Wealth Amplifier Step 1: Small Buildings, Incredible Cash Flows

By Gunnar Dylenn

This book details how you can use various investment techniques to profit from small-building real estate.

• Language: English
• Publisher: Gunnar Dylenn
• Release date: Mar 22, 2012

Book preview

Wealth Amplifier

Step 1: Small Buildings, Incredible Cash Flows

Gunnar Dylenn

Smashwords Edition

Copyright 2009 Gunnar Dylenn

Smashwords Edition License Notes

This ebook is licensed for your personal enjoyment only. This ebook may not be re-sold or given away to other people. If you would like to share this book with another person, please purchase an additional copy for each recipient. If you’re reading this book and did not purchase it, or it was not purchased for your use only, then please return to Smashwords.com and purchase your own copy. Thank you for respecting the hard work of this author.

Disclaimer of Liabilities

It is the belief of the author that the principle person responsible for your personal finance is you. Although the author tries to bring accurate information, under no circumstances can or does the author warrant the completeness or accurateness of the content found in this course or its usefulness for any particular purpose. Therefore, the author makes absolutely no promises or warranties, nor accepts responsibility for any liabilities, injuries or damages that you may cause or incur when using methods, principles or other information provided within this course. The author strongly encourages the user to research all information provided within this course. None of the methods, principles, or other information provided to the user is meant to be used in replacement of professional advice. It is solely up to the user to determine if the methods, principles, and other information are safe and suitable for their particular situation.

Reproduction of any part or translation of any part of this course without the expressed written permission of the copyright owner is unlawful and will be prosecuted to the fullest extent of the law.

Dedication

This course is dedicated to the young in spirit,

Adventurous by nature,

And people bold enough to reach for something

Better within themselves.

To Mary Nellie, thanks for all that you did for me.

To the late great keep rocking even as you rest in peace

Table of Contents

Introduction

Chapter 1: How to Start

Chapter 2: Education

Chapter 3: Learning the Market

Chapter 4: Evaluation

Chapter 5: What Not to Buy

Chapter 6: Where to Find Properties

Chapter 7: Negotiation

Chapter 8: Finance

Chapter 9: Wealth Amplifier

Chapter 10: Property Management

Chapter 11: Taxation

Chapter 12: Partnership

Chapter 13: Motivation

Chapter Quiz Answers

Introduction

I would like to congratulate you on purchasing my course. I know it is the finest small property investment course out there today. I believe that my course will give you the knowledge that will empower you and help you to succeed. I also feel that my course is the most realistic, down to earth, and easiest to understand that is available today. It’s not vague theories that only apply to 1% of the deals out there. My course is broad enough to give you the basics and detailed enough to get you to the place you want to go.

My Story

I guess as I look back my interest in real estate started back in the 1980’s. I would watch the real estate infomercial that was popular back then. It really clicked to me and seemed real because you can see and touch real estate. My grandmother owned a house that was free and clear. For several years she rented her house out and moved in with her parents who were elderly and needed to be cared for. I saw power in owning real estate that was free and clear and renting it out for money, especially if you owned a lot of them. I remember asking my grandmother why she didn’t buy more. She would laugh and say things like she was too old or it was too much trouble. Looking back now and knowing her background I can understand why she didn’t buy more.

When I was growing up my family moved around a lot. This was due to unstable job markets. I was fortunate enough to live in many different places and I lived in a lot of apartment complexes.

When I turned 18 I was unprepared for life and had no marketable skills. The thought occurred to me at that time that if I owned an apartment building I would always have a place to live. This is so ironic; here I was trying to figure out how to get an apartment building when I didn’t know where my next meal was coming from. I knew at that point in my life I couldn’t pull myself up, so I enlisted in the military as a lot of young guys do.I got caught up in the day to day grind of life and my apartment dreams sort of went to the back burner.

My love and passion for real estate never died. I bought my first house while in the Navy and lost money on it. I guess everything was going to be the hard way for me. I once heard someone say that the road of the maverick is never easy. I can honestly and truly confirm that. By the way, see what happens without an education, focus, and planning. Instead of turning away from real estate because I got burned by it inspired me to learn more about it. From the very beginning my focus was very narrow on apartment buildings only. Back then there weren’t classes on buying apartment buildings. I had no idea what a rent multiplier was, net operating income, or what the effective gross income was. I learned a great deal about real estate on my own although I did manage to go to college and get a degree in real estate. Throughout this course I will repeat over and over how important additional education is. Real estate covers such a broad spectrum of things you need to know or should know.

After I finished school I got into managing property and I started going down the road of becoming an investor. I wanted to invest in big apartment buildings but could never make it materialize. I needed a spring board into the big time. I chose to invest in smaller apartment buildings and to work my way up. This course comes from my early experiences in investing and is meant to paint the picture of owning, investing, and managing 2-4 units.

Why 2-4 Units

People often ask me, Why are 2-4 unit apartment buildings the best investment for small time investors? That’s pretty easy. They are prevalent in the market place. 2-4 unit apartment buildings are also easy to manage and maintain. The primary reason for investing in 2-4 units is that they are considered a residential loan instead of a commercial loan. It is like buying residential property. When you buy 2-4 units you are covered under the residential disclosure act. This basically means if something is wrong with the property you have recourse through the courts. Investing in 2-4 units is superior to investing in houses for a couple of reasons. When you have one vacancy in a 4 unit building, that is a 25% vacancy rate with money still coming in. In a home when it is vacant that is 100% vacancy with no money coming in. When you have a rent increase of $25 per unit you get a $100 in rent increases. In a single family house, a $25 increase is just $25. When you get into 5 units and above you are considered a sophisticated investor and the courts view it as buyer beware. The owner of 5+ units doesn’t have to tell you anything and an inspector is not encouraged. You’ll have to fix whatever is broken if it is not discovered during negotiations. Do your homework if you decide to invest in larger properties. I also strongly recommend consulting with a real estate attorney and a tax accountant. There are many legal and financial ramifications to investing too numerous to cover in detail, although this course will help you to know what questions to ask.

What Is This Course Really About?

In the first chapter I talk about how to get started as an investor. It will give the blueprints to become a successful investor. It will discuss how to look professional and how to be professional. I will also discuss budgeting, credit worthiness and ask the question where do you see yourself in five years?

The following chapter is about education. There’s no way to get around it. You should see education as your friend. I will tell you how to choose a community college and the importance of it. I discuss working with brokers, owners, and the importance of getting a license and earning commissions.

In the Learning the Markets chapter, I’m going to teach you about the cyclical nature of real estate, what rent surveys are, where to find vacancy rates, how to categorize property, and what is the significance of days on the market. I’ll also discuss how to classify and evaluate neighborhoods.

In the next chapter called, Evaluation, I will teach you some of the tools you need in order to know what to pay for a property. That is the bottom line. I will also discuss what some of the real estate investing terms are. Evaluation is just as important as the financing in buying 2-4 units.

The Evaluation chapter is followed by the, What Not to Buy chapter. This is a powerful chapter about how to avoid many of the pi T/F?alls in real estate. Many people have had to learn this the hard way. I am one of those people. Buying the wrong property that is hard to rent or sell can be a very costly mistake.

Next is the chapter, Where to Find Properties. Most people think you just go to a broker or an agent and they tell you what is on the market. I’ll teach you key places to look for real estate and how to get people who own real estate to come to you. This will teach you how to capitalize on other people’s time and money.

Negotiation probably causes the most anxiety in buying real estate. You always want to know if you’re getting the best deal or are you being taken to the cleaners. I’ll show you how to manipulate the price and pay no closing costs up front. I’ll explain how to get rid of a bad tenant legally before you buy it. I will discuss how everything is negotiable in real estate.

Finance is one of the most important aspects of buying real estate. It doesn’t matter how low the price is if you end up paying out the nose in points and high interest rates. You will end up broke. I will discuss no money down loans and how to earn money at the back end of the deal. I will show you very creative ways to finance property usable in the real world.

The Wealth Amplifier chapter is where I tie it all together. This will be a powerful strategy that will allow you to amplify your wealth. I’ll discuss what kind of loans to get for what periods of time. I will show you the power of making money off of borrowed money.

Property management is one of the most feared aspects of owning rental property. What I’ve done is put my many years of experience in easy to follow steps from getting an apartment ready to rent, advertising, screening tenants, and move-in day. This chapter will help eliminate some of the fears associated with property management.

Taxation is probably the least liked subject in America today. In real estate investing, owning rental property has benefits when it comes to taxes. Some of the tax breaks are discussed and you are encouraged to seek the advice of an accountant.

The next chapter is on Partnerships. I will discuss the benefits, the pi T/F?alls, where to find a partner, and what kind of partnerships there are. An attorney is also encouraged when a partnership is being formed and maintained. I’ll teach you the proper methods to protect your interests.

Motivation is the final chapter and some of you may be wondering why this chapter is in the course. It wouldn’t be complete without addressing the mind. I will discuss the importance of focus, patience, drive, and understanding it in the real estate business and in your personal lives.

For many years I’ve helped people invest in real estate. I’ve taught from the old to young, and experienced to inexperienced. The inspiration for this course came to me from an experience I had with a younger professional. He came to me for consultation on buying real estate. He wanted to invest in real estate but didn’t know where to start. He had been in the military and had a VA certificate. I suggested that he buy a 4-plex and rent out the units, but owner occupy one of the units. He could have bought the 4-plex with a zero down payment. I tried to lay the foundation but he could not see the full picture. He would have basically lived for free and then been able to save up to buy a house if he wanted to. He could have bought the house with as little as 3% down. Then he could put seconds on both properties and then he would have been in position to buy a really big property. He looked around a while and would come to me with questions about loans, structuring deals, evaluating real estate, and negotiating deals. However, he seemed stuck. Looking back I think he let his fears about real estate get the best of him. I didn’t see him again for about six months. I tried repeatedly to call him and I also E-mailed him. When I finally managed to talk to him he had bought a big house in a C- neighborhood. This will be explained in the Evaluation chapter. He had rented out the extra rooms to his friends and was living for free. However, he was dissatisfied. His roommates were hard on the unit, not paying their rent on time, and he missed his privacy. He also wished he had taken my advice. This experience made me think that there had to be another way to get the investing information I had to help others learn the skills needed to be successful. I then realized I needed a course so that people could see the vision of my plan. I truly care for people and want to enrich their lives.

I have a few thoughts about real estate gurus and real estate agents. When I first committed to writing this course I did a lot of research on the internet. I wanted to see what kind of information they were writing about and whether or not my information was different. I knew there was a wide market of people I could reach with the knowledge I wanted to impart. I started watching infomercials. You know the people you see on television late at night. What I did was when these people would come to town I would go to their seminars.I would arrive about an hour early and observe. I wanted to know what kind of people they spoke to. I would write down notes about the cars in the parking lot and the people who went in. I have found that when you go to these free seminars they basically show you the infomercial that got you there and then would give about a sixty minute presentation where they want you to pay thousands of dollars to go to their workshop or boot camp. Personally, I think these gurus have made a lot of money with no real intention to teach anyone about self- improvement, the market place, and the real estate industry. I think they are greedy and all they do is encourage ignorance, while filling people’s minds with unrealistic expectations. It’s a shame because they had an opportunity to really try to improve people and the industry. No one reaches that many people and they are losers. It’s just sad that they wasted all that energy and other people’s dreams on defective products.

All through this course you will hear me encourage you to become a licensed real estate agent or broker. I think it is important for you to represent yourself and get paid commissions for your purchases. The problem with today’s agents and brokers is that they’re products of the real estate industry. You either perform or you go hungry. The real estate industry is like a revolving door. People are always going into real estate and people are always going out of real estate. It has a high turn over rate in the industry. People have told me that within five years, 95-98% of the people in real estate will get out of it. The good part about real estate agents and brokers is that they make the market place more proficient by helping the novice investor through the process. In other words, it is safe to say that the general population does not know anything about real estate and without help they would muck up everything from the real estate system to the judicial system. On the other hand, they can be a handicap to the investor. You will be approaching deals from a non traditional way which can frustrate your agent and you. You should get paid for pushing your own paper. That could be a lot of money for filling out your own contracts. In my opinion, agents and brokers can be short sighted by being blinded by the agency’s cookie cutter approaches to buying, selling, and making money in the real estate industry. You and I as investors know that there are more approaches than the cookie cutter approaches they’re used to. There is a saying in real estate that says 3% of real estate agents make 97% of the money. I believe this to be true. The handful of agents and brokers that are successful year after year are the ones that know how the game is played. They understand what people purchasing homes and investors are looking for. I’m not trying to trash agents and brokers or say that they don’t earn the money they earn for commissions. I’m saying that in my experience, nine times out of ten they get in the way more than they are of help to the investor. Commissions are supposed to be negotiable, however, rarely if ever are they really negotiable. Most of the time, the seller pays a 6% commission for the sale of a home. Generally speaking 3% goes to the buyer’s broker and 3% goes to the seller’s broker. Just know that when you see an agent or broker in five years they may not be in the industry anymore. Take this with a grain of salt.

I hope as you’ve read through this introduction that it only fuels your desire to learn the material in this course. I really have put everything I know into this course and feel it is the best course available for investing in 2-4 unit apartments. I encourage you to read and re-read the chapters, listen to the CDs in your car on the way to work or at the gym. Every time you read or listen to this course you will discover something new and useful in it. I am presenting this tool to you to use as you will.

In my course I encourage you to improve yourself with some general guidelines. I don’t know how you heard about my course; whether it was through my web page, the internet, the newspaper, on TV, or through some other form of advertising. I want you to know that I created this course from the kindness in my heart, honestly trying to help people attain a better place to live, an enriched life and how to make the industry a better place