Whether you want to buy a house for personal use or as an investment, the first step is to read John W. Schaub’s “Building Real Estate Wealth in a Changing Market,” which explains how to cope with today’s market.
For more than 35 years, the author has been investing in and teaching classes on how to thrive in any real estate market by buying houses. In his latest book, he reveals how buyers can take advantage of the current situation in home sales to acquire properties for minimum cash at bargain prices while taking minimum risk.
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Although Schaub has invested in vacant land, commercial property, a car wash, and even a motel, he says single-family houses are the smartest purchases for either personal occupancy or as long-term investments. He is definitely not a get-rich-quick investor because he prefers to profit from both rental cash flows and long-term appreciation in market values.
The book’s theme is set in the first chapter titled “Embrace Change — It Will Never Stop.” The author explains it’s easy to buy houses but it can be difficult to sell them. For that reason, he cautions buyers to purchase only one or two houses per year in the current buyer’s market to gradually build up their portfolios.
After reading the first chapter, it would pay to skip to Chapter 19, “A 10-Year Plan for Building Wealth One House at a Time.” In it Schaub tells the story of how his dad came to him at age 63, when he realized he might live a long time, to start an investment plan in single-family houses. Today, the author reports his dad at age 90 has several extra thousand dollars per month of rental income for his comfortable retirement.
Schaub has a knack for writing the right book at just the right time for today’s home-sale market conditions. He emphasizes the importance of the basic profit fundamentals of acquiring modest houses needing fix-up but not major capital improvements.
A unique feature of the book is the many simplified charts that explain the principles the author discusses in the text. There are many low-down and nothing-down examples, including techniques for structuring affordable monthly mortgage payments.
Schaub is averse to getting new bank mortgages to purchase houses. Instead, he prefers to buy “subject to” or assume existing mortgages to save the costs of obtaining new financing. He is a big believer in showing sellers the benefits of carrying back first and second mortgages for buyers.
A fascinating point, emphasized several places in the book, is “It’s the land that appreciates.” For this reason, Schaub advises against buying luxury houses as investments, preferring working-class houses in good neighborhoods that will grow in value as the land becomes more valuable, because the houses appeal to the majority of prospective tenants and future buyers.
When it comes time to sell, the author is a big advocate of selling his houses to tenants on leases with options to purchase, also called “rent to own.” Although he barely scratches the surface of explaining details of this important topic, Schaub emphasizes there are always plenty of lease-option buyers even in a slow buyer’s market.
Chapter topics include “Causes of Change — What Was Different This Time?” “Predicting Change in Your Market”; “How Neighborhoods Change and How to Profit from the Change”; “Setting Your Strategy for Buying in a Changing Market”; “Nine Ways to Protect Yourself in a Changing Market”; “Things You Can Control and Change”; “Strategies for the Parts of Investing You Cannot Control”; “12 Opportunities for Profit in the Changing Market”; “Making Offers on Properties with Changing Prices”; and “Buying Foreclosures.”
This is one of the very few real estate books that cannot be recommended too highly. John Schaub, a “newbie” author with more than 35 years of investing experience in all types of realty markets, shares his advice in simple easy-to-understand terms. On my scale of one to 10, this outstanding book rates an off-the-chart 12.
“Building Real Estate Wealth in a Changing Market,” by John W. Schaub (McGraw-Hill, New York), 2007, $21.95, 201 pages; available in stock or by special order at local bookstores, public libraries and www.Amazon.com.
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