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If you are thinking of beginning your new year by investing
in real estate, first read William H. Pivar's "Real Estate Investing from A to
Z, Third Edition." It is not a get-rich-quick book. Instead, it is a get rich
soundly in real estate by understanding the investment basics book.
Pivar begins by explaining the primary reasons for investing
in real estate and why property is usually far superior to alternative
investments, such as the stock market. He is a big believer in using leverage
(i.e. borrowing money) to control property, which is likely to appreciate in
market value.
"If you purchase real estate on which you owe $2 million and
hold on to it for 15 years, you should be a millionaire. With only an average 3
percent inflation rate, within 15 years your equity for average purchases should
give you your million-dollar equity," the author explains.
Then the author proceeds to show why a small 10 percent cash
down payment is more profitable than a 50 percent down payment, thanks to the
magic of real estate leverage. "Real estate investments can buy themselves,"
Pivar explains, meaning the tenants will provide the rent money to pay the
mortgage payments and buy the property for the investor.
Although the author doesn't overlook risks of investing in
real estate, he shows why the safety of realty is far greater than alternatives.
The author explains the negatives of real estate, such as illiquidity, personal
liability, negative cash flow, and management. But then he explains how to
overcome these potential realty investment drawbacks.
I especially enjoyed Pivar's review of the realty investment
basics, some of which have been forgotten about in recent years. Especially
valuable are his explanations of the many different types of realty investments,
several of which are sure to appeal to every reader. Along the way, the author
uses many actual examples, plus follow-ups to show what happened to the example
investor' properties recently.
An unexpected benefit is the book' tax benefits section is
up-to-date, including reference to the recent 2003 Tax Relief Act, which reduced
the federal long term capital gain tax rate to a maximum of 15 percent, even
lower for taxpayers in low tax brackets. Pivar devotes an entire chapter to
explaining the investor benefits of tax-deferred exchanges.
As the book' title indicates, Pivar includes virtually all
the basics real estate investors need to know and remember. He includes creative
financing techniques, which can be especially important to new "beginner"
investors. The author even includes a personal example how he traded price
verses terms when buying his new home and obtained $21,000 of upgrades from the
builder at no extra cost.
Along the way to explaining virtually all the realty
investment basic terms, Pivar includes sage advice how to use this information
to avoid making mistakes. For example, he suggests staying away from investment
in large homes converted to apartments, abandoned, unrepaired or fire-gutted
buildings, and neighborhoods with lots of graffiti. The author also discusses
how to handle potential negatives, such as asbestos, formaldehyde, lead, radon,
toxic mold and even sick-building syndrome.
Chapter topics include "Why Real Estate?"; "Investment
Alternatives"; "Taxation and Real Estate"; "Understanding Financing"; "Creative
Financing"; "Partnerships, Syndicates, and Real Estate Investment Trusts";
"Locating Property"; "Foreclosures, IRS Sales and Tax Sales"; "Analyzing
Property"; "Your Offer to Purchase"; "Subdividing—Smaller Can Be Better";
"Trading Up to Wealth"; "Optioning Your Way to Success"; "Special Situations";
"Managing Your Property"; and "Selling Your Property."
You won't find a better basic book that thoroughly explains
the pros and cons of realty investing than this one. William Pivar shares his
extensive realty knowledge in a lively manner filled with facts and real-life
examples. On my scale of one to 10, this outstanding book rates a solid 10.
"Real Estate Investing From A to Z, Third Edition," by
William H. Pivar (McGraw-Hill, New York), 2004, $19.95, 288 pages; Available in
stock or by special order at local bookstores, public libraries and
www.amazon.com.
The purpose of this
newsletter is to stimulate thought for our
clients and professionals with whom we network. One should consult with a qualified
real estate professional prior to
implementing any real estate
strategies. If you are a legal,
insurance, tax, real estate, mortgage
planning or real estate professional receiving this newsletter or know of one,
please contact our office to introduce
yourself and your services to us. We
are always seeking to grow our referral
network and expose professional services
to our client base.
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