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If you are thinking of beginning your new year by investing
in real estate, first read William H. Pivar's "Real
Estate Investing from A to Z, Third Edition." It
is not a get-rich-quick book. Instead, it is
a get rich soundly in real estate by understanding
the investment basics book.
Pivar begins by explaining the primary reasons for investing
in real estate and why property is usually
far superior to alternative investments, such
as the stock market. He is a big believer in
using leverage (i.e. borrowing money) to control
property, which is likely to appreciate in
market value.
"If you purchase real estate on which you owe $2 million
and hold on to it for 15 years, you should
be a millionaire. With only an average 3 percent
inflation rate, within 15 years your equity
for average purchases should give you your
million-dollar equity," the author explains.
Then the author proceeds to show why a small 10 percent cash
down payment is more profitable than a 50 percent
down payment, thanks to the magic of real estate
leverage. "Real estate investments can
buy themselves," Pivar explains, meaning
the tenants will provide the rent money to
pay the mortgage payments and buy the property
for the investor.
Although the author doesn't overlook risks of investing in
real estate, he shows why the safety of realty
is far greater than alternatives. The author
explains the negatives of real estate, such
as illiquidity, personal liability, negative
cash flow, and management. But then he explains
how to overcome these potential realty investment
drawbacks.
I especially enjoyed Pivar's review of the realty investment
basics, some of which have been forgotten about
in recent years. Especially valuable are his
explanations of the many different types of
realty investments, several of which are sure
to appeal to every reader. Along the way, the
author uses many actual examples, plus follow-ups
to show what happened to the example investor'
properties recently.
An unexpected benefit is the book' tax benefits section is
up-to-date, including reference to the recent
2003 Tax Relief Act, which reduced the federal
long term capital gain tax rate to a maximum
of 15 percent, even lower for taxpayers in
low tax brackets. Pivar devotes an entire chapter
to explaining the investor benefits of tax-deferred
exchanges.
As the book' title indicates, Pivar includes virtually all
the basics real estate investors need to know
and remember. He includes creative financing
techniques, which can be especially important
to new "beginner" investors. The
author even includes a personal example how
he traded price verses terms when buying his
new home and obtained $21,000 of upgrades from
the builder at no extra cost.
Along the way to explaining virtually all the realty investment
basic terms, Pivar includes sage advice how
to use this information to avoid making mistakes.
For example, he suggests staying away from
investment in large homes converted to apartments,
abandoned, unrepaired or fire-gutted buildings,
and neighborhoods with lots of graffiti. The
author also discusses how to handle potential
negatives, such as asbestos, formaldehyde,
lead, radon, toxic mold and even sick-building
syndrome.
Chapter topics include "Why Real Estate?"; "Investment
Alternatives"; "Taxation and Real
Estate"; "Understanding Financing"; "Creative
Financing"; "Partnerships, Syndicates,
and Real Estate Investment Trusts"; "Locating
Property"; "Foreclosures, IRS Sales
and Tax Sales"; "Analyzing Property"; "Your
Offer to Purchase"; "Subdividing—Smaller
Can Be Better"; "Trading Up to Wealth"; "Optioning
Your Way to Success"; "Special Situations"; "Managing
Your Property"; and "Selling Your
Property."
You won't find a better basic book that thoroughly explains
the pros and cons of realty investing than
this one. William Pivar shares his extensive
realty knowledge in a lively manner filled
with facts and real-life examples. On my scale
of one to 10, this outstanding book rates a
solid 10.
"Real Estate Investing From A to Z, Third Edition," by
William H. Pivar (McGraw-Hill, New York), 2004,
$19.95, 288 pages; Available in stock or by
special order at local bookstores, public libraries
and www.amazon.com.
The
purpose of this newsletter is to stimulate
thought for our clients and professionals
with whom we network. One should consult
with a qualified real estate professional
prior to implementing any real estate
strategies. If you are a legal, insurance,
tax, real estate, mortgage planning or
real estate professional receiving this
newsletter or know of one, please contact
our office to introduce yourself and your
services to us. We are always seeking
to grow our referral network and expose
professional services to our client base. |
