Want to know the secret to making a fortune from real estate? Buy right. It's not actually a secret. Almost any good book on the subject will tell you that. The problem is more than 90% of those who invest in real estate have no idea what "buying right" means. To many people, it means buying property when real estate prices are going up. That, as a practice, sometimes works. But as a strategy for getting wealthy safely? It is a very, very bad one. The first property I invested in seemed very "cheap" when I bought it back in the late 1970s. It was a nice little Washington, D.C., apartment in a refurbished building. The landlady convinced me to buy it by showing me how much prices had been escalating. She told me that if I bought this unit "now," I'd stand to make a lot of money as it appreciated. To make it even easier, she got me a loan from some bank that required nothing down besides a few thousand dollars in closing costs. When my wife and I signed the mortgage and got the keys, we felt like we had made a really good deal. But real estate in Washington, D.C., was bubbling up in the mid-1970s, and lots of people who didn't know a thing about real estate were jumping in. Including me. It took me years to finally get rid of that first apartment (and the deadbeat prostitute who was renting it from me). And it cost me about $30,000 to boot. I made many mistakes in that one transaction. But for today, I want to focus on just one: buying rental real estate without any idea of what a "good buy" really is. When it comes to rental real estate, a good buy is getting the title to a property that can be fixed up and rented out at a profit right from the outset. So what exactly does it mean to buy rental real estate "right"? My answer is this: If you can buy a piece of property and have it fixed up and ready to rent for less than eight times yearly rent, you are almost certainly "buying right." Let me show you a specific example... | 
No comments:
Post a Comment