REAL ESTATE Make money with affordable apartment buildings and commercial properties In the Make Money series, renowned real estate investor and bestselling author Gary W. Eldred shows you how to profit from the safest, most reliable wealth builder in the world--real estate. With coverage of all the fundamentals, Eldred shows you the ropes so you don't have to learn important lessons the hard way. If you've been investing in single-family homes but want a new way to make even more money, maybe it's time to make the jump to apartment buildings and commercial properties. Make Money with…mehr
REAL ESTATE Make money with affordable apartment buildings and commercial properties In the Make Money series, renowned real estate investor and bestselling author Gary W. Eldred shows you how to profit from the safest, most reliable wealth builder in the world--real estate. With coverage of all the fundamentals, Eldred shows you the ropes so you don't have to learn important lessons the hard way. If you've been investing in single-family homes but want a new way to make even more money, maybe it's time to make the jump to apartment buildings and commercial properties. Make Money with Affordable Apartment Buildings and Commercial Properties, Second Edition shows you how to set the right strategy and start investing in bigger properties--from apartment complexes to strip malls and office parks. Fully revised to cover the basics of this hot investment sector, this step-by-step guide reveals everything you need to know to expand your investment empire, including: * Crafting a market strategy that suits you * Finding commercial or multifamily properties with big potential * Evaluating the local economy for long-term opportunity * Identifying and beating your competition * Choosing a target market * Collecting rents and managing properties for increased income * Building equity quickly and simply * Using creative strategies for generating more income * And much moreHinweis: Dieser Artikel kann nur an eine deutsche Lieferadresse ausgeliefert werden.
GARY W. ELDRED, PHD, has invested successfully in real estate for more than twenty-five years and has served on the graduate business school faculty at Stanford University and the University of Virginia. One of America's top-selling real estate authors, Eldred's other books include Investing in Real Estate, Fifth Edition, Trump University Real Estate 101, and Make Money with Flippers, Fixers, and Renovations, Second Edition, all from Wiley.
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Acknowledgments xiii Introduction: How to Start 1 Develop Your Analytical Abilities 1 Develop an Entrepreneurial Spirit 2 Uncommon, Yet Essential 2 Entrepreneurs Create Value for Themselves and Their Customers (a.k.a. Tenants) 3 Market Savvy: Systematic Strategic Thinking 5 1. Profit with Commercial and Multifamily Properties 7 Advantages of Commercial and Multifamily Properties 7 Cost of Acquisition 8 Cash Flows Relative to Price 9 Search Time 13 Management 14 Trade Up Tax Free 15 Owner Will Carry Financing (OWC) 17 Possibilities to Create Value 18 Summing Up 20 2. Craft Your Market Strategy 22 It All Depends 23 A Strategy of Your Own 23 PVP: The One Constant Rule 23 The DUST Strategic Framework: Questions to Answer 24 Entrepreneur Objectives: Know Thyself 26 Talents, Inclinations, and Resources 26 Assess Your Finances 28 Frame Your Due Diligence 30 Identify and Fully Describe the Physical Property 31 Understand Your Bundle of Rights and Restrictions 36 Where Should You Invest? 48 Time Period 49 3. Where's the Local Economy Headed? 50 Economic Base Matters Greatly 51 Alamo, California (San Francisco Bay Area) versus Terre Haute, Indiana 52 Authors Neglect Economic Base 52 Benefit from the Lessons Learned 53 Where to Get Data 55 Will the Population Grow? 55 Enclaves of Existing and Potential Growth 55 Find Out the Actual Numbers 56 Beware of False Negatives 56 Is the Number of Jobs Increasing? 57 What Was the San Diego Connection? 59 Forecasting Recovery 59 Cost of Running a Business 60 Businesses and Employment Migrate to Lower-Cost Cities, States, and Countries 61 Cost of Living for Employees 61 Quality of Life 62 Quality of Life Also Attracts Wealth 63 Community Attitudes and Actions 64 Entrepreneurial Spirit 65 Concluding Remarks 66 4. Outperform the Competition 68 The Competitive Battle 69 Four Good Reasons to Inventory, Inspect, and Critically Review Competitors 69 Where to Invest 69 Market Information Gives You Negotiating Power and Confidence 71 Searching for a Preferred Value Proposition (PVP) 72 Constructing Your Financial Pro Formas 73 Identify Your Competitors 74 Quickly Adapt to Change 74 When Markets Tighten 75 More Practical Implications 75 What to Look For: The Location 76 Aesthetics 77 School Districts 77 Property Taxes and Services 78 Crime Rates 79 Accessibility 79 Trendiness 79 Public Transportation 80 Who Are the Residents and Recent Homebuyers and Tenants? 80 Site Features 81 The Exterior of the Building 81 Play the Tenant 82 Inspect the Interiors of Competing Units 83 Aesthetics: How Does the Unit Look, Feel, and Sound? 83 Livability: Unit Size, Room Count, and Floor Plan 84 Energy Costs 85 The Rental Process 86 5. Choose the Best Target Market 88 How to Create a PVP 88 Diversity Rules 89 Demographic Differences 90 Psychographic Differences 93 Avoid Standard Labels; Picture Your Actual Renters 98 Hitting the Bull's Eye 100 Find Unique and Intense Needs 100 Bull's Eye Lease Assessment 101 Throw Away Standard Operating Procedures 101 How Do You Identify the Wow (PVP) Features for Your Tenants? 102 Informal Conversations 102 Pay Attention 103 Talk with Insiders and Experts 103 Use Questionnaires 104 Focus Groups 105 Anticipate and Adapt to Change 106 The Age Wave 106 Echo Boomers 107 Local Trends and Changes 108 6. Is the Property a Good Deal? 109 How Much Would It Cost to Construct the Property Today? 110 The Construction Cycle 110 Implications for Investors 111 Local (Regional) Recessions 113 Per Unit Measures 113 Per Apartment Unit 113 Per-Square-Foot Measures 115 Price Per Front Foot 117 Gross Rent Multipliers 117 Capitalized Value 118 Estimate Market Value 122 Anticipate the Future; Pay for the Present 124 Cash-on-Cash Return 125 Growth in Equity 127 Don't Settle for Low Rates of Appreciation 129 7. Collect More Rents 130 Never Accept Average 131 Stand Out and Stand Above 131 A Strategy of Your Own 132 Verify Current Rent Collections 133 Examine All Leases and Rental Applications 134 Interpreting the Rental Information 134 Rent Collections, Not Rental Rates 135 Talk with Tenants 135 Your Competitive Market Analysis 137 Set Your Rents with Market Savvy 138 The Myth of Market Rent Levels 139 Rent Levels and Vacancy Rates 140 The Myth of the Market Vacancy Rate 141 Think Rent Range, Not Rent Rate 142 Raise Rents without Substantially Improving the Building 142 Confirm Your Suspicions 142 Why Owners Underprice Their Units 143 Investor Opportunities with Stage-of-Life Sellers 144 How High Can You Go? 146 Selective Increases 148 Dealing with Current Tenants 149 Can You Boost Your Rent Collections by Lowering Rents? 150 An Extreme Example of Overpricing and Market Ignorance (or Fanciful Dreaming) 150 A Purchase Opportunity 151 Time-Sensitive Rental Markets 152 8. Build Equity Fast with Sharp Interiors 153 The Entrepreneurial Imperative 153 Too Many Investors 153 Too Few Sellers 154 Not Words of Discouragement 155 Your Target Market 155 Visualize Your Tenants 156 Your Suggestion Box 157 Figuring Payback 157 Fast Buck versus the Last Buck 158 Set Your Budget for Improvements 158 The Sum Effect 160 The Interior of the Units 160 Sharpen the Aesthetics 161 Special Touches 163 Safety, Security, and Functionality 163 Rightsizing Room Count/Room Size 165 Create More Storage 167 Check Noise Levels 169 Overall Livability of the Unit 170 9. Generate More Income 171 Your Building Sends an Advertising Message 171 Clean Up the Grounds 172 Yard Care and Landscaping 172 Sidewalks, Walkways, and Parking Areas 173 Fences, Lampposts, and Mailboxes 173 The Exterior of the Building 174 Name Your Building 179 Signage 182 Curb Appeal: Summing Up 182 Collect More than Rent 183 Laundry 184 Parking 184 Build Storage Lockers 185 Cable/Satellite 185 Add Other Amenities or Services 186 10. More Creative Ways to Make Money 187 Tailor Your Lease Agreements 187 Competitive Advantage 188 What Terms Might You Negotiate? 191 Should You Furnish Your Apartments? 198 All Price Levels 199 High Payback 199 Warning: Don't Pay a Premium Price for Furnished Apartment Buildings 201 Improve the Neighborhood 202 Become a Neighborhood Entrepreneur 203 The Huge Payback 204 Conclusion: Investing in Action: The Bayside Apartments 206 Entrepreneurial Strategy 212 Real Estate Entrepreneurs Outperform All Other Investors 213 Only Investors Perform 214 Entrepreneurial Real Estate Investors Perform Best of All 214 Index 217
Acknowledgments xiii Introduction: How to Start 1 Develop Your Analytical Abilities 1 Develop an Entrepreneurial Spirit 2 Uncommon, Yet Essential 2 Entrepreneurs Create Value for Themselves and Their Customers (a.k.a. Tenants) 3 Market Savvy: Systematic Strategic Thinking 5 1. Profit with Commercial and Multifamily Properties 7 Advantages of Commercial and Multifamily Properties 7 Cost of Acquisition 8 Cash Flows Relative to Price 9 Search Time 13 Management 14 Trade Up Tax Free 15 Owner Will Carry Financing (OWC) 17 Possibilities to Create Value 18 Summing Up 20 2. Craft Your Market Strategy 22 It All Depends 23 A Strategy of Your Own 23 PVP: The One Constant Rule 23 The DUST Strategic Framework: Questions to Answer 24 Entrepreneur Objectives: Know Thyself 26 Talents, Inclinations, and Resources 26 Assess Your Finances 28 Frame Your Due Diligence 30 Identify and Fully Describe the Physical Property 31 Understand Your Bundle of Rights and Restrictions 36 Where Should You Invest? 48 Time Period 49 3. Where's the Local Economy Headed? 50 Economic Base Matters Greatly 51 Alamo, California (San Francisco Bay Area) versus Terre Haute, Indiana 52 Authors Neglect Economic Base 52 Benefit from the Lessons Learned 53 Where to Get Data 55 Will the Population Grow? 55 Enclaves of Existing and Potential Growth 55 Find Out the Actual Numbers 56 Beware of False Negatives 56 Is the Number of Jobs Increasing? 57 What Was the San Diego Connection? 59 Forecasting Recovery 59 Cost of Running a Business 60 Businesses and Employment Migrate to Lower-Cost Cities, States, and Countries 61 Cost of Living for Employees 61 Quality of Life 62 Quality of Life Also Attracts Wealth 63 Community Attitudes and Actions 64 Entrepreneurial Spirit 65 Concluding Remarks 66 4. Outperform the Competition 68 The Competitive Battle 69 Four Good Reasons to Inventory, Inspect, and Critically Review Competitors 69 Where to Invest 69 Market Information Gives You Negotiating Power and Confidence 71 Searching for a Preferred Value Proposition (PVP) 72 Constructing Your Financial Pro Formas 73 Identify Your Competitors 74 Quickly Adapt to Change 74 When Markets Tighten 75 More Practical Implications 75 What to Look For: The Location 76 Aesthetics 77 School Districts 77 Property Taxes and Services 78 Crime Rates 79 Accessibility 79 Trendiness 79 Public Transportation 80 Who Are the Residents and Recent Homebuyers and Tenants? 80 Site Features 81 The Exterior of the Building 81 Play the Tenant 82 Inspect the Interiors of Competing Units 83 Aesthetics: How Does the Unit Look, Feel, and Sound? 83 Livability: Unit Size, Room Count, and Floor Plan 84 Energy Costs 85 The Rental Process 86 5. Choose the Best Target Market 88 How to Create a PVP 88 Diversity Rules 89 Demographic Differences 90 Psychographic Differences 93 Avoid Standard Labels; Picture Your Actual Renters 98 Hitting the Bull's Eye 100 Find Unique and Intense Needs 100 Bull's Eye Lease Assessment 101 Throw Away Standard Operating Procedures 101 How Do You Identify the Wow (PVP) Features for Your Tenants? 102 Informal Conversations 102 Pay Attention 103 Talk with Insiders and Experts 103 Use Questionnaires 104 Focus Groups 105 Anticipate and Adapt to Change 106 The Age Wave 106 Echo Boomers 107 Local Trends and Changes 108 6. Is the Property a Good Deal? 109 How Much Would It Cost to Construct the Property Today? 110 The Construction Cycle 110 Implications for Investors 111 Local (Regional) Recessions 113 Per Unit Measures 113 Per Apartment Unit 113 Per-Square-Foot Measures 115 Price Per Front Foot 117 Gross Rent Multipliers 117 Capitalized Value 118 Estimate Market Value 122 Anticipate the Future; Pay for the Present 124 Cash-on-Cash Return 125 Growth in Equity 127 Don't Settle for Low Rates of Appreciation 129 7. Collect More Rents 130 Never Accept Average 131 Stand Out and Stand Above 131 A Strategy of Your Own 132 Verify Current Rent Collections 133 Examine All Leases and Rental Applications 134 Interpreting the Rental Information 134 Rent Collections, Not Rental Rates 135 Talk with Tenants 135 Your Competitive Market Analysis 137 Set Your Rents with Market Savvy 138 The Myth of Market Rent Levels 139 Rent Levels and Vacancy Rates 140 The Myth of the Market Vacancy Rate 141 Think Rent Range, Not Rent Rate 142 Raise Rents without Substantially Improving the Building 142 Confirm Your Suspicions 142 Why Owners Underprice Their Units 143 Investor Opportunities with Stage-of-Life Sellers 144 How High Can You Go? 146 Selective Increases 148 Dealing with Current Tenants 149 Can You Boost Your Rent Collections by Lowering Rents? 150 An Extreme Example of Overpricing and Market Ignorance (or Fanciful Dreaming) 150 A Purchase Opportunity 151 Time-Sensitive Rental Markets 152 8. Build Equity Fast with Sharp Interiors 153 The Entrepreneurial Imperative 153 Too Many Investors 153 Too Few Sellers 154 Not Words of Discouragement 155 Your Target Market 155 Visualize Your Tenants 156 Your Suggestion Box 157 Figuring Payback 157 Fast Buck versus the Last Buck 158 Set Your Budget for Improvements 158 The Sum Effect 160 The Interior of the Units 160 Sharpen the Aesthetics 161 Special Touches 163 Safety, Security, and Functionality 163 Rightsizing Room Count/Room Size 165 Create More Storage 167 Check Noise Levels 169 Overall Livability of the Unit 170 9. Generate More Income 171 Your Building Sends an Advertising Message 171 Clean Up the Grounds 172 Yard Care and Landscaping 172 Sidewalks, Walkways, and Parking Areas 173 Fences, Lampposts, and Mailboxes 173 The Exterior of the Building 174 Name Your Building 179 Signage 182 Curb Appeal: Summing Up 182 Collect More than Rent 183 Laundry 184 Parking 184 Build Storage Lockers 185 Cable/Satellite 185 Add Other Amenities or Services 186 10. More Creative Ways to Make Money 187 Tailor Your Lease Agreements 187 Competitive Advantage 188 What Terms Might You Negotiate? 191 Should You Furnish Your Apartments? 198 All Price Levels 199 High Payback 199 Warning: Don't Pay a Premium Price for Furnished Apartment Buildings 201 Improve the Neighborhood 202 Become a Neighborhood Entrepreneur 203 The Huge Payback 204 Conclusion: Investing in Action: The Bayside Apartments 206 Entrepreneurial Strategy 212 Real Estate Entrepreneurs Outperform All Other Investors 213 Only Investors Perform 214 Entrepreneurial Real Estate Investors Perform Best of All 214 Index 217
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