Yes I probably spelled that wrong, but oh well. Anyway I’m interested in both the getting rich field and the real estate field.
I was wondering if anyone had ever read “the millionare next door” and if you have, what did you think-is it a worth while read?
Second question, I want to read a really good “how to” book on real estate. Any suggestions?
Any Takers?
never read any books about it, but with good credit you can buy real estate with zero or little down. Buy fixer-uppers and put in a little “sweat equity”, meaning you spend the time to fix it up, make it nice and stick it on the rental market. With rental property, you are (in a manner of speaking) getting paid for the passage of time. Renters pay you every month for years, move out and have nothing! You keep the property/home! You build the equity! Play your cards right, buy smart and soon you can not afford to have a job, because your time is worth more than anyone is willing to pay you!
I find small apartment complexes very rewarding. Not too big to require managent staff (just one person who helps out with small stuff) but large enough to insure positive cash flow even with high vacancy rates (4-9 units). Duplex and Fourplex are cool too.
Landscaping and swiming pools are a big no-no! Money down the drain for little return. Desert flora and open space is good enough for most tenants, and if not, let them live somewhere else (and pay more!)
2 things my old man taught me: 1. Always buy the worst property on the best street. Let the other properties raise your value. 2. Never sell your property. Rent it, trade it, lease it, whatever- but keep your hand on the equity.
Let’s hope the inheritance tax is killed once and for all! Good luck out there!
Read “The Millionaire Next Door.” It purports to be a study that charts how most people make their money and what they do with it. It breaks down into the following, albiet incomplete, points:
Own your own business. Can be any kind, but the important thing is to own it. You get to write the checks, pay the people, take the deductions. You get most of the money it makes.
Hold onto that business for a long time. Build it up. Being a millionaire doesn’t happen overnight. Be patient.
Hold onto your original house. Hold onto your original car. Don’t play the “movin’ on up” game. It’s a money suck. Many of the millionaires stay in their houses for a long time, and only move if they needed to (such as the pressure of having a larger family).
Same thing with possessions, trips, second homes. Don’t buy because you feel “you deserve it” or because other people have more.
Live quietly. The point of the book’s title is that many people are millionaires and you wouldn’t know it. They may own their own business, but you may not know just how profitable it can be.
I can understand this from second-hand experience. I interviewed a newspaper publisher. He published a county-wide newspaper in North Carolina (Alamance County) two or three times a week. He had a staff of four. Three were interns from the local journalism school. The fourth’s big job was to sit in court and note down all the cases, the races and ages of the defendants, the outcomes and the judges’ comments. All of this was published, in detail, and distributed to the convenience stores.
The paper looked like it hadn’t changed its layout and font style since Roosevelt was president (and I mean Theodore). The newspaper was in a storefront office that consisted of two rooms: the office in front, the printing press in the back. When I told my adviser about the ramshackle nature of the business, he said, “Kid, don’t underestimate him. He may look poor, but he’s got a beach out in Manteo.”
Believe it or not, I’ve seen several people do it writing novels, but it takes a focused effort and a lotta marketing on your part to do it. Of the two people in particular, they identified what kind of books were selling (series mysteries and sentimental fiction), wrote to fit, then marketed themselves repeatedly. The mystery writer has about 15 books out, the other one appears regularly on the NYTimes list and has had two movies made from his books.
As for real estate books, I can’t help you there. All I know is second-hand. Basically, it’s buy low, sell high. The real sharks find “distressed” properties, and the methods depend on your ethics. Supposedly, checking the obits and calling up the families within a day of the funeral is one method.
Other ways would be to find “cleaning women” specials; houses that would have sold had the owners bothered to declutter, paint rooms neutral tones, dump the kitty litter, etc. I suspect finding these houses would take a lotta looking and a lot of networking, and you could probably end up doing better flipping burgers.
Well, I can tell you that Nothing Down, by, I think, Robert Allen is one piece of crap for a real estate book. The author brags of being able to go into any town anywhere and buy 10 gillion dollars worth of real estate with less than a hundred dollars out of pocket expenses etc… To paraphrase his first chapter , it’s Get your Rich Dad to get the loan for you! Gee! I’m glad that I spent all that money for the book! But, that was years ago. I’ve read many over the years and they all are crap and basically xeroxes of each other. If you must read one, get it from the library. Then, read no more of them.
Gatopescado - we must be brothers, because everything your old man said is exactly how I run my business. And it works. I read LOTS of real estate books, and they are mostly all alike. But reading books doesn’t get the job done, though; getting off your butt and DOING it is what makes real estate work. It isn’t hard, but it doesn’t do it by itself.
As for no-money-down, I’ve made that work too. You need a seller who is willing to hold a second mortgage for you. Find a seller who’s owned his property for a long time, so even getting 70% of his asking price feels like a good profit to him. Then ask him hold a 10% to 30% second mortgage. Get yourself a 90% (if you can) to 70% (if you must) first mortgage for the balance. Let inflation and appreciation be your friend. Re-fi and pay off the second as soon as you can. The rest is profit.
And tenants are your friends too. Rental real estate is like prostitution. You got it, you sell it, you still got it! And I agree, never sell! You can sell, pay a 6% commision to a broker, and walk away with 94% of your market value. Or you can re-fi out your equity, walk away with 90% of the market value, and STILL OWN THE PROPERTY! What a scam, but it works and it’s legal. Amazing.
Nine out of 10 fortunes are made in real estate. Good luck!..Timmy
I find most “get rich quick” books to be utter nonsense. They sound good because the the ideas are so simple and common-sense. e.g. Live within your means or own your own business. All sounds great, right? What they always seem to gloss over is the fact that starting a business or buying properties can have a great deal of risk:
Properties are not garanteed to always increase in value.
You could rent to apparently normal tenents who trash the place or don’t pay their rent. Depending on what state the property is in, it can be hard to get rid of them.
Rental properties require maintenance. If you don’t plan to do it yourself, you’ll need to hire someone. That will take away from your bottom line.
Real estate is not very liquid (compared to securities and other investments).
You could have trouble renting or selling the property.
That said, a lot of people do make a lot of money off real estate. But forget the Millionare Next Door, Rich Dad/Poor Dad, Don Lapris bull shit. Go to Barnes and Nobel and get a plan old book that tells you all the ins and outs of buying properties. It’s nice to know that you should buy the worst property in the best neighborhood, but you need to understand all the rules for paying taxes, financing the property, local rental laws, local rental market, and so on.
It may not be that hard, but if it was so easy everyone would be doing it.