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
