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Dozens of residential properties can be taken over by you with zero, or very little ($100 or so), of your own cash—that is, with borrowed money. Let’s see how—right now. Truly, you can borrow your way to real estate riches in residential zero, or very low-cash, properties! “How can residential property make me rich?” you ask.
• Because more than 5 million families seek a new or different home each year.
• Hence, there is an enormous and growing market in residential properties of all kinds.
• The home people seek today might be an apartment, a singlefamily residence, a condo, a co-op, or a furnished apartment.
• But regardless of what type of home these 5 million+ families are seeking, there are only about 4 million new units built in a typical year!
Thus, there is a shortfall of some 1 million units per year. So you can easily see that apartments and homes are in great demand. And this demand continues to rise each year as more families are formed, people move to other areas, and people enter the United States from other countries. This is why you can make millions in residential income real estate property, using borrowed money to start and expand your holdings. Everyone needs a home!
Know Why Income Real Estate Is So Good for You
In the recent past, we figured the average apartment in a large city would bring in $500 per month in rent. Today, the average large-city apartment brings in considerably more than that. For example, here are a few rents I have seen in just the last few weeks:
• An ordinary three-room apartment, $1,800 per month.
• A “swinging” area studio apartment (2.5 rooms), $2,500 per month.
• A four-room apartment in an upper-middle class area, $4,000 per month.
Thus, my good friend, the day of the $500-per-month apartment is basically gone in many large cities. Today we should figure on at least an average of $1,000 per month. What does this mean to you?
Higher rents mean you can build your riches faster! Yes, I know that all costs related to a building have risen. Fuel, labor, insurance, and repairs all cost more. But all these expenses are provable and tax-deductible.
As the rents for residential real estate rise, your income will almost always increase. In many desirable large-city areas of the country, it is basically impossible to find an attractive apartment or home at a rent
How to Base Your Real Estate Riches on Borrowed Money
of $1,000 or less per month. You may find this situation a turnoff, but this is what is happening in the world of residential real estate today. I want you to take advantage of this situation.
So recognize, here and now, that the rent numbers of residential real estate have changed. And I am delighted to say they have changed in your favor!
Let’s see how you can start building your millions in residential real estate on borrowed money, starting right now.
Pick the Location for Your Future Properties
Your first step in making your millions in residential income property is to decide where you want to have your real estate property. A delightful aspect of real estate is that you can own property either in a local area or in a distant city or town. It really makes no difference so far as your income is concerned. Why is this?
Because income property is much the same, no matter where it is located—be it in New York, New York, Dubuque, Iowa, or San Francisco, California. People will happily rent, and pay for, clean, neat apartments. And if you attract families with two or three children, families in which the husband is at least a sub-professional, you will probably keep them as tenants for many years. Such tenants regularly pay their rent on time and do not give you any problems.
Let’s start you with local properties in the area in which you live. We’ll talk later about distant properties and how you can invest in them.
Local Properties Are Ideal for Beginners
I strongly recommend that for your first few properties you pick buildings near you. Why? Because then you can watch them as time goes on to see and learn about the typical problems you will meet. You will also learn how to solve these problems so you can apply the methods to buildings far from you at a later date.
It’s easy to pick properties near you. Just read the Real Estate Section For Sale ads in your local Sunday papers to see what is available. Make a list of :
• Typical prices.
• Cash down payment.
• Expenses of these properties.
You can get this information by calling the seller or by asking the real estate broker who is selling the property to provide you with an Income and Expense Statement for the property. By preparing a simple Summary Sheet, such as that shown in Table 2.1, you can become a local expert for income properties in your area. With this information in hand, you can easily judge how much money you will earn from a potential income residential property that you might buy.