How to Buy and Sell Apartment Buildings

243 Pages·2004·9.54 MB·English

by  Eugene E. Vollucci

How to Buy and
Sell Apartment
Buildings
Second Edition
Eugene E. Vollucci
Stephen E. Vollucci
John Wiley & Sons, Inc.

How to Buy and
Sell Apartment
Buildings

How to Buy and
Sell Apartment
Buildings
Second Edition
Eugene E. Vollucci
Stephen E. Vollucci
John Wiley & Sons, Inc.
This book is printed on acid-free paper. ➇
Copyright © 1993 and 2004 by Eugene E. Vollucci. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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specifically disclaim any implied warranties of merchantability or fitness for a
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Library of Congress Cataloging-in-Publication Data:
Vollucci, Eugene E., 1939–
How to buy and sell apartment buildings / Eugene E. Vollucci, Stephen
Vollucci.—2nd ed.
p. cm.
Includes index.
ISBN 0-471-65343-8 (pbk. : alk. paper)
1. Apartment houses. 2. Real estate business. 3. Real estate investment.
I. Vollucci, Stephen. II. Title.
HD1390.5.V64 2004
333.33′8—dc22
2003068780
Printed in the United States of America.
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Contents
Preface xiii
1 An Investment Plan to Create Wealth 1
Discover Life’s Three Chronological Investment Periods 1
A Winning Financial Plan up to Age 35 1
Investing between the Ages of 35 and 50 2
Why It Is Mathematically Impossible to Become Wealthy
Earning 20 Percent per Year 2
The Best Financial Plan for You 2
What It Takes to Become Wealthy 4
The Best Investment Strategy over Age 50 6
Conquering Your Fears of Investing 6
Become a Gold Medalist in Investing 7
Summary 7
2 Why Real Estate Is Your Best Investment 9
Using Real Estate to Control Risks 9
Effectively Reducing Your Taxes 10
Leveraging That Works 10
v
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vi CONTENTS
Why Real Estate Investment Is “Smart” 10
Real Estate versus All Other Real Estate Investments 10
Three Advantages Apartments Have over Other
Types of Real Estate 12
The Building Size That Gives You the Greatest
Profit Potential 13
Apartments—the Coming Bonanza for You 14
Real Estate: The Shock Absorber 17
Summary 17
3 The New Approach to Investing in the 21st Century 19
Foreclosures—The Big Illusion 19
What They Don’t Tell You about Foreclosures 21
Why Apartments Are the Best Investment 22
Working Smarter Not Harder 22
Become a Millionaire in Only Three Moves 23
Group Investing 23
Step 1: Research 25
Step 2: Decreasing the Group Size 28
Step 3: Sole Investor 35
Summary 36
4 How to Effectively Employ Consultants 39
Advantages of a Team Approach 39
Picking the Right Consultant 40
Beware of “Know It Alls” 41
Getting the Most Out of Your Consultant 42
Controlling Fees 42
Avoid Unnecessary Billings 42
Protecting Yourself 43
Fee versus Commission 43
Keep Control 43
Your Key Consultant 44
Finding a Good Property Manager 44
Be Wary of “Mom-and-Pop” Operations 44
Be Just as Wary of the “Giants” in the Field 44
Procedure Manuals Are Critical 45
What to Expect from Your Property Manager 45
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CONTENTS vii
Controlling Property Management Fees 45
Traps to Avoid in the Property Management Agreement 46
Finding the Best Attorney for You 47
Structuring Contracts to Avoid Litigation 48
The Secret to Working with Accountants 48
Getting the Most from the Escrow and Title Companies 49
The Consultant Who Will Save You the Most Time and Money 49
An Effective Way to Save on Commissions 50
Understanding How Multiple Listing Services Work 50
What to Tell the Building Inspector before an Inspection 50
Saving Money Using an Appraiser 52
Working with Loan Brokers 52
Summary 53
5 Buying in the Right Place at the Right Time 55
Two Rules for Buying and Selling 55
The Benefits of Bottom Fishing 55
The Key to Evaluating Locations 56
Employment Trends 56
Demographic Factors Affecting Apartments 56
Apartment Building Cycles 57
The Five Phases of an Apartment Cycle 57
Master Apartment Economics 58
All Markets Rebound Eventually 60
The Analytical Approach to Locating Good Areas 60
Determining the Best Time and Place to Buy and Sell 61
Summary 65
6 Easy Steps to Locating Good Property 67
Starting Your Search for Quality Apartment Buildings 67
Make the Lenders Work for You 68
Use Motivation to Your Advantage 68
The Secret of Working with Real Estate Licensees 68
A Sample Advertisement for Buying Apartments 69
A Good Source for Leads 69
Using Acquisition Cards 70
Getting Sellers to Talk to You 70
Reading a Set-Up Sheet 70
Summary 77