Secure Your Financial Future Investing in Real Estate

Martin Stone, Spencer Strauss9780793161294, 0-7931-6129-0

The roller coaster stock market and recent corporate scandals have left many with smaller retirement portfolios-and greater skittishness-about investment options. Real estate has been one notable bright spot in this gloomy investment landscape. New home construction is booming, property values continue to increase, and interest rates have been uncommonly low. Now, Martin Stone and Spencer Strauss leading real estate practitioners and authors, discuss how smart investors can use real estate to build a retirement portfolio-safely and successfully. Using time-tested principles, the authors outline a step-by-step guide that clearly describes the opportunities and hazards in real estate investing. For starters, Martin Stone and Spencer Strauss discuss a formula that shows readers exactly how much money they’ll need for a comfortable retirement income. From there, readers will learn: *How to create safe wealth through leverage and compound interest, tax-deferred exchanges, and commonsense real estate principles *How the investment playing field has changed, and how the real estate market can provide long-term profitability and retirement stability *Do’s and don’ts in planning, appraising, and financing various real estate ventures, including big and small apartment buildings, condos, foreclosures, and commercial and industrial properties *How to spot a money-making investment-and when and why to run away from a loser *How to manage properties to yield the greatest investment return, including the management of tenants, when to seek out new opportunities, and when to bail out Filled with real-life examples, checklists, and worksheets, readers will find a sharply focused treatment to retirement planning using one of the most underestimated investment vehicles on the financial scene. Real estate, the authors point out, can be a viable and extremely lucrative way to create a fulfilling, predictable, and prosperous nest egg.

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Table of contents :
Cover……Page 1
CONTENTS……Page 6
Preface……Page 10
Acknowledgments……Page 16
1.RETIREMENT REALITIES……Page 18
Time Costs Money……Page 19
The Stats Don’t Lie……Page 20
Inf lation: Friend or Foe?……Page 21
Inf lation and the Fixed Income……Page 23
The Tax Man Cometh……Page 26
Social Security……Page 27
401(k)s……Page 29
Health Insurance and Related Needs……Page 30
Life Expectancy……Page 32
2.GREAT EXPECTATIONS……Page 34
Focus Up……Page 35
Finding Balance……Page 36
Three Steps……Page 37
Determining Net Worth……Page 39
Assets versus Liabilities……Page 40
Spending Habits……Page 41
Back to the Future……Page 44
Dream a Little Dream……Page 47
Striking It Rich……Page 50
Three Groups of Investors……Page 51
Group #1: “Got Plenty of Time”……Page 52
Group #2: “Too Busy Just Hangin’ On”……Page 56
Group #3: “Worried It May Be Too Late”……Page 59
4.THE APPRECTION GAME……Page 68
Real-Life Comparable Property Sale from 1977……Page 69
Proof in the Pudding……Page 75
Your Yellow Brick Road……Page 78
The Five-Point Plan……Page 79
Step One: Learn……Page 80
Step Two: Research……Page 81
Step Three: Plan……Page 82
Step Four: Invest……Page 83
Step Five: Manage……Page 84
5.COMPONENTS OF RETURN……Page 86
The Income……Page 87
The Expenses……Page 88
Loan Reduction……Page 90
Appreciation……Page 91
Tax Benefits……Page 94
Modified Accelerated Cost Recovery System (MACRS)……Page 95
Putting It All Together……Page 99
Your Winning Numbers……Page 102
Sharing the Secrets……Page 103
Goals……Page 107
Cash-Flow Requirements……Page 108
Tax Benefits……Page 109
Cash Withdrawal……Page 110
The General Plan……Page 111
The Detailed Plan……Page 115
Follow-Up and Goal Review……Page 119
7.TAX PLANNING……Page 122
Deductions as an Owner……Page 123
Operating Expenses……Page 124
Capital Expenses……Page 125
The Depreciation Allowance……Page 126
Capital Gains……Page 127
The 1031 Tax-Deferred Exchange……Page 129
Types of 1031 Exchanges……Page 130
The Installment Sale……Page 134
Refinancing……Page 138
8.APPRAISING VALUE……Page 140
Methods of Valuing Property……Page 141
Comparative Market Analysis……Page 142
Reproduction Cost Approach……Page 145
Capitalization of Income……Page 146
The Gross Scheduled Income……Page 148
Expenses……Page 149
The Cap Rate……Page 150
To Sum Up……Page 151
The Gross Rent Multiplier……Page 152
Finding Hidden Value……Page 153
The Highest and Best Use……Page 155
9.FINANCING REAL ESTATE……Page 158
Costs of Borrowing……Page 159
Three Sources of Money……Page 160
Government Lending……Page 161
Conventional Loans……Page 163
Residential Loans: One to Four Units……Page 164
Commercial Loans: Five Units and Up……Page 165
Fixed Loans……Page 166
Private-Party Financing……Page 171
To Sum Up……Page 172
10.MINDING THE FARM……Page 174
Open for Business……Page 175
HUD Housing……Page 178
Discrimination……Page 180
Utilities and Insurance……Page 181
Who’s Doing What?……Page 182
Determining Vacancy Rates……Page 183
Determining Rental Rates……Page 184
Filling a Vacancy……Page 185
A Policy on Pets……Page 187
Happy Tenants……Page 188
Raising the Rent……Page 189
Conclusion……Page 192
Appendix……Page 196
Glossary……Page 210
Recommended Reading……Page 216
Index……Page 218
About the Authors……Page 222