Investing in Income Properties : The Big Six Formula for Achieving Wealth in Real Estate

Acknowledgments xi

Introduction 1

Part One The Basics 5

Chapter 1 Why Commercial Real Estate? 7

Real Value, Real Ownership, Real Estate 8

The Control Factor 10

Financing Options 10

The Leverage Edge 11

Tax Benefits 11

Access to Information 13

Easy Troubleshooting 13

Overcoming Fear 14

The Bottom Line 18

Chapter 2 Real Estate 101 21

What Is Real Estate? 21

Types of Income Properties 21

What Real Estate Can Do for You 23

The Search Begins 23

Purchase and Sale Contracts 24

Closing 25

Education 26

Real Estate Lingo 28

The Bottom Line 29

Chapter 3 Assembling the Team 31

The Broker 31

The Attorney 36

The Certified Public Accountant 38

The Bottom Line 41

Chapter 4 Getting the Money 43

Obtaining a Home Equity Loan 44

IRA Accounts 46

Cash Value of Life Insurance 47

Customized Creativity 47

The Use of Options 48

OPM 49

Ask Your Banker 49

Present Sacrifice for Future Benefits 50

The Bottom Line 52

Part Two The Big Six Formula 55

Chapter 5 Location: Planting Investment Roots 59

Evaluating Locations 60

Industrial Properties 68

Short-Term Gains and Declines 68

Long-Term Gains and Declines 69

The Bottom Line 70

Chapter 6 Building Quality and Design Efficiency: Ensuring the Long-Term Viability of Your Portfolio 73

Class A Buildings 75

Class B Buildings 76

Class C Buildings 76

Class B Apartment Buildings 77

Class B Retail Strip Store Centers 78

Class B Office Buildings 79

Industrial Properties 81

The Bottom Line 82

Chapter 7 Tenant Profile: The Right Fit 85

Factor No. 1: Rental Rate and Terms 86

Factor No. 2: Gross or Net Lease 87

Factor No. 3: Size of Units 87

Factor No. 4: Impact of a National Tenant 89

Factor No. 5: Right of First Refusal 90

Factor No. 6: Potential Condo Buyers 91

Factor No. 7: Parking Considerations 91

Factor No. 8: Undesirable Mix of Tenants 92

The Bottom Line 93

Chapter 8 Upside: Maximizing the Return on Your Holdings 95

Tenants Can Set the Price of a Building 97

Upside Strategies 98

The Bottom Line 107

Chapter 9 Financing: Choosing the Fiscal Formula That Matches Your Goals 109

Before You Begin: Your Credit Report 109

Financing Components and Dynamics 111

Appraisal 118

The Advantages of Dealing with Local Banks 118

Ideal Financing 121

Getting Your Loan Approved 122

Private Lenders 122

The Romance of Leverage 123

Infinity Return 125

All-Cash Buyers 126

Burn the Mortgage Quickly 127

Mortgage Brokers 127

Healthy versus Unhealthy Debt 127

The Bottom Line 128

Chapter 10 Price: Looking Beyond the Price Tag to See the Big Picture 129

The Price-Is-Too-High Syndrome 130

Things to Know 132

The Bottom Line 140

Chapter 11 Anatomy of a Big Six Deal 143

Adam’s Manor 143

The Sellers 144

Listing the Property 145

The Buyer 147

Setting the Stage 148

The Buyers’ Strategy 149

Sealing the Deal 152

Brokers Meet the Sellers 154

Now What? 161

The Bottom Line 162

Part Three Moving Forward 165

Chapter 12 Management and Leasing to Enhance Your Investment 167

Managing Apartment Buildings 170

Managing Small Retail Centers 175

Managing Small Bay Warehouses 179

Managing Office Buildings 183

The Bottom Line 188

Chapter 13 Condo Conversions: Big Money in Small Apartment Buildings 191

My Start in Condo Conversions 192

Criteria for Converting Small Buildings 195

Critiquing the Units 197

Announcing the Conversion 200

Announcing the Improvement Program 202

Handling the Unsold Units 203

Legal Requirements 204

Bradford Terrace: A Mini Case Study 205

The Bottom Line 211

Chapter 14 One Good Investment Is Worth a Lifetime of Labor 213

The Shift: by Jeffrey Cohen 215

I Came to New York: by Christine Marie 219

Love at First Sight: by Tony DeRosa 222

If I Never Made Another Deal: by Cliff Suchman 225

You Can Never Know Too Much: by Anthony Dilweg and Andy Roberts 228

I Made It in Buying: by Kenneth D. Rosen 231

The Bottom Line 235

Glossary 237

About the Author 247

Index 249