Abcs of Real Estate Investing:

ABCs of Real Estate Investing: The Secrets of Finding Hidden Profits Most Advisors Miss

According to the book the ABCs of Real Estate Investing: The Secrets of Finding Hidden Profits Most Advisors Miss, it is a myth that some investors seem to have the so-called Midas touch of investing, while others do not. (9) Rather than attempting to intimidate with impressive-looking ledgers of facts and figures, ordinary investors are encouraged to read this book for concrete suggestions of how they can enter the real estate market, how they invest wisely and charge the appropriate rents for their area so they can recoup on their investment, as well as glean some general personal and motivational strategies. True, in "every business and every industry there are people who just seem to drip with success," states the introduction (1) but this book provides the reader with the practical steps to emulate such people, people who seem to have the uncanny ability to know the right properties to invest in, and thus have the power to become their own bosses, and live as they chose to live.

The book is part of the famous Rich Dad, Poor Dad business book series by investment guru and advisor Robert T. Kiyosaki. Kiyosaki also provides the introduction to the book, and frames the advice given by the author Ken McElroy as part of his larger investment strategy. Real estate appraiser Ken McElroy assumes that the reader has the same goals as those who follow the Rich Dad, Poor Dad gospel of wise investment, personal empowerment, and the goal of early retirement, but focuses on the ability to use real estate investment properties to achieve these goals. In an uncertain investment climate, he counsels, real estate offers an attractive and sound fall back position for generating a steady source of income for even small investors.

According to Ken McElroy, property evaluation is the key to ensuring one's success in the real estate market. The author describes his own personal system for determining property valuations for multiple units. "It's called the Five Step Property Evaluation and I've used it for the past fifteen years with outstanding results. Here it is in a nutshell. First of all, "verify property income" -- objectively, how much is the property worth at the present time. Next, "verify expenses" -- how much will the investor have to put into the property, to make it livable, attractive to renders, and/or, eventually sellable? Thirdly, determine your "net operating income," do you have the capital to make such an investment? Fourthly, find the "capitalization rate and valuation," of the property over time -- will you make more on your investment than you will have to put in, over a long period of time, or will the value of your investment quickly flatten out? Finally in step five, "Calculate the loan payment and your profit or cash on cash." (97)

Once you have located this golden opportunity, or ideally even before, McElroy advises finding a partner to act as a sounding board, to ensure one has a second voice about making an assessment and also someone to fall back on for advice as well as financial support. (3) Only then can one can embark upon making a deal. It is Myth 1, McElroy says, that all real estate investors are loners, a la Donald Trump. Business and investing are team sports, particularly the expensive but rewarding 'game' of real estate investing. (35)

McElroy's Myth 2, however, is less cautious. It is a myth, he says, that one must start small. (4) Start big in the real estate game of investment property, the author says to maximize one's incoming cash flow, and actually minimize the investment risk. The larger the property, the more money a real estate investor is likely to have coming in, in terms of rent, and the more money he or she will have defray the beginning costs. Yes, it might at first turn your stomach to make a large outlay -- but that relates to Myth 3, which seems to be the opposite of Myth 2, even though both are interrelated. Myth #3 is that "You Can 'Flip' Your Way to Success or Get Rich Quick with No Money Down." All investment involves some risk and initial outlay, and unfortunately, one must invest to eventually see a return on one's initial investment. (7) if a deal seems to be too good to be true, it probably is -- probably is swampland rather than a gold mine. (35) number of the myths, such as Myth #4: "Some People Just Have the Midas Touch" or Myth #5: "You Need a Great Deal of Confidence" to succeed in real estate, strike the reader as fairly generalized personal empowerment myths that could apply to a variety of industries, particularly, Myth #6: You Want to Do it but Don't Really Have the Time, (this really comes down to choices and priorities, wisely counsels McElroy) (9-10) but other real estate myths 'busted' by the author are quite industry-specific, like the idea that "Myth #7: You Have to Know Somebody to Get Going in This Business," or Myth #8: "You Have to Be a Seasoned Negotiator and Businessperson" to make it in the industry, debunk the idea that real estate is a secret and mysterious club, rather than, like any other industry, the art of taking in more money than one is outlaying.