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Chavis lays out the path to making money on multifamily properties in good times and in bad. He addresses the matter analytically, almost scientifically, with a fact-based approach to all parts of the transaction, from the SEOTA (Strategic Evaluation of a Target Area) method to how to amass an empire. Nothing is built on gut or instinct; in fact, he’s got a form or process that will help solve all issues and challenges—and gladly he shares his experiences. Got a deadbeat tenant? You’ll get more cooperation by sending a nice, understanding note than by threats. How about jumping on the foreclosure wagon? Educate yourself first—and look for realistic sales comps and accurate operating expenses. When screening potential residents during open houses, ensure there’s always a fresh pot of coffee—and cookies. Everything you ever wanted to know is either embedded in his logical presentation or incorporated in the appendixes (SEOTA and due-diligence forms). --Barbara Jacobs
Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those who are skilled in its keep.
-- The Richest Man in Babylon
We are all looking for ways to get wealthy. Some people might not state this so bluntly, but let's face it -- we all crave the security that money can bring. But it's important to note that wealth doesn't have to mean greed. Wealth can buy you more time off to spend with your family, good education for your children, better health care, and the freedom to live the life you want to live.
Wealth to me means freedom. I want to have enough money to take time off to travel with my wife. I want to be able to help my parents live out their retirement years in comfort. And I want to give back to my community, particularly to help atrisk children have opportunities to make something out of their lives. All this takes time and money. Money buys me this time, and it provides me with these things that are so important to me.
The bookstore shelves are lined with titles that promise to reveal the "secrets to success." I was once one of those staring at a wall of titles and wondering which one would help get me to the place I wanted to be. If you're anything like me, you've probably already learned what makes the "millionaire next door" tick and how to "think and grow rich." These are great motivational books -- they help you figure out what path you want to take toward building your own life of financial security and freedom. But if you've picked up this book, you probably want something more...specific advice on how to build that wealth through one of the smartest methods around: real estate.
I've been working in the apartment industry, where I received my Certified Apartment Manager (CAM) designation, for more than a dozen years, first as a manager of large rental complexes and later as an owner. I've worked on every type of property -- from single-family homes to 1,000-unit apartment buildings, and just about everything in between. Several years ago, I decided to put all the advice, systems, and "best practices" I've developed over the years into a book and seminar series called The Landlord Academy (www.thelandlordacademy.com). I've trained tens of thousands of would-be rental property owners, some of whom have gone on to be property moguls in their own right.
But in order to be successful, you don't have to have 100 units -- a single-family home or a duplex is just as viable for your first move as a rental investor. And, as I'll show you, it's a heck of a lot safer to hang on to property for the long term than to try to work the market with risky "fix-it-and-flip-it" schemes. The beauty of rental investing is that you can choose the steps you want to take and decide when you are ready to take them. The key, of course, is performing your SEOTA™ (my own method for evaluating the right rental properties, which you'll learn in this book) and allowing this process to help you choose wisely. I'll give you all the tools, checklists, and operating systems you will need to make that first choice with confidence. That is my commitment to you. Read on to learn how Mitchell and Thelma, two of my Landlord Academy success-story clients, put these systems into practice.
Mitchell and his wife, Thelma, attended several of my Landlord Academy training courses. They were recently married with two young children, and were looking for a way to build wealth. Their financial state was OK (but not perfect) when they came to me. They both had steady jobs (though neither was pulling in the big bucks) and they had OK credit (with some outstanding credit card debt). But they also had a dream for the future: They wanted their kids to go to college (something neither of them had done), they wanted to be able to offer some security to their parents, and they had decided the 401(k)s they contributed to at work weren't going to get them where they wanted to go fast enough. They wanted to take their financial destiny into their own hands.
Mitchell and Thelma were living in an apartment and needed more space for their growing family. As a two-income family, they decided they were ready to buy a home. However, after attending some of my classes, they were excited to start their rental investment portfolio and were unsure if they should use their limited funds to buy a new home for their family, or continue to live in their apartment and buy a home to rent out.
I get questions like this all the time. I usually suggest this: Why not do both? Why don't you buy a rental property in which you can live and rent out the other units to help pay down the debt you'll be taking on?
Mitchell and Thelma had been looking at single-family homes in the $240,000 price range. I suggested that they explore buying a duplex for the same amount. They could live in one apartment and rent out the other apartment in the building to help defray the cost of the mortgage. The rental income would get them started on their journey to real estate wealth, and the family would have a larger place to live in.
Mitchell called me a few months later to report that while the lure of that bigger, more expensive home had been powerful, they'd resisted the temptation. They thought about their long-term plans and realized that this first investment move needed to be a wise one. Buying a more expensive home would be okay. It would appreciate in value, and they would have some equity to use in the future for college or a real estate investment. But by buying a duplex instead, they would advance two moves, rather than one. They might not have some of the upgrades found in the more expensive home, but they would have more space to live in and an income-producing rental unit. If they had bought the single-family home to live in, they would have had to save up more money or wait a few years for the equity to build up to use to buy a rental property. Mitchell and Thelma had just accelerated their journey to wealth.
They were smart in another sense as well. Now that they had a rental property, they used The Landlord Academy as a resource to get the training, operations manuals, and forms they needed to manage this rental profitably and legally. They took their first step seriously. It always amazes me when I see people put their entire savings at risk by buying a rental property without getting some training on how to run that property. The time and money you spend in training to be a landlord and researching the best property-management systems (whether you take a class, or you use the guidance offered in this book) will pay off tenfold. For Mitchell and Thelma, the price of enrolling in my Landlord Academy was far less than the cost of one eviction! You can use the same methods Mitchell learned in class by using the processes and forms you find in this book to purchase and operate your own rental property. Mitchell and Thelma found that by using tried and true methods of operation, they were spending less time running the place than they once did worrying about their financial future.
Mitchell and Thelma knew why their goal of wealth was so important to them. They wanted to be able to pay for their kids' educations. They didn't want to work second jobs to earn more, because they wanted to remain actively engaged in their kids' lives. And they wanted to have enough of a financial cushion to assist family members who might need assistance down the line. They wisely chose real estate as their method of achieving wealth. Then they were smart enough to find a step-by-step system to follow. This book will give you the tools to do the same thing.
Are you thinking that you might as well put this book down now, because you don't have good enough credit to get a loan? Don't do it! When I started my real estate journey, my credit score was a shaky 582! One of the smartest things I did was immediately get some advice on improving my credit. As I was planning my path to wealth and educating myself on real estate investing, I was also taking small but steady steps to improve my credit. By the time I was ready to make an investment move, my credit had improved dramatically.
The worst thing you can do if you have less than desirable credit is wait to do something about it. There are many companies that can help you improve your credit, as well as some simple steps you can take on your own. I'll talk more about improving your credit in chapter 6. So, don't be discouraged if your credit isn't stellar right at this moment -- you can still become a successful real estate investor. For a list of creditable credit repair services visit thelandlordacademy.com.
Mitchell and Thelma decided that purchasing a single-family home wasn't the beall and end-all for them at that moment. While that remained a desire, they were willing to put off realizing that dream for a while. They knew that if they acted strategically, eventually they'd be able to own a much nicer single-family home.
What really convinced them that buying the duplex and renting the other unit was the wisest choice for them was that they understood and put to use the basic principle of leverage -- using other people's money to purchase an asset. We will talk more about the power of leverage later on, but for now you need to understand only that their down payment entitled them to own an investment valued at $240,000. In other words, they put a small percentage down and got to own a much more valuable property because the bank loaned them the rest of the value of that property. If you were going to make your riches in the stock market, to buy $240,000 of stock, you would have to write a check for $240,000! In real estate you have to have onl... --This text refers to an out of print or unavailable edition of this title.
Bought it last Sunday and "flipped" thru it fast nothing stood out.
I did not want to buy or invest in a multi unit or "not older then 15 years" or fill out... Read more
A great read and ton of information for anyone considering getting into the rental biz. Chavis covers a lot of ground.Published 1 month ago by Mark R Cutsinger
Finally useful formulas and a realistic approach to real estate investing. Even though I have read many, this is the best by far!Published 2 months ago by Amanda L Huston
Least useful rental income book I have read so far. We are just getting into rental properties, and bought about 7 different books to educate ourselves. Read morePublished 2 months ago by Schnack