Real Estate H2o: Quenching Your Thirst in a Parched Economy

By John Dessauer

Real Estate H2O is a great book to use for beginners to more advanced investors in real estate. It delivers concepts and easy to grasp ideas so that the reader can implement them immediately and see results.

• Language: English
• Publisher: BookBaby
• Release date: Nov 15, 2015
• ISBN: 9781419699276

John Dessauer

John Dessauer; Pirate John has a rich history as an entrepreneur. He has been in a Managing Director/Owner position with companies in various industries, including: Environmental Services, Hospitality Services, Auto Services, Marketing, Education and Real Estate. Regarding real estate, John has transacted hundreds of deals in real estate in different sectors such as apartments, office buildings, retail, single-family homes and condominiums all within his personal portfolio. John has serviced other investors through his Brokerage and Asset Management firm Anton Agency/Anton Asset Management. Under John's direction, Anton Asset Management has managed and brokered over 2,000,000 of rental and retail square feet, which translates in over $100,000,000 in property values. He is a published author on 4 books on entrepreneurship and real estate investing. He has also hosted a nationally syndicated real estate investing show on Sirus/XM. John has a B.S. Degree in Biology and Business Administration/Economics from St. Ambrose University in Davenport, Iowa.

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Real Estate H20

Dessauer

Book Introduction: Why Main Street Beats Wall Street—Every Time

Water is fluid, soft, and yielding. But water will wear away rock, which is rigid and cannot yield. As a rule, whatever is fluid, soft, and yielding will overcome whatever is rigid and hard. This is another paradox: what is soft is strong. -Lao-Tzu (600 B.C.)

As I write this, I’m staring out on to the aquamarine surf on Key West, Florida, four blocks from my house, at the southernmost tip of the United States.

It’s got me thinking, looking out over the Atlantic, only 90 miles from Cuba and a completely different life.

Quite simply, water is life giving—and so is real estate.

Stick with me here. I know how crazy that may sound.

But think about it. You can’t live without water. You’ll die of thirst. Not only does it give you life, it gives you quality of life.

Water has a ripple effect, and so does real estate. Water also gives life, and supports and sustains it—just like investing in land and infrastructure.

The opposite is true, too. When you are in the corporate world you are dehydrating yourself. You are denying yourself benefits and powers of the same life-giving elements that water provides to our bodies.

By varying estimates, water covers between 70 and 80 percent of the earth. Since I started in real estate, I have calculated that real estate should comprise about the same percentage of your annual income.

And it can.

Facts About Water

– Roughly 70 percent of an adult’s body is made up of water.

– At birth, water accounts for approximately 80 percent of an infant’s body weight.

– A healthy person can drink about three gallons (48 cups) of water per day.

– Drinking too much water too quickly can lead to water intoxication. Water intoxication occurs when water dilutes the sodium level in the bloodstream and causes an imbalance of water in the brain.

– Water intoxication is most likely to occur during periods of intense athletic performance.

– While the recommended daily amount of water is eight cups per day, not all of this water must be consumed in the liquid form. Nearly every food or drink item provides some water to the body.

– Soft drinks, coffee, and tea, while made up almost entirely of water, also contain caffeine. Caffeine can act as a mild diuretic, preventing water from traveling to necessary locations in the body.

– Pure water (solely hydrogen and oxygen atoms) has a neutral pH

of 7, which is neither acidic nor basic.

– Water dissolves more substances than any other liquid. Wherever it travels, water carries chemicals, minerals, and nutrients with it.

– Somewhere between 70 and 75 percent of the earth’s surface is covered with water.

– Much more fresh water is stored under the ground in aquifers than on the earth’s surface.

– The earth is a closed system, similar to a terrarium, meaning that it rarely loses or gains extra matter. The same water that existed on the earth millions of years ago is still present today.

– The total amount of water on the earth is about 326 million cubic miles of water.

– Of all the water on the earth, humans can use only about three tenths of a percent of this water. Such usable water is found in groundwater aquifers, rivers, and freshwater lakes.

– The United States uses about 346,000 million gallons of fresh water every day.

– The United States uses nearly 80 percent of its water for irrigation and thermoelectric power.

– The average person in the United States uses anywhere from 80-100 gallons of water per day. Flushing the toilet actually takes up the largest amount of this water.

– Approximately 85 percent of U.S. residents receive their water from public water facilities. The remaining 15 percent supply their own water from private wells or other sources.

– By the time a person feels thirsty, his or her body has lost over 1 percent of its total water amount.

– The weight a person loses directly after intense physical activity is weight from water, not fat.

You’ll notice in reading my book that each chapter begins with a little anecdote or metaphor on the power of water and how it impacts our lives. So it goes with real estate. Just like the life-affirming benefits of water, real estate can literally keep us sustained and alive, in both a financial and lifestyle sense.

Centuries ago, the notion of crossing great, sweeping oceans was greeted with derision, akin to the existence of the Tooth Fairy or the ability of leprechauns to locate gold. Of course, as explorers from Columbus to Magellan demonstrated, it could be done. Now hardly a summer day goes by when a luxury liner doesn’t set sail from Miami or New York destined for some far off exotic locale.

I feel the same way about real estate. I’ve found—and you will too when you finish this book—that nothing is impossible with real estate. Sure, I get a lot of people at my talks and seminars that scoff at the notion of wealth-creation through real estate. They cite the stock market as the principle engine for financial growth today.

But if they studied the facts, they’d discover what I did—the stock market is no match for real estate as far as investment income goes.

Anatomy of a Failure

For tens of millions of Americans, the stock market is the only way to financial freedom.

The funny thing is, not too long ago middle-income people rarely participated in the stock market. Their retirement savings were usually handled through their employer’s pension fund. Social Security was regarded as a future financial cushion, and savvy workers made regular deposits into rainy day savings accounts at banks. Investments in capital markets were largely limited to the wealthiest earners or inheritors. But several major developments led to a dramatic increase in the proportion of the population that became participants in the stock market: (1) savers became investors; (2) mutual funds grew and blossomed; (3) Social Security began to look shaky; and (4) the rise of the Information Age. Let’s examine these happenings in more detail.

1. From Spenders to Savers. Fueled in part by the stock market’s double-digit returns—

approximately 22 percent in the 1990s—America, once a nation of savers, is being transformed into a nation of hook, line and sinker’d stock market investors, mostly in mutual funds. In 1940 there were fewer than 80 funds and their assets totaled $50 million. Twenty years later there were 160 funds and $17 billion in assets. At the beginning of the 21st century asset expansion in the mutual fund industry during two calendar years was greater than the industry’s total size in 1990. Most people in a sense are still spenders, they give their money over to a company/big business that spends it as they see fit. Where people think they are investing or saving, they are providing funds to big business, only to do it repeatedly every two weeks. What a gimmick. Notice, it’s not the person that buys the stock in most cases that gets rich, it’s the person that creates the stock that gets rich—another incentive to become a real estate investor.

2. Fund Frenzy. Much of the expansion of the mutual fund industry has been fueled by the rapid growth of assets held in retirement-designated accounts. At the industry’s origins back in 1970, mutual funds held total assets of about $50 billion worldwide. Today, the biggest mutual fund, Fidelity Magellan, boasts assets of more than twice that amount, and the industry as a whole is swarming with 7,000 funds holding some $3 trillion in investor assets.

In addition, the mutual fund industry has benefited from employers’ shift away from defined benefit plans to defined contribution plans, like 401(k) plans. Defined benefit plans saddled employers with greater costs of administration, required current funding, higher future liabilities, and extensive administrative requirements. The result has been a move toward defined contribution plans, which provide employees with more control over their retirement plans by allowing them to choose where their retirement money is to be invested. Companies have figured out the benefits of having the public fund their firms whether or not those same people buy any of their goods or services. This marketing job has been going on since the stock market was created.

3. Social Security Woes. Analysts differ as to the exact date, but many agree that Social Security, as it is currently structured, will be exhausted sometime in the twenty-first century, just as the Baby Boomers are retiring in full force. Realizing that Social Security will not be the safety net it once was, Americans are taking financial matters into their own hands by participating in the growth of the capital markets and financing retirement through equity rather than debt.

Real Estate: The Key to Fast, Efficient, and Rewarding Wealth

The end result?

A revolution in individual investing that leaves ordinary Americans at the mercy of a stock market that, as we have demonstrated above, holds the interests of the big banks and brokerage companies (corporate America) in higher regard than the average investor. After nearly two decades of relentless buying, more than half of all U.S. households own stocks either directly or through mutual funds. Those holdings are worth roughly $10 trillion, compared to about $5 billion in 1929, $940 billion in 1980, and $2.3 trillion in 1999 according to the U.S. Census Bureau.

Sure, individual investors have made great strides in recent years but, for many nonprofessionals, the stock market remains an impenetrable maze of confusing numbers. Lawmakers, the Federal Reserve, market analysts, and professional economists seem to talk in a foreign language. Just what is a J-curve? What are monetary aggregates, and why are fixed-income (bond) managers constantly stumbling over yield curves?

In my opinion, the entire stock market structure is more trouble than it’s worth.

Sidebar II: Kiyosaki Asks How Fast is Your Money Moving?

In Kiyosaki’s latest book, Who Took My Money? the best-selling author answers the question, What should I do with $10,000? Using exactly the same parameters of 5% interest, and a 7-year period, Kiyosaki invests the $10,000 in a stock mutual fund and in real estate. Here are the results:

Choice #1 – A mutual fund $28,142 (5.8% return)

Choice #2 – Real estate $273,198 (180.9% return)

The difference between choice #1 and choice #2 is that financial velocity is added to choice #2. He demonstrates that by using the $10,000 to borrow enough money to buy real estate property, the velocity of money factor enables him to turn $10,000 into $273,000. The velocity of money is so much faster with real estate because of the leverage that it provides. Kiyosaki’s point is this: You don’t make money by working harder you make it by making your money move faster.

Choose Your Destiny

That’s why, in this book you hold in your hand, I’m going to show you a better and faster way to create wealth. I’m going to show you a short cut to a happier lifestyle, where you’ll have more time to spend with your kids and family, and more money to secure not only your financial future, but theirs as well.

How would I know?

My name is John Dessauer and I’ve made millions investing in commercial real estate. As I said, I’m writing this introduction to my book from the comfort of my vacation home in Key West, Florida, with my kids splashing in the sun-soaked surf nearby.

I think it’s high time that everyone enjoys the same lifestyle I do. I also firmly believe that the key to achieving this lifestyle is to jettison the herd mentality of the stock market lemmings and chart a new course to wealth creation using real estate as your primary investing vehicle.

I’m hardly alone. Real estate investors like Robert Kiyosaki, author of Rich Dad, Poor Dad, are beginning to shed light on the shenanigans taking place on Wall Street and showing people how much faster and easier it is to change their lives, both financially and spiritually, by investing in real estate.

Throughout this book I’ll detail how the real estate market works. I’ll explain how, by owning real estate, you benefit not from one revenue stream, but from four revenue streams: cash flow, depreciation, amortization (tenants paying your debt); and appreciation.

Real estate is changing the way people receive their income from linear to passive—and that’s the easiest way to make money that I’ve ever found.

Inside these pages, we’ll cover each revenue stream more comprehensively, in particular…

Cash Flow – The amount of money left after you pay your expenses on the building and your debt service.

Depreciation – The gift from Uncle Sam that lets you earn money tax-free. Things like bricks and mortar and lights all depreciate from an accounting point of view. Because of that the government allows you to turn that into tax-free money.

Amortization – The action of your tenant paying down your debt, your interest, and the principal of the loan on your property.

Appreciation – That’s where property grows in value from natural or forced appreciation.

Each revenue stream, once clearly understood and comprehended, will change the way you think about retirement. By using other people’s money to leverage these revenue streams, you’ll set the foundation for a wealth creation plan that will have you financially secure in three-to-five years, instead of the 30 to-40 years it takes to get rich (if ever) on the stock market. Better yet, you’ll find that real estate is the key to a new world of freedom and security, one where you are the master of your own destiny. As the quote that I used to open this book shows, it’s choice—not chance—that determines your destiny. It’s time to start making better choices.

Sidebar: Myths About Real Estate

Remember the powers-that-be on Wall Street, the ones peddling misinformation to line their own pockets and take money out of yours?

They’re the same guys who contribute to the flow of misinformation about real estate investing. Expert after expert tells the public that real estate investing is too hard, to expensive, too intimidating, and most condescending of all, too complicated for the average American.

I’m here to say that’s all nonsense. The Wall Street guys have to tell you that. If you know the truth, which you will after reading this book, you’ll pick real estate over stocks and bonds any day of the week. Here are some of my favorite myths foisted upon the public by the finance industry and the media elite.

Myth #1: Stocks—not real estate—are the true path to wealth. Real estate investing has created more millionaires than ALL other industries combined including internet marketing, stock investing and mutual fund investing. In fact, according to the U.S. Budget Office, in the hottest bull market in history, more people ended up creating wealth through home ownership than through stock ownership.

Myth #2: Real estate is too expensive. Once you learn how to buy undervalued properties, you can find all types of people who will lend you their cash. You can find these people at your local real estate investor association, at the bank, or even from the seller. In this book I’ll show you how to invest in real estate using all kinds of financing.

Myth #3: Bad credit? No real estate. Like Myth #2, once you learn how to find undervalued properties, you can find all types of people who will lend you their credit, especially if the property has significant equity. Additionally, you can also use an option to control the property and this technique doesn’t require that you have good credit.

Myth #4: Real estate means expensive renovations. While you can indeed make good money doing rehabbing, you can make even more money working with properties in suburban areas that need little renovation. I’ve learned to look for properties in good neighborhoods, with good schools, and low crime rates. In other words, places where people actually want to live.

Myth #5: The real estate market is too cyclical. It’s not all about Manhattan or Malibu—even remotely. The reality is that once you learn how to buy undervalued properties, you can make money regardless of what the local or national market is doing. Remember the market rule: Buy low, sell high. Most people invest backwards.

Myth #6: Real estate is too risky. You actually have more control when buying real estate than when you buy stocks and bonds. You can negotiate prices, create advantageous financing plans, and depend upon other people’s money—in the form of rent checks—to cover your own payments. In the end, the only myth about real estate that makes any sense is that people aren’t interested in it. As this book will attest, real estate investing isn’t a luxury, it’s a necessity.

INTRODUCTION END

Real Estate H20

Dessauer

Chapter One: Choose to Be Free

Water is the driver of Nature. – Leonardo da Vinci

Remember being at the beach or at the lake as a kid? Feeling the sun beat down on your back as you poised on the dock or at the edge of the sand, ready to dive in? Maybe you felt a tiny little shiver as a breeze picked up, and felt your entire body tingle in anticipation of that first cold splash in the bracing blue water. Remember what a liberating feeling that was? Have you ever felt more alive than you did at that moment?

That’s how I felt when I embarked on a career as a real estate investor. Alive, excited, with adrenaline coursing through my body and firing on all cylinders.

I saw real estate as a wonderful opportunity, just like I did as a 10-year-old perched on the edge of a dock—a wide open lake in front of me, all to myself.

Unfortunately, not everyone is feeling so liberated. In my line of work, I see people of all different stripes—smart people, not-so-smart people, optimistic people and pessimistic people, hard working and lazy people. The one thing that separates the ones who succeed in life and the ones who don’t is the ability to recognize opportunity and act accordingly.

Let me tell you a story about opportunity.

Once upon a time there were two market researchers who worked for a giant shoe company. Both were