By David Lindahl
By David Petrovich
The ForeclosureS.com Guide to Advanced Investing Techniques You Won’t Learn Anywhere Else
By Alexis McGee
I often have friends, clients and students ask, “Do you know a good book on real estate one that will teach me to make money buying and selling properties?” Until now, I have had to suggest that they go to the library and search through the (inadequate) books there. I now have a book I can recommend.
The author says that he was a landscaper living in a one-room apartment; he was down to his last $800. He began investing in real estate using the principles in his book and now heads The Lindahl Group, a $140 million real estate empire. He did that by using common sense ideas that are really quite ingenious. His ideas include:
- Buy in emerging markets. Did you ever notice that when an investment is at its peak, everyone wants to buy? When it’s going down like a rock, no one is interested in buying? Isn’t the rule, “Buy low, sell high?” Lindahl tells you how to buy low by observing that there are four phases to the real estate market and providing useful advice in identifying them. If you buy at the right time, you will make money. If you don’t, you will lose substantially.
- Different areas of the country are often in different market phases. Most of us lock ourselves into real estate in one geographic area. “Wrong” says Lindahl. As an investor, you should strive to maximize the value of your portfolio. You can accomplish that by moving from markets that have peaked, to markets that are undervalued.
- You can make money in single-family residences. You can make LOTS of money in multi-family units. If you have 17 single-family residences, you have to arrange for 17 lawns to be cut. If you have a 17-unit apartment, you need only arrange for one lawn to be cut, and it is likely that you can delegate your apartment manager to supervise that cutting.
- You can find properties. Here’s how. Lindahl provides some very good methods of finding properties for sale often at bargain prices. Interested? Read the book!
- You, too, can work for $10 per hour. But why would you want to? If you are doing all your maintenance rather than hiring a handyman, you are working for less than you should. Your assistant should be helping you with your investments. Use your time to manage your business, not to do jobs others can do more profitably.
- Professionals you need. Lindahl lists the professionals you need on your team, as well as what their qualifications should be.
- Exit strategies. You can cash out of properties, or you can exchange them for other properties. Remember, though, that the important thing to consider is cash flow. As I often tell my students, the value of your investments is the present value of your after-tax cash flows. Put another way: “It’s all about spendable cash!”
This book is a must-read for anyone who wants to invest. Lindahl provides a highly readable investments textbook, providing ways of analyzing public data to provide useful information. An observant student will recognize that even if real estate is not your favorite investment, the techniques that Lindahl provides can be applied to other investments as well.
More fortunes have been made in real estate than in any other investment, but timing is critical. Lindahl tells you what that timing should be and how to make lots of money in what he considers “the best investment.”
I look at books on “saving your home in foreclosure” with a cynical eye. Most of them are very long on promises and war stories about how someone with unusual circumstances has saved his or her home (with the help of the author, who, of course, has always done a super-human job helping). Most are equally short on results and good advice that will help the typical person in foreclosure.
To my delight, despite the title laden with promise for everyone, the author provides 130 pages (in addition to valuable appendices) of excellent, practical, commonsense advice for one whose house is in foreclosure. I believe this book is a “must-read” for anyone caught in this situation.
What exactly does the book say? It provides information and advice on six main topics:
- Communicate. If you find yourself in financial difficulty, you will most likely hide that fact from everyone. That is exactly the wrong thing to do, the author says. Communicate with your family, your lender, and others involved in the situation. Petrovich also backs this advice with many examples of situations where lack of communication led to disaster, and communication led to successful resolution of problems.
- Budget. Before finding yourself in financial difficulty, you should begin budgeting so that your plan provides you the information you need to be successful. In foreclosure, that process is even more important.
- Record. When in foreclosure, keep a log of your actions, correspondence, and conversations. Petrovich has a “Mortgage Workout Notebook” with excellent tips on what records to keep and good advice on how to respond to collection agents.
- Don’t deny. Face up to the problem. Early. Petrovich provides stories of success (and failure) from following (or not following) this advice.
- Legal defenses. If your lender has not “followed the rules” you may have legal defenses to foreclosure. Believe it or not, lenders often make mistakes on loans. While you will probably need an attorney to help enforce your rights in such a situation, Petrovich provides advice on what to look for in this arena.
- When all else fails, sell. Petrovich provides information on: selling your house before foreclosure; on “short sales” (paying less than the loan balance in satisfaction of your loan); and on deeds in lieu of foreclosure.
Even if you are not “in foreclosure” Petrovich’s 45-page highly readable glossary of real estate terms makes this a worth-having book. If you are in foreclosure, it is a must-read.
The ForeclosureS.com Guide to Advanced Investing Techniques
Guide to Advanced Investing Techniques provides a great deal of useful information for those interested in investing in real estate in less traditional ways than simply making an offer through a realtor.
The author identifies five ways of purchasing properties in non-traditional
- Purchasing junior deeds of trust near foreclosure;
- Purchasing properties from foreclosure at auction;
- Purchasing repossessed property from a bank’s Real Estate Owned (REO);
- Short sales wherein the bank agrees to take less than the full note value of the property; and
- REO auctions.
The book provides many sources of information (most are web-based) and a huge amount of practical advice on executing transactions. In addition, the author provides many war stories (an apparent requirement of a book of this type). Some of those war stories provide “what to do” information; others provide “avoid this at all costs” information. The “avoid this” discussion is probably more valuable to the serious investor, as the lessons can be translated more effectively into winning strategies.
Each chapter closes with a “Takeaway” section that summarizes its most essential points. The most significant takeaways deal with the importance of being prepared. The book is replete with stories of people who were not prepared like the investor who bought a property for $70,000 more than its fair market value because he did not realize he was bidding on the third trust deed rather than the second, or the investor who missed checking an IRS lien on a property that made his “great deal” merely an adequate one.
However, this book shares some of the flaws of the author’s earlier book endless promotion of the author and her coaches and plugging of the author’s company and website. (Read Kinsman’s review of The ForeclosureS.Com Guide to Making Huge Profits Investing in Preforeclosures Without Selling Your Soul.)
This book is a “read-if-the-mood-strikes-you” book for the serious property investor someone who is actually going to invest money in properties. The book provides a lot of information but should not instill a great deal of confidence in the neophyte investor. Only a great deal of experience will provide that confidence. And experience takes time, not just reading.
*Full Disclosure: The reviewer of this book has purchased properties using two of these techniques.