Real Estate Investing and Cash Flows to Earn Wealth!
This course helps real estate buyers – whether an investor or personal residence buyer – learn how to answer the question, “What is a good real estate deal?” The class teaches the basics on how to correctly analyze a real estate purchase and do the proper due diligence on a targeted property purchase. By doing the proper due diligence, an individual should be better able to reduce their risk and make a smart investment choice that adds to their long term wealth.
Note: This course is for smart people who are willing to take the time and effort to educate themselves so they can make informed prudent cash flow and equity building decisions. If you are looking for a quick and easy “get rich quick scheme” – and good luck with that strategy – you might want to look for a different course.
An educated real estate buyer needs to project cash flows for an investment, consider their ownership time horizon for a personal residence, review title issues, get bids on mortgage financing, procure the proper dwelling and liability insurance, review HOA documents and budgets, etc. and review all the other risk issues that could occur and cause the investment (or a personal residence investment) to perform poorly or fail. Then they must mitigate the potential that issues occur by doing the proper due diligence before they acquire the property, and during their ownership.
That’s what this course teaches, the basics on how to make better, smarter, long term real estate buying and investing decisions!
Real Estate Introduction to Smart Investing and Long Term Wealth Building
In this course you will learn many of the most common real estate due diligence procedures to help you reduce your risk and hopefully earn more wealth from your smart and prudent real estate purchasing decisions.
The topics we cover are:
1. Overall Due Diligence
2. The Purchasing Process
3. Rental Property Cash Flows
4. Short Term Ownership/Rent vs. Own
5. Foreclosures at the Courthouse
6. Income Taxes and Property Taxes
7. Mortgage Financing
8. Homeowners Associations
9. Home Inspections
10. Dwelling and Liability Insurance
11. Title Abstracts and Insurance
12. LLCs and Trusts
13. Renting and Managing Property
14. Fixers and Flipping Bewares
15. Small Apartment Buildings
16. Second Homes and Vacation Rentals
17. Valuation of Property
This is your Master Table of Contents and You Should Print it Out To Follow It!
*** Also Print out the "Download Required, Real Estate Investing Due Diligence Checklist Below"
This video segment walks you through the structure of the course and many items and issues you should consider and think through before you purchase real estate.
This is the main Real Estate Investing
Due Diligence Checklist
You should print this out and spend an hour or two reviewing it
The entire course, video, textbook, documents follow this checklist. It is pretty good, but keep in mind that the authors don't even know anywhere near close to all the Due Diligence that you should do for any particular property you buy. Real Estate is Buyer Beware and while the checklist covers many of the most common issues, you need to also talk to the other professionals involved in your purchase for additional due diligence tasks, procedures, analysis, etc. you should do.
Note: There is no risk free real estate, you can never mitigate all risks....hopefully any issues that occur with the properties you buy will be small and not too expensive....but there will be issues!
These are the PowerPoint slides that go along with this video. I've created two options for your viewing:
1. A .pdf with 3 slides to a page with lines for notes. The entire deck is about 33 pages and you might want to print it out before you watch the videos.
2. The actual .ppt Powerpoint deck you can download and use file name "Baron Real Estate Class 03 01 14"
Good luck, Leonard
Most property buyers have no idea how the purchasing process for real estate works. In this segment I walk you through the process and some tips and guidance to help you make better purchasing decisions. Good luck, Leonard
Financial Aspects of Real Estate Investing - Cash Flows, Short Term Ownership
This video segment teaches you the basics on cash flow mechanics so that you understand how to "pro-forma' or "pencil out" your real estate deal. We teach you a methodology called a Cash on Cash return calculation and then it's up to you to find rental properties that make financial sense. Good luck, Leonard
Now that you've learned how to pencil out a deal and what is a good.... or a bad....deal, we're going to run through a few more examples related to prize properties just to reinforce your knowledge. Good luck, Leonard.
This text points you where to find our simple and straightforward downloadable Investment Property Analysis spreadsheet for your use. Some people are scared of spreadsheets, but if you can read this sentence, you can mange the one I've created for you to use. Good luck, Leonard
We know some people think Due Diligence is boring, so we want to set that thought on fire here with this funny video followed by some Disclaimers that you should always think about when you are ready to write the check - to take the risk - when buying property. Good luck. Leonard
This is a Chapter in one of my Continuing Education courses that discusses different ways to measure investment returns. I provide information on these investment calculation methodologies, you educate yourself, then you decide which measure will best help you acquire real estate that increases your wealth over the long term.
Some of these are complicated subjects and will take some time to review and learn.
We suggest you Print it Out and get a cup of coffee or one of those delicious kale, wheatgrass, seaweed, molasses, spinach and green tea icy breakfast smoothie drinks they sell AND take your time to review this chapter!
In order to increase your chances that your real estate will add to your wealth, you really need to understand that the breakeven period on a real estate investment is really 5 years. That means if you sell the property at the five year mark, you probably will not have earned a cent. This is primarily due to the transaction costs upon sale, which run between 8% and 15% of your sales price - and a much higher percentage of your equity.
So short term ownership really doesn't work, and that's for an investment property or a personal residence. Good luck. Leonard
Far too many property buyers think that real estate is easy money and believe in those Get Rich Quick Schemes. I can assure you that short term GRQS rarely leave an investor with any money in the bank. How about try a Get Rick Slowly over a Couple of Decades Schemes - with some clogged toilets, midnight tenant emergency calls, and of course the every once in a while tenant who vacates your property without telling you and fails to pay you rent. The hard work long term build wealth over time is you best bet to succeed in real estate - especially if you do the proper due diligence on a property before you buy and during your ownership. Good luck, Leonard
Income Taxes, Self-Directed IRAs, Mortgage Financing and Homeowners Associations
In this first section on income taxes, we walk you through the 1040 form and how real estate deductions, like personal residence home mortgage interest deduction on 1040 Form Schedule A works. Take your time, relax and review the materials so you'll gain some knowledge and be able to talk to your tax professional to minimize your tax burden.
Now that you understand deductions, it's time to run you through how a rental property owner calculates his Losses or Income on the rental property 1040 Form Schedule E. We cover the basics and depreciation so you can get a great feel for how to calculate your investment property income tax situation.
In this last tax segment, we talk about selling real estate and the tax issues with 1031 exchanges and personal residence gain exclusions. We also cover some property tax information and the very very basics on the use of self-directed IRAs to own real estate to defer taxes on an investment. Good luck, Leonard
In order to get a fair deal on your mortgage financing, you need to get two different bids for your business. In addition, you need to be able to dissect those bids and pull out the numbers that help you determine how much in fees you are paying to the lender and what interest rate you are being offered for those fees. The government Good Faith Estimate fails to assist you because it commingles relevant costs with irrelevant costs of your financing.
We can help. In this chapter check out how mortgage qualification of your income works, how to dissect your Good Faith Estimate so you can review the relevant numbers, and we've got some additional basic good advice. Good luck, Leonard
This is the worksheet for Dissecting a Good Faith Estimate. Of course you need to get two estimates and dissect both of them in order to be able to make a decision on which is the better deal. If you are early in the process, the lender probably won't give you a GFE. If they won't, just have them write down what fees will be on the GFE they are going to issue you later in your process that correspond to numbers 1, 2, and 3 on that future GFE and you can input them on my worksheet plus their offered interest rate for those fees. Then compare between two lenders. So remember, GFE 1 + 2 + 3 and their offered interest rate is what you compare between lenders. Good luck! Leonard
Common Interest Developments, commonly called HOAs, are very complex animals. Most real estate buyers hardly review any of the documents that come along with them; even though there are tens of complicated issues which could cause a buyer significant financial pain and stress. This first HOA section covers the basics on HOAs and the risks regarding ownership of a property in an HOA.
In this second HOA section we discuss how HOA fees work, reserve studies, reserves percent funded, community reserve deficits and reserve deficits per unit. There are lots more items and issues to review than what we cover in these two video sections, that's why I've included my HOA checklist in this course. If you are going to buy a property in an HOA, I highly suggest you fully educated yourself well before you intend to start making offers on properties. I've also included a copy of my HOA chapter from my Real Estate Professional Continuing Education course with more information for you to digest and discover. Good luck, Leonard
This is my checklist that covers many of the HOA issues you should review, analyze, test, etc. when purchasing a property in a Common Interest Development. This checklist does not cover everything, because we - and no one - knows everything related to HOAs and what you need to review for your particular community. Good luck, Leonard.
This is my list of all the documents that a prudent and determined buyer should locate, collect and review when buying into an HOA governed community.
Beware: These may not be all the documents you need for your purchase, we don't know all the documents you may need, there are many we've never heard about, so get to it and keep asking questions of all people who understand HOAs, like lawyers, CPAs, HOA property managers, etc. Good luck, Leonard
This is the HOA chapter of a continuing education course I wrote. It will give you additional information to think about and consider for your HOA Due Diligence Analysis. Luckily, this is only about 6 pages.... oops I mean 12 pages! Good luck. Leonard
Home Inspections, Property Insurance, Title Insurance, Exclusions, Lot Lines
This video segment talks about some of the issues to consider with home inspections.... It also is a huge BEWARE on buying properties that are fixer-uppers. For a multitude of reasons, you should avoid properties in bad shape. Rarely do fixer uppers sell at a big enough discount to compensate for all the work that needs to be done. It's truly.... BUYER Beware!!!! Good luck. Leonard
These Checklists can be used to help identify many of the common items in a home that a buyer should review and consider. These should be used in conjunction with your licensed home inspector's guidance and opinions on the condition of property items, from air conditioners to the foundation.
They do not cover everything, because there are way too many things to be covered than we can list on our checklist. Make sure to get bids from a licensed contractor or service provider on any items you need repaired, replaced, serviced, constructed, etc.
Most real estate buyers and owners rarely look at their insurance documents nor determine if they have the right type and right amount of coverage. This is not a good way to insure your most expensive asset. In this chapter we walk you through how insurance works for homes, for condos, and liability insurance too! It's a good lesson to apply to all your insurance decisions. Good luck. Leonard
In this section we discuss many issues related to reviewing the title, the title policy, and the exclusions. Few residential buyers review this documentation.... while most commercial buyers have a title lawyer review these documents. It's smart to sit down with you title agent and at least have them walk you through each document so they can point out to you anything funky that might cause you to hire an attorney to review them. It's time well spent. Good luck. Leonard
People often ask me about using LLCs and trusts for "Asset Protection". The best asset protection is having the proper type and amount of insurance in place. But I'll walk you through the basics on LLCs and Trusts and then you can get with your attorney to work out the details that are best for your circumstances.
Renting and Managing Investment Property to Earn Long Term Wealth for Retirement
As a long time owner and property manager, I've learned lots of tough lessons. The best one I've learned is that the better you treat your tenants, the better they will treat you, take care of your property, and you'll make more money with less hassle. Shouldn't the person paying for your retirement be the most important person in your life who you treat the best? If you think about it that way and agree with those words, you're probably going to have a good real estate wealth building career going forward. Talk to other local investors in your area for their opinions and guidance. Good luck, Leonard
Other Investing - Flipping/Fixers, Apartments, Second Homes and Vacation Rentals
While all the TV shows are fun and exciting and everyone makes money on fixer-uppers and flipping homes...they are just not reality. Most people who try these get rich quick and easy schemes eventually lose all of their money. I'm not saying you can't succeed with these strategies, it's just highly unlikely you will....especially over long periods of time. This segment gives you some food for thought! Good luck, Leonard
We've included a Deal Evaluation Worksheet - from ReggieLal.com - and of course use this, and do all your due diligence, at your own risk. Good luck. Leonard
In this video portion we are just really talking about apartment buildings up to six or eight units maximum, as that's really the extent of the Professor's experience. However, all apartments regardless of size pretty much use the same categories of due diligence, just the bigger the property the most tasks for category. Speak with other investors in apartments in your local area for more due diligence guidance. Good luck. Leonard
Many folks believe that second homes and vacation rentals are investments; and they are correct. Unfortunately, they aren't typically very good investments. That's what we cover here and why.... and provide a vacation rental spreadsheet to use when you are penciling out your deal. Good luck, Leonard
Valuation of Real Estate - Comps Approach, Income Approach, Replacement Costs
There are many ways to value property. Value is important, but buying a great property you'll keep for a long long time will add more wealth to your future than trying to save money on the price. Fifteen years from now that great property will still be producing; and you won't care what you paid for it back in the day! Good luck. Leonard
This memo describes the Capitalization Rate Income Approach "Cap Rate" to property valuation. This is also in the Chapter 3 - Measuring Investments CE course chapter.