REAL ESTATE RICHES. How to Become Rich Using Your Banker s Money. Dolf de Roos, Ph.D. John Wiley & Sons, Inc.

Transcription

1 REAL ESTATE RICHES How to Become Rich Using Your Banker s Money Dolf de Roos, Ph.D. John Wiley & Sons, Inc.

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3 REAL ESTATE RICHES

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5 REAL ESTATE RICHES How to Become Rich Using Your Banker s Money Dolf de Roos, Ph.D. John Wiley & Sons, Inc.

6 Copyright 2005 by Dolf de Roos, Ph.D. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) , fax (978) , or on the web at Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) , fax (201) Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. The publisher is not engaged in rendering professional services, and you should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. For general information on our other products and services please contact our Customer Care Department within the United States at (800) , outside the United States at (317) or fax (317) Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our web site at Library of Congress Cataloging-in-Publication Data: De Roos, Dolf. Real estate riches : how to become rich using your banker s money / Dolf de Roos. [New ed.] p. cm. Originally published: New York : Warner Books, Includes index. ISBN (pbk. : alk. paper) 1. Real estate investment. 2. Real estate investment Finance. 3. Mortgage loans. I. Title. HD D '24 dc Printed in the United States of America

7 Contents Foreword by Alex Rodriguez vii Praise for Real Estate Riches Acknowledgments Preface: I Don t Have a Job. Shame! ix xiii xv PART ONE Why Is Property So Good? 1 CHAPTER 1 Four Magic Questions 3 CHAPTER 2 Conspiracy Theory 19 CHAPTER 3 A Taxing Issue 27 CHAPTER 4 Beating the Averages Easily 33 CHAPTER 5 Yes, But CHAPTER 6 Summary: Why Invest in Real Estate? 69 PART TWO Okay! Show Me How to Do It! 71 CHAPTER 7 The 100:10:3:1 Rule 73 CHAPTER 8 Finding Properties 81 CHAPTER 9 Analyzing Deals 101 CHAPTER 10 Negotiations and Submitting Offers 109 CHAPTER 11 Getting High on Opium (aka OPM) 119 CHAPTER 12 Massively Increase the Value of Your Properties (Without Spending Much Money) 129 CHAPTER 13 Managing Your Properties 137 PART THREE Liftoff! 149 CHAPTER 14 Residential versus Commercial Property 151 CHAPTER 15 Government Interference 169 v

8 vi CONTENTS CHAPTER 16 The Eight Golden Rules of Property 173 CHAPTER 17 The World Is Your Oyster 181 Appendix: Other Books by Dolf de Roos 187 About the Author 189 Index 191

9 Foreword Baseball has blessed me with a sensational career and an avenue to reap rich financial rewards. However, the hard work does not stop in the baseball diamond, nor does it end with the paychecks. I am acutely aware that many professional athletes are paid well for their talents but, sadly, are victims of poor financial planning. When I landed my well-publicized 10-year, $252 million contract, I set about finding an investment vehicle that would ensure my financial fitness long after baseball. I read many books on wealth, entrepreneurship, and investing, as well as biographies of successful individuals, but nothing inspired or captivated me as much as Real Estate Riches by Dolf de Roos. Dolf makes real estate investing simple and accessible to anyone who has the will to succeed. He is an All Star in his field! On my journey to verify the opportunities available in real estate, I met with Joanne Mitchell, a good friend and local real estate advisor who owns and operates several thousand apartments in Miami. She immediately recognized the copy of Real Estate Riches under my arm and consequently pulled her copy out from her desk. Her book had been highlighted, and notes had been scribbled in the margins it had been an inspiration to her as well. This book holds powerful recipes for prosperity. I had to meet this wizard of real estate called Dolf de Roos. After great effort due to scheduling conflicts, we met in Dallas. To his surprise I was a baseball player and not a basketball player, and to my surprise he was accessible and eager to teach a newcomer his strategies. Clearly whether you are on the baseball field or a field slated for real estate investing, life is a numbers game. Some days you score big, and others, well... vii

10 viii FOREWORD you don t; but if you practice hard, learn from your mistakes, stay focused, and above all have passion, then the numbers start to work in your favor and your success fuels even more success. I credit Real Estate Riches and Dolf de Roos as valuable guides that helped give me the confidence to form Newport Property Ventures. I began by investing in a small duplex in an emerging area of South Florida, which led to the acquisition of several other income-producing properties. With hard work and determination my projects and portfolio continue to grow with phenomenal returns. Dolf s principles are working strong! That Dolf has passion is apparent from the first few pages of this book. This passion and enthusiasm for his game is even more apparent when you meet him in person. Recently we met in New York where we once again reviewed the principles that lead to great success in a newfound sport from which I will never have to retire! August 2004 Alex Rodriguez, #13 M.L.B. American League MVP Founder and CEO, Newport Property Ventures

11 Praise for Real Estate Riches I have always been interested in property but have never had the courage to admit to myself that property is in fact a passion of mine and not just an interest. Your book, Real Estate Riches, has helped me make that final leap and as a result I have decided to pursue my passion and restructure my life to make more time for real estate investment. Paul Dinis, South Africa I read your book, Real Estate Riches, and I loved it. Thanks for breaking things down in such a simple fashion. I am now looking to get into real estate investing. Mike Desroches, New York I just closed my first Las Vegas property last week and want to thank you for pointing me in the right direction and giving me the tools to begin my investing. I feel like I have begun building my real estate dynasty! I am very happy; thank you so much!!!!!!!! Pamela, California Thank you so much for the great book Real Estate Riches. Moshe Mizrachi, California I have read Dr. Dolf de Roos book titled Real Estate Riches. Two weeks ago I bought my first rental flat, then a week later my first rental building (six flats). It s magic to create wealth out of thin air. Thank you for your inspiring books. L.C., France ix

12 x PRAISE FOR REAL ESTATE RICHES I bought your book Real Estate Riches and your course Property Investor s School and used the information to buy a $1.2 million commercial building. Thanks for all of the great information. I couldn t have done the deal without the information I learned from you. I used your advice to do the deal and immediately raised the building value by $160,000. Sam Beckford, Vancouver, Canada I have just finished reading your book Real Estate Riches. The information was helpful and encouraging. Thanks for your willingness to share your experiences. Along with my partner (older sister) I am a novice investor. Six months ago, we purchased our first property, a six-unit commercial building. Last week, we made an offer on a second commercial property. So far, it is exciting work. I hope that the excitement and profits continue! Mike W. Sanderson, Virginia I have just completed your book Real Estate Riches. What a great book. Brian Hunter, Boulder, Colorado I am a mother of four and awaiting my turn in real estate riches. (That was a great book; I m reading it again.) Because of the book Real Estate Riches, my husband and I felt bold enough to take over my parents property (they didn t want to deal with the mortgage anymore). We refinanced, took money out, and now are in negotiations to buy an investment property. Dolf de Roos helped us to think out of the box. Vivienne Piña, California

13 PRAISE FOR REAL ESTATE RICHES xi I have recently joined a real estate company and have read your book Real Estate Riches. I am a keen businessman, and after reading your book property makes a lot of sense. Thank you for the great inspiration. Rudi Maritz, South Africa I recently purchased one of your books (I already had Real Estate Riches). I just wanted to say that I am really enjoying them and I can t wait to actually get out there and utilize the principles. Thank you so much! Mark Smith, Kentucky I just wanted to pass along a thank-you for inspiring me to start my real estate investing career. I have been successful in one jointly owned short-term rental property. I am in the process of laying the basic foundation for residential rentals and hope to own my first one June Out of all the real estate gurus I ve listened to and read, you have reached me the most. The message I received from your books is a source of constant inspiration for me whenever I need it. I love your can-do attitude and upbeat personality. I hope you will continue to write and pass on your experiences. Patrick Mintel, Florida Just finished Real Estate Riches and enjoyed it very much. Can t wait to continue my search for the riches. Becky Moran, Erie, Pennsylvania I read your book Real Estate Riches, and found it both empowering and life changing. THANKS. You added value to my life. Wikus Strydom, Cape Town, South Africa

14 xii PRAISE FOR REAL ESTATE RICHES Thank you for your assistance. I greatly appreciate your time and the valuable information that you have bestowed upon me. This new thinking has changed the direction of my life. Thank you. Emily F. Henderson, California Dear Dolf, I bought your books I bought your tapes I bought your seminar I ve made millions because of you. Thanks. I listen, I learn, I do! Steve Gronlund, California

15 Acknowledgments My thoughts, theories, methods, mistakes, successes, wins, and learnings in real estate have been formulated over many years. Countless people have wittingly or unwittingly contributed to my thinking, from real estate agents, bankers, mortgage brokers, and appraisers to tenants, members of real estate investment associations, and thousands of investors (both budding and experienced) who have honored me by attending my events and who have forced me to expand my thinking. While it is impossible to acknowledge everyone, an array of people deserve and have my deep appreciation. If I have missed you, then I apologize in advance; know that my appreciation is real nonetheless. Sincere thanks go to Trevor Quirk, David Henderson, Mike Pero, Stephen Witte, Kevin O Gorman, David Grose, Charles Drace, Stephen Collins, Paul Wright, Ron Whiteley, David Thompson, Allen and Kenina Court, Robert Tybon, Dr. John Baen, Diane Kennedy, Tom Wheelwright, Ann Mathis, Kim Butler, Gene Burns, Andy Fuehl, Carrie Putman, Stefan Kasian, Cindy Kenney, Claudia Brelo, Ross Denny, Randy Carder, and Andy Driggs. On the publication front, I would like to sincerely thank my agent, Larry Jellen, for his vision and confidence. Laurie Harting and Mike Hamilton at John Wiley & Sons, Inc., are a delight to work with, as are Pam Williams and Ken Burlington at the National Association of Realtors. Finally, I would like to thank my parents for never having told me not even once You can t do that! xiii