Foreclosures and REOs 143 The Stages of Foreclosure 143 Approach Owners with Empathy: Step One 145 Some Investors Profit from the Foreclosure Auction: Step Two 148 The Benefits of Buying REOs: Step Three 151 Chapter 11 More Sources of Bargains 156 Federal Government Auctions 156 Sheriff Sales 157 Buy from Foreclosure Speculators 157 Probate and Estate Sales 157 Private Auctions 159 Short Sale Bargains 162 Chapter 12 Run Numbers Like a Pro 169 Monitor the Construction Cycle 170 How to Profit from the Construction Cycle 170 Per-Unit Measures 173 Gross Rent Multipliers (GRMs) 175 Capitalized Value 176 Cash Flow Returns 181 Create Your Own Appreciation 183 Chapter 13 Greatly Increase the Value of Your Investment Property 184 Search for Competitive Advantage 185 First, Verify Actual Rent Collections, Not Merely Rental Rates 186 Talk with Tenants 187 Set Your Rents with Market Savvy 188 Your Apartment Checklist 189 Give the Interior a Martha Stewart Makeover 190 Safety, Security, and Convenience 193 Rightsize the Rooms 194 Create More Storage 195 Check Noise Levels 197 Overall Livability 198 Chapter 14 Twenty-One More Ways to Push Up the Value of Your Properties 199 Create Strikingly Attractive Curb Appeal 199 Collect More than Rent 202 Convert a Garage, Attic, or Basement 203 Create an Accessory Apartment 204 Create a Special Purpose Use 205 Change the Use of a Property 205 Cut Operating Expenses 208 Gentrification and Other Value Plays 210 Part Four: Onward and Upward to Build Wealth 217 Chapter 15 Win What You Want through Negotiation 219 How to Define Win-Win 219 Know Thyself 222 Know the Property and Neighborhood 222 Know the Sellers 223 Establish Favorable Benchmarks 225 Tit for Tat 226 Get Seller Concessions Early 226 Come Ready to Buy 227 Ask for More than You Expect 227 Establish Credibility 228 Never Offer to Split the Difference 229 List Your BATNAs 230 Negotiate for Yourself 231 Leave Something on the Table 233 Chapter 16 Write Your Purchase Offer 235 No Single Contract Form 235 Draft Clauses with Understanding 236 Summing Up 246 Chapter 17 Craft Your Lease to Increase Profits 247 Achieve Competitive Advantage 247 Craft Your Rental Agreement 248 Landlording: Pros and Cons 260 Chapter 18 The 12 Secrets of Successful Landlording 262 The Good News 262 Hired Management versus Self-Management 263 Before You Buy, Verify, Verify, Verify 267 Prepare the Property for Rental 269 Craft a Winning Value Proposition 270 Attract Topflight Tenants 271 Set Up a Flawless Move-In Policy 275 Retain Topflight Residents 276 Strong Market? Raise Rents 277 Prepare for Special Problems 279 Maintain the Property 280 Process Move-Outs Smoothly 280 Persistently Seek Ways to Increase Your Cash Flow 282 Keep Trading Up 283 Internet Appendix 285 Index 291