For some unexplained reason “The ABC’s of Real Estate Investing” by Ken McElroy has become a best seller on several national lists of business books. After reading the book, “publicity hype” seems to be the prime reason for the book’s popularity. Content alone certainly is not the reason.

If you want to become a tycoon real estate investor, acquiring large apartment complexes, this new book shows how a “big time” investor goes about investigating and buying large property acquisitions.

McElroy explains how he and his “team” went to Portland, Ore., to spend a few days investigating apartment purchases because their research showed it would be a good place to invest. They eventually bought a large waterfront property, but the details of their purchase and property rehab are limited.

Based in Phoenix, professional property manager McElroy explains how to evaluate apartment building acquisitions to buy at the right price. He doesn’t provide much detail as to how he acquires cash down payments, but it is apparently from individual investors.

Emphasis is placed on crunching the actual property income and expense numbers, rather than using “projected” numbers often supplied by property sellers and their real estate agents. McElroy uses a five-step evaluation process to convince the seller to sell at the price and purchase terms he offers.

The author reveals how, after the seller accepts his purchase offer, he then uses 30 days of the contingency “due diligence” time to thoroughly check the property, including walking through every apartment to be certain they are in the condition represented.

This is definitely not a basic how to get started investing in real estate book. Instead, it is a simplified realty investment book for advanced investors to show how to avoid costly mistakes when acquiring larger properties.

McElroy shares personal examples, such as managing apartment properties for out of state investors who often have no clue how to correctly manage their large properties. He shares a few property management horror stories, such as getting a convicted child molester out of a property and how he turned around a criminal-infested apartment building in a bad neighborhood.

In addition to raising cash flow from rental operations, McElroy implies the way to profit from long-term apartment investments is to increase rents and increase net income from efficient management. But he is unclear explaining how income property market value appreciation usually depends on capitalization rates and rising net income.

The author never mentions alternative often more profitable real estate investments, such as single-family rental houses, office buildings, commercial retail properties, warehouses, and other income properties. Because the book focuses only on apartment buildings, the title is very misleading since it is far from a basic book about real estate investing.

Chapter topics include “The Myths and the Magic”; “You Gotta Have a Goal”; “It Takes a Team”; “Research Can be Fun?” “Swampland for Sale”; “Finding Your Diamond in the Rough”; “Is It Really a Diamond?” “Due Diligence: The Easter Egg Hunt”; “Making Sense of It All”; “You Own It…Now What?” and “To Sell or Not to Sell.”

This is definitely not a good book for beginner real estate investors who don’t have lots of cash for a down payment, unless you want to put together an investment group. Although the book refers to a hypothetical eight-unit apartment building, most of the actual examples are much larger properties.

The book provides excellent advice from full-time professional investors and property managers. But McElroy never really explains how average realty investors, especially beginners, can manage their property without making it a full-time business. On my scale of one to 10, this disappointing book rates only a seven.

“The ABC’s of Real Estate Investing,” by Ken McElroy (Warner Business Books, New York), 2004, $16.95, 193 pages; Available in stock or by special order at local bookstores, public libraries and

(For more information on Bob Bruss publications, visit his
Real Estate Center


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