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IF you’re a home buyer, contracts can be one of the most difficult things understand. One source to understand.
One source of great tips is actually an investment book, John Schaub’s "Building Wealth One House at a Time," coming out this month from McGraw-Hill.
Here are five of our favorite tips from the book:
1. Offer to close quickly.
You can cut your down payment this way, Schuab notes. While this won’t work on a New York City co-op, it might on a house. "The only reason to make a large down payment is to convince the seller that you are a serious buyer," Schaub writes. "You can get the seller’s attention with less money by making an offer that closes in a week."
2. Take whatever time you need to read the contract.
If you’ve spent dozens of hours finding a good deal, why blow it by skipping a potentially important clause in the contract?
3. If an inspection reveals problems, the buyer can make repairs; but it will be faster for the seller to give the buyer a financial credit toward those repairs.
4. Keep the contract the sellers filled out.
If you have a choice of copies, you want the one they’ve written on. Schaub notes "it would be hard for them to claim that they did not understand the contract if they actually filled it out."
5. Never go to court to enforce a contract.
If the sellers back out, you can stick it to them, but you shouldn’t, Schaub says. "It is easier and more profitable," he writes "to find another good deal." (Associated Press)
REAL ESTATE BOOK REVIEW
EXPERT REVEALS HOW TO GET STARTED AND PROFIT BY INVESTING IN RENTAL HOUSES
By Robert J. Bruss
BUILDING WEALTH ONE HOUSE AT A TIME, By John W. Schaub (McGraw-Hill, New York), 2005, $18.95, 225 pages
The reason Building Wealth One House at a Time by John W. Schaub makes such profitable reading is it is written by an expert who shares his more than 30 years of success experiences so you don't have to make the few mistakes he made. This is such an important new book, it should be read two or three times to fully benefit from Schaub's wise insights.
For example, he explains why single family rental houses make the best investments, both from cash flow and market appreciation viewpoints. Another gem Schaub shares is to avoid obtaining bank mortgages when acquiring houses for investment. "I have never borrowed money from a bank to buy a property," he discloses. Then he shows how to get financing from sellers and other sources.
This is a "must read" book for every serious real estate investor. Written in easy-to-understand style, it explains how the author has been a full-time investor for 32 years, raised a family from rental house income, and has lived in the home of his dreams for the last 24 years. Schaub shares why he rented where he lived for nine years to save money for rental house investing while getting started.
The author explains why investing in houses is safer and more profitable than other investments. "A major advantage of investing in several houses rather than one big apartment or office building is that you can diversify by investing in different price ranges. By owning both less expensive and more expensive houses, you can have the safety of the lower-priced houses and the upside potential of the higher-priced ones."
Schaub recommends buying houses close to where you live. He admits to once owning properties in 10 states. But he says that was a mistake because it's too difficult keeping them rented and handling repairs by long distance. Today, he only owns property near his home.
With average annual market value appreciation of 5 percent, the author explains how anyone can become very wealthy because it's the tenants who buy the houses for the investor.
He spends considerable time showing how to select quality tenants who will stay many years. Next, the author shows how to manage those tenants so they won't bother the owner. "I have had to evict only six tenants in 30 years," the author adds.
Schaub reveals how to find and acquire rental houses with nothing down. He explains how he taught these techniques to Robert G. Allen, a former student of Schaub's seminar "Making It Big on Little Deals," who went on to write the best selling book "Nothing Down" based on those methods.
"Not all houses are created equal. Some houses will appreciate more; some will produce more cash flow because they will attract better tenants; and others will require more maintenance and have higher expenses," Schaub reports.
He recommends staying away from slum and very low income neighborhoods. Then he shows why investing in higher priced homes is usually more profitable than acquiring middle-income homes.
As for rising mortgage interest rates, Schaub welcomes them. "As the economy changes, you will borrow at different interest rates. When rates are the highest, you will make your best buys," he explains.
The author emphasizes his top nine sources for finding investment houses at bargain prices, often with bargain-rate seller finance terms also. He suggests buying at least one house per year. "In a normal market, 90 percent of the houses for sale are not opportunities. You are trying to identify that one seller in 10 who might have a reason to make you a good deal," he notes.
The book includes key questions to ask sellers or their realty agents on the phone before even looking at their house. Additionally, Schaub's "seller's motivation scale" shows how to spot a motivated seller who is likely to make a good deal.
The chapter about knowing how to pay for rental houses is especially valuable. The author shares his checklists, including his 10-10-10 rule, which is making no more than a 10 percent down payment, paying no more than 10 percent interest (for an especially good deal), and buying at least 10 percent belong market value.
Chapter topics include How Buying One House at a Time Can Make You Wealthy; Buying the Right House; Finding Good Deals; Making the Offer; Borrowing to Increase Your Profits; Understanding and Using Real Estate Contracts; Secrets of Professional Negotiators; Buying and Selling with Agents; Buying and Selling Houses to Produce Cash Flow Now; Selling on Lease-Options to Generate the Largest Profits; Finding and Buying Preforeclosures and Foreclosures; and Eight Steps to Quitting Your Day Job.
The book concludes with a chapter about helping others build wealth, one house at a time, to eliminate poverty housing. Schaub explains why he has been active locally with Habitat for Humanity for many years; he is now on Habitat's international board of directors. This is one of the very few real estate books which cannot be recommended too highly. On my scale of one to 10, it rates an off-the-chart 12. (Real Estate Weekly)
“John Schaub is the only real estate guru I know who has survived and prospered for 30 years in this wild and wooly market.”-Mark Skousen, Ph.D., Adjunct Professor of Economics, Columbia University, and Editor, Forecast and Strategies
The key in owning investment real estate is buying good houses in good neighborhoods. By learning to buy at wholesale prices, fund your down payment, and attract tenants that will pay off your loans and improve your property value, you can immediately begin to increase your wealth. In Building Wealth One House at a Time, real estate expert John Schaub shows you how to
Building Wealth One House at a Time will have you ready to buy the right house, resell in a hurry for guaranteed profits, and create financial independence on your own terms.
It is a good book with some helpful tips about getting started with property. Did expect a lot more from it but I did learn a few things.Published 29 days ago by Craig Fernandes
Great Book, Well Written!!! An information packed book that tells you what you need to do to acquire one house at a time. Thank you for sending this in to me!!!Published 6 months ago by Ben Crawford
Some may not necessarily agree with the 'rolling RE stock rotation' the author advocates, but you can't argue with the numbers he puts up.Published 8 months ago by Deployed Consumer
There is some good info in here, especially for those who know nothing. If you are one of those who know nothing however, you will need to read more books than just this one. Read morePublished 10 months ago by David Daly
good for building wealth
well written and can be used with useful tips.
still need to finish the book but certainly can be used to make money
This book is written in simple, easy to understand paragraphs. I didn't feel overwhelmed with the info but it was amazing details for my beginning investment career.Published 14 months ago by Lori J. Hagen
This craze has long passed. As long as prices were increasing rapidly, it may have worked, but not in the housing crash. We lost $240,000.Published 14 months ago by Linda Tomaselli
This was a great read. I couldn't put it down. Great information and examples make it easy to absorb. I will re-read this book several times.Published 16 months ago by M. Chin