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Chapter 16. MAKING YOUR MONEY GROW: REAL ESTATE AND OTHER OPPORTUNITIES

How to Wisely Buy, Finance and Manage Real Estate… Knowing the Risks In Commodities, Metals, Gemstones and More

A. Myths and Facts About Real Estate Investing1. A World of Opportunities

B. Income-producing Real Estate1. Factors Affect Income - Producing Real Estate (See Personal Action Worksheet, Text page 462)

a. Quality and type of tenantsb. Nature and quality of the buildingc. Property taxesd. Utility costs

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B. Income-producing Real Estate, (continued)

2. Management of the Property3. Financing4. The Lease

a. Length of leaseb. Rental ratec. Use of propertyd. Repairs and restoratione. Default

5. “Compounding” Your Income6. Tax Implications

a. Depreciation deductioni. Now the bad news

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C. Investing in Vacant Land1. Factors Affecting Vacant Land Investments

a. “Known” landb. “Unknown” land

2. Appraisals3. Tests4. Surveys5. Dollars and Cents

D. “Turnover” Investing1. Buying right2. Financing right3. The profit margin

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E. Investing in Mortgages1. “Taking back” a mortgage2. Initiating a new mortgage3. Buying mortgages at a discount4. Mortgage pools5. Pitfalls - Return of principal and early payoffs

F. Group Investing1. Syndication and limited partnerships2. Real estate investment trusts (REITs)3. Private partnerships

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G. Investing in a Small Business1. Working for yourself (See text, Chapter 21)

H. Gambling in Commodities1. Commodity funds

I. Foreign Exchange and Deposits1. Bank accounts2. Stocks and mutual funds

J. Precious MetalsK. Strategic Metals

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L. Gemstones

M. Collectibles

N. Television “Investment Opportunities”

O. Private Lending

P. Knowledge

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TALKING POINTS…Chapter Sixteen, Number One

You’re thinking of investing in a nice four-unit apartment house that’s very near the local university. You would live in one unit and rent out the other three. Evaluate the following concerns:

1. Most of your tenants are likely to be college students.

2. The university is expanding and always needing more property.

3. The building is quite old and may need a lot of refurbishing, much of which you could do yourself.

4. A gang neighborhood is only three blocks away, and you’re not sure if it’s getting bigger or smaller.

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TALKING POINTS…Chapter Sixteen, Number Two

A salesman for a commodity trading company has phoned you with a powerful sales pitch. How would you respond to each of these statements of his?

1. The U.S. Department of Agriculture has announced that due to evidence of possible hoof and mouth disease, 30% of the pigs in the U.S. will have to be destroyed.

2. How would you like to triple your money in just six months?

3. I’ve put every penny I can scrape together into pork-belly futures. I’ve even had my mother put most of her retirement nest-egg into it.

4. You have my personal guarantee - if pork bellies don’t go up by at least 10% a week for the next four weeks, I’ll get you a refund.