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How To Increase The Value of Real Estate book brief summary

Posted by John T. Reed on

I got another book shipment today. No pallet though so not a “Jack Reed Workout Day.” This title sells slower so I didn’t print so many.
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It is How to Increase the Value of Real Estate. The title is maybe a little misleading. Real estate investors seem to understand it, but I got a good review in a mass-market periodical once and laymen readers who thought it was some sort of pixie dust that you sprinkled over any house in America gave me some crap about it.
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I studied appraisal as part of my becoming a real estate investor. Their text book lists all the things that DETERMINE value. One day I looked at it and said, “Wait a minute. You could look at this book as a list of all the things that, if you improve them, INCREASE value.”
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The key to increasing the value of properties is knowing which changes are feasible and profitable and overlooked by other investors and by sellers and real estate agents and how to execute.
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Furthermore, you need to look for properties that have things wrong with them that you can change, thereby increasing the value of the property. Then you have to recognize that some things cannot be changed, like the location of the property. There are four possibilities:
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1. bad changeables
2. bad unchangeables
3. good changeables
4. good unchangeables
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You must avoid #2 at all costs. What you must DO is buy a property with #1 and #4 and turn into a #3/#4.
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And that potential must be overlooked by the other players in the market and it must be feasible to change the good changeables cost-effectively. And the quantity of the value increase must be worth your time.
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You should have a strategy in real estate in investment, a speciality. But deals are never clean and one-dimensional. You can decide to be a load-factor-reducing guy—but as you go about pursuing that strategy, you will generally find that the buildings you buy for to that also have other targets of opportunity that, while not your specialty, are lying there in front of you. If you do not take advantage, you are leaving money on the table.
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That is why I recommend all investors buy my four strategy books: How to Increase Value, How to buy Real Estate for at Least 20% Below Market Value volumes 1 and 2, and Fixers. Say you work your speciality, in almost every deal, you will, because of reading the other books, recognize other ways to make money on that deal.
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Load-factor reducing means to turn unrentable space in a building into rentable space. For example in one apartment building, I turned one store room into a studio apartment and another into a second bedroom of a one-bedroom apartment. I also noticed two dead-end, outdoor, second-floor walkway corners where only the tenant who lived there ever walked through that space. I noticed because one of them put a potted plant there. So I turned those two dead-end areas into outdoor patios with a louvered wall and a door with a lock and jacked the rent on those units. I also had two stairways there and put closets underneath them and rented one out. We used the other for our apartment building stuff.
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Anyway, that is load factor reducing. So maybe while doing that you note that a local federal housing office is eager to place subsidized tenants there and the town has rent control. From my book, you know that federally related buildings are often exempt from local rent controls. So maybe you get that profit too out of this building because you are educated as to ALL sorts of ways to make money from a property.
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