Emerging Real Estate Markets: How to Find and Profit from Up-and-Coming Areas

243 Pages·2007·1.23 MB·English

by  David Lindahl

EEmmeerrggiinngg
RReeaall EEssttaattee
MMaarrkkeettss
How to Find
and Profit from
Up-and-Coming
Areas
D L
AVID INDAHL
JOHN WILEY & SONS, INC.

EEmmeerrggiinngg
RReeaall EEssttaattee
MMaarrkkeettss
How to Find
and Profit from
Up-and-Coming
Areas
D L
AVID INDAHL
JOHN WILEY & SONS, INC.
Copyright©2008byJohnWiley&Sons,Inc.Allrightsreserved.
PublishedbyJohnWiley&Sons,Inc.,Hoboken,NewJersey.
PublishedsimultaneouslyinCanada.
Nopartofthispublicationmaybereproduced,storedinaretrievalsystem,ortransmitted
inanyformorbyanymeans,electronic,mechanical,photocopying,recording,scanning,
orotherwise,exceptaspermittedunderSection107or108ofthe1976UnitedStates
CopyrightAct,withouteitherthepriorwrittenpermissionofthePublisher,or
authorizationthroughpaymentoftheappropriateper-copyfeetotheCopyrightClearance
Center,Inc.,222RosewoodDrive,Danvers,MA01923,[phone],fax(978)
646-8600,orontheWebatwww.copyright.com.RequeststothePublisherforpermission
shouldbeaddressedtothePermissionsDepartment,JohnWiley&Sons,Inc.,111River
Street,Hoboken,NJ07030,[phone],fax[phone],oronlineat
http://www.wiley.com/go/permissions.
LimitofLiability/DisclaimerofWarranty:Whilethepublisherandauthorhaveusedtheir
besteffortsinpreparingthisbook,theymakenorepresentationsorwarrantieswithrespect
totheaccuracyorcompletenessofthecontentsofthisbookandspecificallydisclaimany
impliedwarrantiesofmerchantabilityorfitnessforaparticularpurpose.Nowarrantymay
becreatedorextendedbysalesrepresentativesorwrittensalesmaterials.Theadviceand
strategiescontainedhereinmaynotbesuitableforyoursituation.Youshouldconsultwith
aprofessionalwhereappropriate.Neitherthepublishernorauthorshallbeliableforany
lossofprofitoranyothercommercialdamages,includingbutnotlimitedtospecial,
incidental,consequential,orotherdamages.
Designationsusedbycompaniestodistinguishtheirproductsareoftenclaimedas
trademarks.InallinstanceswhereJohnWiley&Sons,Inc.isawareofaclaim,theproduct
namesappearininitialcapitalorallcapitalletters.Readers,however,shouldcontactthe
appropriatecompaniesformorecompleteinformationregardingtrademarksand
registration.
ForgeneralinformationonourotherproductsandservicespleasecontactourCustomer
CareDepartmentwithintheUnitedStatesat(800)762-2974,outsidetheUnitedStatesat
[phone]orfax(317)572-4002.
Wileyalsopublishesitsbooksinavarietyofelectronicformats.Somecontentthatappears
inprintmaynotbeavailableinelectronicbooks.FormoreinformationaboutWiley
products,visitourWebsiteatwww.wiley.com.
Lindahl,David.
Emergingrealestatemarkets:howtofindandprofitfromupandcoming
neighborhoods/DavidLindahl.
p.cm.
“PublishedsimultaneouslyinCanada.”
ISBN978-0-470-17466-1(cloth)
1. Realestateinvestment. I. Title.
HD1382.5.L552008
332.33’24—dc22
2007016851
PrintedintheUnitedStatesofAmerica.
10987654321
To my parents, Barbara and Carl Lindahl, for sharing your
endless wisdom, support, and encouragement
for all the years of my life.

Contents
Acknowledgments xi
Chapter 1
Real Estate Emerging Markets: Your Ticket to Great Wealth 1
Investing with the Four Phases of the Real Estate Market Cycle 2
What Most Real Estate Investing Books Leave Out,
or Don’t Know 3
Avoiding Real Estate Losses When the Market Turns Down 4
Discover the Path of Progress, and Get Wealthy 4
Could a Great Emerging Market Be Right under Your Feet? 5
Why Most People Can’t Recognize An Emerging Market in
Their Own Backyard 5
How I Discovered the Power of Emerging Markets 6
How to Predict the Hottest Future Growth Areas 8
How Similar Are Real Estate and Stock Market Investing? 8
Chapter 2
How to Identify Emerging Markets Using My “Market Phase”
Method 11
How to Invest in Each Phase of the Market 11
What You Need to Know about the Buyer’s Market Phase I 12
The Tremendous Importance of Job Growth 14
How to Invest in a Buyer’s Market Phase I 15
What You Need to Know about the Buyer’s Market Phase II 16
How to Invest in a Buyer’s Market Phase II 18
What You Need to Know about the Seller’s Market Phase I 19
How to Invest in a Seller’s Market Phase I 21
What You Need to Know about the Seller’s Market Phase II 22
How to Invest in a Seller’s Market Phase II 24
More on Emerging Markets 25
Characteristics of the BEST Emerging Markets 26
v
vi CONTENTS
Chapter 3
Goldmines and Landmines in Emerging Markets 29
The High Cost of Bad Advice 29
Local Investments Can Be Highly Profitable 30
Insights I Gained from the Boston Market 31
Earning Positive Cash Flow 31
Buying below Replacement Cost 32
Knowing When to Move to Another Market 32
The Importance of Courage 33
How to Manage Out-of-Area Properties 34
The Incredible Wealth-Building Power of 1031 Exchanges 35
The Compounding Factor 37
Following the Rules to Enjoy the Benefits of a 1031 Exchange 37
Emerging Markets Are NOT the Same as Hot Markets 39
Why Both Employers and Employees Prefer Emerging Markets 39
Why It Takes Less Money to Get Started in Emerging Markets 40
The Hardest Part of Investing in Emerging Markets 42
Chapter 4
Getting Your First Deal in an Emerging Market 44
Secrets of Great Wealth Creation 46
Where You Should Start 46
The Supreme Importance of Time Management 48
How to Save Time and Money When Investing
in Emerging Markets 48
Secrets of Successful Direct Mail Campaigns 50
Working Successfully with Agents 52
More Details on Working with Agents 53
Finding Great Investment Properties on the Internet 54
How Research Can Help You Dominate an Emerging Market 56
How to Find a High-Quality Management Company 58
The All-Important Path of Progress 58
How to Determine Where and When to Buy 59
How to Find the Money You Will Need 60
Chapter 5
HowtoJump-StartYourWealththroughSingle-FamilyInvestments 63
Step-by-Step to Your First Payday 64
Get the Leads Flowing In 64
Where to Find Out-of-Town Owners 65
What the Letters Should Say 66
CONTENTS vii
Screening the Deals 67
How to Answer the Calls 68
Making Offers 70
How to Approach the Seller with Your Offer 72
Tie Up the Property 73
Find Buyers 73
Assign the Contract and Collect Your Money 74
Chapter 6
Multi-Family Investing: YOU Can Make Millions,
My Hands-Off Way 76
Cash Flow Is King 77
Positive Cash Flow in Action 78
Economies of Scale 79
Start Investing Part Time 79
Who Pays for the Property Manager? 80
How to Get Lower Risk and Larger Returns 81
TwoWaystoExplodeYourWealthwithMulti-FamilyProperties 82
Finding the Best Use of Your Profits 82
How to Do Fewer Deals and Make More Money 84
How to Close More Deals with Creative Financing 84
Multi-Family Properties Have One Other Major Advantage 85
Chapter 7
How to Find Diamonds in the Rough 88
The Wealth-Building Power of Value Plays 88
How to Find—and Profit from—Burned-Out Landlords 89
A Secret Hunting Ground for Finding Burned-Out Landlords 91
VariationonaTheme:TheLandlordWhoHasJustHadEnough 92
A Case Study in How to Deal Successfully with a
Burned-Out Landlord 93
How to Avoid Management Nightmares 95
Red Flags in Dealing with a Property Management Company 96
How to Acquire 100 Units with Your First Deal 101
Properties that Need Repair: Polishing Those Diamonds 103
A Repositioning Success Story 104
Solving the Problem of High Vacancy ...Once and for All! 106
More on High-Vacancy Properties 107
How the Profit Multiplier Works 108
How to Get a Steady Pay Raise 109