How to Make Money in Commercial Real Estate for the Small Investor (Hardcover)

by Nicholas Masters (Author) "Traditionally, though real estate has been the major source of wealth worldwide, most how-to investment books focus on securities (stocks, bonds, mutual funds), insurance policies,..." (more)
Key Phrases: addendum clauses, other rental activities, exurban land, United States, Federal Reserve, State of Florida (more...)

Editorial Reviews

Product Description
DID YOU KNOW THAT . . .

. . . Real estate is a better long-term investment than the stock market?

. . . You don’t need a lot of money to begin? Since time immemorial, real estate has been an excellent investment. The long-term returns have actually exceeded the stock market and other investments. If you’re looking for financial security, real estate can provide you with welcome supplemental income, year after year. And if you thought investing in real estate was out of your reach, this book will change your mind . . . and your future! Experienced real estate broker and investor Nicholas Masters demystifies the entire process of buying real estate for you and shows you how to get started. Illustrating his explanations with examples from his own experiences in thirty years of real estate investing, Masters takes you step-by-step through the process of understanding the benefits of owning real estate, finding and evaluating properties, getting financing, closing the deal, and managing your property.

You’ll find out . . .

• Why your first real estate investment should be your own home
• Why there’s safety in numbers—the advantages of real estate investment "clubs"
• The pros and cons of individual ownership, partnerships, and corporations
• How to find properties—brokers, foreclosures, government surplus, sales leasebacks, and other methods of matching up with the right purchase
• The ins-and-outs of financing and mortgages—balloon mortgages versus fixed rate; liens and bankruptcies; and other financing options
• How to deal with repairs, tenant relations, insurance, and other aspects of managing property . . . and why hiring a professional management firm could be a good idea for you You don’t need a million dollars to start making money in real estate. All you need is the clear information and sensible, reality-based guidance you’ll find in How to Make Money in Commercial Real Estate for the Small Investor.

From the Inside Flap
With the stock market making front-page headlines and the bookshelves teeming with how-to-invest guides, you probably think that the stock market is the best investment around. You’re wrong. In the long run, real estate is superior.

Here’s why:

• Real estate is not subject to daily price fluctuations, as stocks are
• Investors hold on for the long run rather than try to time the market
• Returns are on average higher than most people get from stocks
• Real estate is an excellent hedge against inflation
• As real estate appreciates, you continue to build up equity

The simple truth is, real estate investment can give you excellent long-term profits—often up to a 430ng-term total annual return. Yes, 43% a year! Try squeezing that out of the Dow Jones! You, too, can achieve similar results! This book will show you how. This is not a get-rich-quick scheme or an infomercial tie-in. Written by a former professor of accounting who is also an experienced real estate investor, How to Make Money in Commercial Real Estate for the Small Investor is designed to help neophyte small investors—people like you—get started in creating a real estate portfolio. Its step-by-step approach simplifies the ins-and-outs of real estate in terms anyone can understand and follow. And you don’t need an accounting degree to understand the economics. Using examples from his own real estate deals, Nicholas Masters goes over the "numbers" so you see just where the money comes from, where it goes, and what it means to your bottom line. Point by point, Masters explains the various types of real estate, including family homes, residential complexes, shopping centers, office buildings, as well as types of land, and explores the relative advantages and disadvantages of each. He shows you, for instance, how a $20,000 cash investment in a small apartment complex in which you yourself live can provide a juicy $8,200 annual return, and that’s not counting tax benefits!

You’ll see how easy it is to get started in real estate. If you think buying property is out of your financial reach, Masters recommends forming an investment club, where you pool your resources with similar small investors to find opportunities you couldn’t have afforded alone. He tells you how to create such a club, what partners to look for, and how to run it. Then he takes you through each step of the process of owning property. By the time you’re done, you’ll know how to find properties . . . the benefits and pitfalls of auctions and foreclosures . . . how to evaluate the property and negotiate the best deal . . . how to get a mortgage and get to the all-important closing . . . and ultimately how to manage your property profitably. If you’ve ever dreamed of having financial security, real estate is one good way to establish a steady, reliable source of income for years to come. You don’t have to be a Donald Trump to succeed in the business. Reassuringly clear and level-headed, How to Make Money in Commercial Real Estate for the Small Investor takes the mystery out of buying real estate and helps you make your dream a reality.

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Product Details

• Hardcover: 320 pages
• Publisher: Wiley (July 3, 2000)
• Language: English
• ISBN-10: 0471355437
• ISBN-13: 978-0471355434
• Product Dimensions: 9.5 x 6.1 x 1.1 inches
• Shipping Weight: 1.3 pounds
• Average Customer Review: 4.1 out of 5 stars See all reviews (14 customer reviews)
• Amazon.com Sales Rank: #270,076 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

87 of 88 people found the following review helpful:

3.0 out of 5 stars Disappointing: out-dated and not comprehensive, February 26, 2006

By	Jai Kohli "Commercial real estate broker and ... (Berkeley, CA USA) - See all my reviews (REAL NAME)

While Mr. Masters does make several good points, most of the information in this book could apply to any real estate investment: whether it be residential or commercial even though the title of this book clearly makes it appear that this book will focus on commercial properties, which it does not.

Mr. Masters starts the book by making a quick comparison between real estate and other investments, such as holding your money in cash, saving accounts, securities, collectibles, and precious metals. He gives the advantages and disadvantages of each: namely, liquidity versus returns. Now, we get into the meat of the subject matter. First, Mr. Masters argues that an investor should own their own primary residence and have 12 months of expenses in the bank before venturing to invest in commercial real estate: conversative, but good enough advice. He gives comparisons between different commercial properties you can invest into, with garden apartment complexes and anchored shopping centers getting his nod as the best investment choices for a real estate novice. He argues that novice investors should form investment clubs to invest in real estate together; however, he gives very little advice as how to hold title and what form of ownership the group should take. I understand that people must consult with tax and legal professionals to see what best matches their situation, but it would have been nice to have Mr. Masters elaborate on this since its a key argument of his book.

To find property, Mr. Masters tells the aspiring investor to work with a knowlegable broker and not purchase a property with a cash-on-cash return or a cap-rate under 8-10%. While I agree its very important to buy properties with positive cash-flow, this is one of my biggest issues with this book: while in theory it'd be great to skip every property that offers lower returns, in today's market its virtually impossible in most top markets to find properties with those types of returns. If you follow the advice of the author, it will now be impossible to purcahse most investment opportunities as he does not leave room for exceptions in his rule. He also ignores other calculations and never shows how to construct an APOD, which really dates this book. There is no mention of an IRR or projected cash-flows. He also never says to independently confirm the income and expense figures given by the seller even though 9 times out 10 the cap-rate the seller gives on a property is calculated off of proforma numbers that are not aligned with market realities. I can sum up his financing section in a single sentence: find a good mortgage broker to find you a good rate on a fixed, 15-30 year mortgage. And to manage your property? Use a professional management company and watch them for a year to see how they do it, then you can consider doing it on your own. He gives very little helpful advice on what to look for in a management company, mortgage broker, or real estate broker as well.

Tax information is included relegated to an appendix, yet it doesn't even touch on a 1031 tax-deferred exchange and tax implications of real estate investments are hardly touched upon, and when they are, they're no longer applicable as tax laws have changed. I don't remember reading anything about what will effect the basis of your property, how to calculate cash-flow after taxes, or even more than a few quick words about depreciation!

For someone who has purchased their own home or has even a little bit of real estate knowledge, this book has little pratical use -- the only difference between this book and better, cheaper books that I've read is the author's limited information on investment clubs. He even gives poor advice on finding information online: he tells the reader to go online and type in a few keywords on a search engine, not realizing that the reader will find plenty of advertisers and unscrupulous companies in the results.

For anyone who's interested in investing in real estate, I recommend the first thing they learn is how to evaluate properties so they know what to look for in an investment opportunity. To that extent, I highly recommend Frank Gallinelli's "What Every Real Estate Investor Needs to Know About Cash Flow and 36 Other Key Financial Measures", a far-superior, more-practical, and less expensive book.

47 of 48 people found the following review helpful:

5.0 out of 5 stars Buy this book first, December 8, 2002

By A Customer

When I decided I wanted to learn more about commercial real estate investment, I bought a pile of books that claimed to be relevant and started working my way through them. This one was the ONLY one that I feel was really worth the read. It starts out by ascertaining whether the reader is truly ready to buy commercial real estate, taking a very prudent view of personal finances. It lays out everything worthwhile that any of the books on this subject lay out, and does so in a very readable manner. At the same time, it does not talk down to the reader or try to "dumb down" any of the material. I would suggest starting with only this book, and then buying other books (or talking to experts) in a more focussed manner, based upon what you find here. Incidentally, I haven't bought any commercial real estate yet, but I still intend to and I am trying to follow the advice of this book in preparing to do so.

65 of 70 people found the following review helpful:

4.0 out of 5 stars Sound information. Good for experienced or beginners., April 9, 2001

By	Reluctant Reader - See all my reviews

This is a good book with lots of good information. The book is great for persons without any knowledge of commercial real estate and is a good reference book for persons with experience in commercial real estate.

It is worth noting, however, that the much of the author's experience with investment real estate seemed to be during the 1970's decade. During that period of time there was hyper inflation in the real estate market. Often values and prices paid for real estate did not make much sense.

Some of the examples in the book refer to properties indicated to be worth several million dollars - and not exactly what you would call a small investment property.

However, the financial scenarios in this book are based on reasonably sound financial and economic theory. And the reasoning for the mathematical financial calculations seem to be fairly sound.

The book is a good buy for the price.<...