Easy Money: Why Buy Real Estate?

Real Estate is the Best Investment

Real estate has been the basis for the wealth of more millionaires than any other form of investment. This is true because real estate is probably the best of all possible investments.

You can make money and have a tax loss, legally with real estate. If your annual depreciation amount exceeds the amount of income you have from the property, it will result in a reduction of your taxable income, even though you actually made money.

Banks will lend you money to buy real estate, sometimes more than 100% of the present value of the real estate. See how many bankers will lend you $100,000 to buy $100,000 worth of stocks.

A good real estate investment will give you dividends and appreciation (growth), not just one or the other as most stock brokers will try to convince you to settle for when buying stocks. Rent payments can be the equivalent of dividends for the smart investor and in spite of the recent downturn in real estate values, the historical average appreciation of real estate exceeds the historical average gains in the stock market.

The value of real estate does not disappear overnight like it can with stocks and bonds. At worst case, if you own it, you can always go live in it. Try that with a stock certificate!

Like they say in buying stocks, the secret to making money is to buy low and sell high. In real estate, we say that money is made in real estate when it is bought, not when it is sold. If you buy low and ensure you have a positive cash flow, it is pretty hard to miss in real estate.

It is a simple formula, but a challenging one to execute. Most professional real estate investors spend a lot of time understanding their markets. They see a lot of houses for sale that they won't make offers on. They know how to tell the winning deal from a loser, because of their experience and training.

Unfortunately, the amateur investor often gets taken in real estate, just as they do in the stock market. Anyone who hopes to consistently make money in real estate investing has to be prepared to pay their dues by getting the right education, getting a good mentor, and then following directions to do deals the right way instead of trying to make it all up on their own, or improvise their own approach to the market.

Because real estate is a capital intensive field, it is easy to loose a lot of money investing foolishly. There are three ways people can profitably get involved in and benefit from real estate investing.

1) Become a private lender. Find an experienced, successful and reputable real estate investor in your area and ask him if he could use a private lender. Use your IRA, move the money in your old 401K into an IRA, or use excess cash you have parked in CDs or less profitable investments. Make it available to this investor to use. Don't try to tell him or her how to find houses or which houses to buy, but require that you get four things every time your money is used:

• A promissory note for the amount loaned, personally guaranteed by the investor


• A deed of trust on the property with your loan in the first lien position


• Lenders title insurance with you (0r your IRA) as the named beneficiary


• Hazard insurance with you (or your IRA) as a named beneficiary/lender

As I mentioned, don't try to tell the investor where or what to buy. But, do feel free to ask why she or he bought the house they did. Learn all you can from the investor and don't begrudge her or him their profits. You are getting paid to learn from them by getting a nice interest rate return on your money.

2) Become an equity partner with an experienced, successful real estate investor. Seek out this investor and tell him or her that you have a sizable chunk of money (this better be at least $500K) and you want to get into the real estate investing business. You commit to providing the capital in exchange for a 50% share of the profits on each deal you do with them.

Again, be sure to pick the brain of the investor as you do each deal so that you can learn how the investor picks the winners, how s/he acquires the property and profits from the deal. Once again you are getting paid to learn.

3) Become a professional (part-time or full-time) real estate investor. First, you will need to set aside about $30K to $50K and invest it wisely in the best real estate investing training you can find (if you ask me, I will provide a confidential list of the best I have seen and some to avoid). As soon as you complete the very first course, apply it, apply it, and then apply it some more - before you attend or sign up for any additional training. Do not sign up for any additional training until after you have worked solid for six months trying to do everything the first course taught you to do. I will make an exception for a coaching program and a mentoring program that can help you apply what you have learned. You probably should sign up for those right away and work them for everything they will give you during that six month startup period.

After you have successfully used your training to buy and profit from three to six deals, then it is safe to go back in the water to sign up for additional courses.

In another post I will discuss the perils of real estate training and how it can distract you from making money.

Of the three ways I mention above to make money in real estate investing, the first two require the least amount of time and effort. The third, even if you do it only part-time, requires a tremendous amount of work, dedication, persistence and applied knowledge. The rewards are greater and so are the risks. Decide for yourself which approach suits you.

If you would like more information on:

1. How to be a private lender see the Investors page of www.BuyAHouseBelowMarket.com.


2. How to become an equity partner, contact me directly at tsheppard@adbproperties.com


3. How to become a successful real estate investor, keep reading these blogs or contact me directly at tsheppard@adbproperties.com

Tom ~

Why Buy Retail?

www.BuyAHouseBelowMarket.com

Easy Money: Read This Before You Buy ANY Real Estate Course

Before You Buy ANY Real Estate Course - Read This!

Have you ever heard one of those commercials/webinars/presentations for real estate that tell you how you can become a real estate millionaire without money or credit? Before you whip out your credit card to buy and start planning how to spend all that dough, consider this...


Switch gears for just a moment and try to stay with me. All food has three ingredients that give it flavor: fat, sugar, and salt. Diet foods that say "fat free" have compensated by adding sugar or salt. Those that say, "sodium (salt) free" have likewise compensated by adding sugar or fat. And, "sugar free" means they have put in extra fat or salt, or both. If you have food that is fat-free, sugar-free, and salt-free, it is also flavor-free.


Liken these three ingredients, fat, sugar, and salt to buying real estate. To buy real estate you need money, credit, and work. If you don't have money or credit, then you better be prepared to compensate by doing a whole lot of work! Oh, did I mention knowledge too? Because if you don't know what you are doing when buying real estate you will either lose a lot of money, go to jail, or both.


Lots of folks spend money every day buying get rich quick schemes. Most of these are either targeted at making money on the internet or in real estate.


As a guy who has made money and is working right now in the real estate industry, I am here to tell you that there is no such thing as easy money and getting rich quick is usually a prelude to getting poor fast, and maybe going to jail.

The fastest and easiest way to make a lot of money really fast is by robbing people. You see my point?


Over the past few years I have spent a lot of money on seminars and courses about how to buy and sell real estate. Nearly all of them were prefaced by a pitch that made it seem like it would be fast and easy to make money. Those parts of the program were lies.


Don't get me wrong. I have made money in real estate. I have successfully used much of what I learned in those seminars. However, making that money was neither fast nor easy.


Before you buy any real estate course you need to understand that no matter what the ad says, to make the program work you will need to dedicate a significant amount of time and energy over an extended period to make it work. In many cases, you also need to be prepared to pay out substantial sums to prime the pump. Your best bet is not to quit your day job just yet. If you cannot make enough money in real estate working at it part time, you won't do any better working at it full time, in fact you will do worse.


"But Tom," you exclaim, "they say I can make money selling real estate without money or credit. Are you saying they are lying?" No, they aren't lieing. But you aren't understanding the whole truth either.


I have made money in real estate without money (or without much) and without credit. I bought a $537,000 complex with no money down and only the lawyers and I got a check at closing. It can be done. But, it takes a lot of work and courage. It would have been a lot easier if I had money and credit.


So, here is the bottom line. Before you decide to try making money in real estate with no money and no credit, be prepared to work very, very hard. Be prepared to make a lot of offers that get rejected, and be prepared to invest time and energy to offset that lack of money and credit.

I did it and it works. But I still work hard at it.

Next time - The 10 Second Formula for Getting Rich

Tom ~

Buy a house now, to invest or to live in, either way don't pay RETAIL!

http://www.buyahousebelowmarket.com/