What No One Ever Tells You About Investing in Real Estate : Real-Life Advice from 101 Successful Investors (What No One Ever Tells You About Investing in Real Estate)

2004·2.65 MB·English

by  Robert J. Hill

This publication is designed to provide accurate and authoritative information in re-
gard to the subject matter covered. It is sold with the understanding that the pub-
lisher is not engaged in rendering legal,accounting,or other professional service. If
legal advice or other expert assistance is required,the services of a competent pro-
fessional should be sought.
Vice President and Publisher:Cynthia A. Zigmund
Acquisitions Editor:Mary B. Good
Senior Project Editor:Trey Thoelcke
Interior Design:Lucy Jenkins
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©2005 by Robert J. Hill,II
Published by Dearborn Trade Publishing
A Kaplan Professional Company
All rights reserved. The text of this publication,or any part thereof,may not be re-
produced in any manner whatsoever without written permission from the publisher.
Printed in the United States of America
05 06 07 10 9 8 7 6 5 4 3 2 1
Library of Congress Cataloging-in-Publication Data
Hill,Robert J.,1973–
What no one ever tells you about investing in real estate :real-life advice
from 101 successful investors / Robert J. Hill,II.
p. cm.
Includes bibliographical references and index.
ISBN 0-7931-9516-0
1. Real estate investment. 2. Real estate management. 3. Landlord and
tenant. I. Title.
HD1382.5.H548 2005
332.63′24—dc22
2004015646
Dearborn Trade books are available at special quantity discounts to use for sales
promotions,employee premiums,or educational purposes. Please call our Special
Sales Department to order or for more information at 800-621-9621 ext. 4444,e-mail
[email protected],or write to Dearborn Trade Publishing,30 South Wacker Drive,
Suite 2500,Chicago,IL 60606-7481.
In memory of my grandfather, Burkhardt John Zoeller, Sr., a
welder and real estate investor who preached the value of education,
and in honor of the children of real estate investors everywhere—
you are wise beyond your years.

C O N T E N T S
Foreword xi
Preface xiii
Acknowledgments xvii
Author’s Note xix
PART 1 LANDLORD WOES AND VICTORIES 1
1. Landlord, Beware 3
2. Casual Chat Leads to New Tenant 4
3. Free Rent Pays Off in Unusual Way 5
4. Consider Rent-to-Own for Good Tenants 6
5. Who Moved In? 8
6. Keep Tenants and Property Managers on Their Toes 9
7. What to Do When Tenants’Lives Change 11
8. References May Not Be What They Seem 13
9. Make Sure the Heat Is On 14
10. What If Your Tenant Disappears? 15
11. The Mysteriously High Water Bill 16
12. The Case of the Leaking Toilet 17
13. Evicting Delinquent Tenants 18
14. When Should You Start Evicting? 20
15. Collecting on Bad Checks 21
16. The Downside of Property Management Firms 22
17. How to Get Action from Late-Paying Tenants 26
18. Offer Tenants Upgrade Features 27
v
vi Contents
19. Codes and Rules—For You and against You 28
20. Section 8 Rentals in Low-End Neighborhoods 30
21. Fire Leads to Explosion but No Lawsuit 33
22. The Necessity of Background Checks 34
23. Dealing with Cultural Differences 35
24. No Pleasing Her, So Why Try? 36
25. Higher Deposit Helps Prequalify Tenants 38
26. Allowing Pets Brings In More Money 38
27. The Search for the Hovering Stench 39
28. Don’t Neglect Eviction Due Process 40
29. The Joys of Being a Hands-on Landlord 41
30. Crucial Step:Check Applicants’Credit 43
31. Short-Term Disaster, Long-Term Gain 46
32. Head-on Collision with Reality 48
PART 2 FINDING GOOD INVESTMENT DEALS 57
33. Hidden Signs, Hidden Deals 60
34. Looking Around Pays Off 61
35. Investment Cruising 62
36. Motivation First, Location Second 63
37. Know the Property’s History 64
38. Bailing an Owner Out of a Tough Situation 64
39. Why Networking Contacts Are Crucial 67
40. Go with Your Instincts 68
41. A Mess for the Seller, a Deal for You 69
42. Buying a Duplex 101 70
43. Modular Homes Can Be Viable Investments 75
44. Location, Location, Location 77
45. The “Real Deal”at Auctions 78
46. Creative Mortgage Surgery 79
47. Stay Open to New Buying Possibilities 81
48. You Don’t Always Get What You Ask For 82
49. Keep the Door Open When Opportunity Knocks 83
Contents vii
50. Luck Can Work on Your Side 85
51. Win-Win for Cat Lady and Investors 86
52. Low Bid Can Forfeit Quick Sale 88
53. Getting Facts Lands Young Investor a Home 89
54. Always Time to Reconsider 91
55. A Lucky Abandonment 91
56. The Day It Paid to Get Bored 92
57. Finding Deals Close to Home 94
PART 3 FINANCIAL IDEAS 99
58. Turn to Credit Card Advances in a Pinch 101
59. Create Reserve Accounts 103
60. Understand SBA Regulations from the Start 104
61. Quick Responses, Ready Funds 105
62. The Value of Earnest Money 106
63. Plan for Contingencies 107
64. The Perils of Seller Financing 108
65. Backwards Math 110
66. Put 20 Percent Down 111
PART 4 CAUTIONARY MEASURES 113
67. Beware of Changing Rules and Regulations 116
68. Appearances Can Fool You! 118
69. Land Surveys Tell All 118
70. Run the Numbers but Trust Your Intuition 119
71. Talk Over Your Plans with Neighbors 121
72. Be a Wise Consumer of Insurance 123
73. Liability Insurance Is a Necessity for Landlords 125
74. Getting the Right Insurance Coverage 126
75. Don’t Ever Skip Inspections! 127
76. Beware When Entering “Vacant”Properties 129
77. When Long-Term Renters Have Too Much Control 130
78. Set Aside Funds for Possible Legal Actions 131
viii Contents
79. Foreclosure Brings Surprises 133
80. A Cruel April Fool’s Day Joke 135
81. An Inappropriate Trade-Out Offer 137
82. Know What You Buy—Inside and Out 138
83. Confirm Your Agent’s Market Research 140
84. Foreclosures:You Never Know What to Expect 141
85. Rose-Colored Glasses Don’t Serve You 143
86. Cover Yourself against Title Mix-Ups 145
87. Protection against Title Search Errors 146
88. Dealing with Troublemakers 148
89. Call in the Authorities 150
PART 5 LESSONS IN REHABILITATION 155
90. To Repair or Not to Repair 157
91. Your First Fixer-Upper Is the Worst 158
92. Owning Rehabs Isn’t Always Roses 164
93. Novice Investors’Rehab Mistakes 164
94. Is the Right Work Getting Done? 166
95. Turning a Lemon into Lemonade 168
96. The Value of a Skilled, Steady Handyman 169
PART 6 YOUR ROLE AS AN INVESTOR 173
97. Investing in Real Estate versus Stocks 175
98. Looking Back with Some Regret 176
99. Flexibility and Creativity Pay Off 177
100. Appearance Affects How People Perceive You 178
101. Knowing Enough 179
102. Select a Team to Support Your Style 180
103. A Bigger Role in Life 182
104. Check Your Beliefs about Money 187
105. Sellers Don’t Reject You, They Reject Offers 188
106. Valuing a Knowledgeable Property Manager 189
107. Teach Your Children Well 190
Contents ix
108. White Knight of Experience 191
109. Speak Kindly of Competitors 194
110. Solving Problems without Breaking Rules 195
111. Investor as Rescuer 196
112. Confessions of a Quadriplegic Investor 197
Suggested Reading 201
Internet Resource Guide 203
Contributors 207
Index 211