Introduction

Welcome to Real Estate Investing For Dummies, 3rd Edition! We’re delighted to be your tour guides. Throughout this book, we emphasize three fundamental cornerstones that we believe to be true:

• Real estate is one of the three time-tested ways for people of varied economic means to build wealth (the others are stocks and small business). Over the long-term (decades), you should be able to make an annualized return of at least 8 to 10 percent per year investing in real estate.
• Investing in real estate isn’t rocket science but does require doing your homework. If you’re sloppy doing your legwork, you’re more likely to end up with inferior properties or to overpay. Our book clearly explains how to buy the best properties at a fair (or even below market value!) price. (Although we cover all types of properties, this book concentrates more on residential investment opportunities, which are more accessible and appropriate for nonexperts.)
• Although you should make money over the long-term investing in good real estate properties, you can lose money, especially in the short-term. Don’t unrealistically expect real estate values to increase every year. Downturns in the local real estate prices may create temporary buying opportunities, but we aren’t real estate day traders. When you invest in real estate for the long-term, which is what we advocate and practice, the occasional price declines should be merely bumps on an otherwise fruitful journey.

About This Book

Real Estate Investing For Dummies, 3rd Edition, covers tried and proven real estate investing strategies that real people, just like you, use to build wealth. Specifically, this book explains how to invest in single-family homes; detached and attached condominiums; small apartments including duplexes, triplexes, and multiple-family residential properties up to 20 to 30 units; commercial properties, including office, industrial, and retail; and raw (undeveloped) land. We also cover indirect real estate investments such as real estate investment trusts (REITs) that you can purchase through the major stock exchanges or a real estate mutual fund.

We’ve always relied on tried-and-true methods of real estate investing and our core advice is as true today as it was before the real estate downturn in the late 2000s. Our book is an especially solid reference in a down economy and will help you position yourself for the rebound.

If you expect us (in infomercial-like fashion) to tell you how to become an overnight multimillionaire, this is definitely not the book for you. And please allow us to save you money, disappointment, and heartache by telling you that such hucksters are only enriching themselves through their grossly overpriced tapes and seminars.

Unlike so many real estate book authors, we don’t have an alternative agenda in writing this book. Many real estate investing books are nothing more than infomercials for high priced DVDs or seminars the author is selling. The objective of our book is to give you the best crash course in real estate investing so that if you choose to make investments in income-producing properties, you may do so wisely and confidently.

Here are some good reasons why we — Eric Tyson and Robert Griswold — are a dynamic duo on your side:

Robert Griswold has extensive hands-on experience as a real estate investor who has worked with properties of all types and sizes. He is also the author of Property Management Kit For Dummies (Wiley) and was the author of two popular syndicated real estate newspaper columns for more than 20 years. He has appeared for more than 15 years as the NBC-TV on-air real estate expert for Southern California. And for nearly 15 years, he was the host of the most popular and longest running real estate radio show in the country — Real Estate Today! with Robert Griswold on Clear Channel Communications.

Robert also holds the Counselor of Real Estate (CRE), Certified Commercial Investment Member (CCIM), Professional Community Association Manager (PCAM), and Certified Property Manager (CPM) designations. He earned a bachelor’s degree and two master’s degrees in real estate and related fields from the University of Southern California’s Marshall School of Business.

Eric Tyson is a former financial counselor, lecturer, and coauthor of the national bestseller Home Buying For Dummies (John Wiley & Sons, Inc.), as well as the author or coauthor of numerous other bestselling books in the For Dummies series, such as Personal Finance, Investing, Mutual Funds, and Small Business.

Eric has counseled thousands of clients on a variety of personal finance, investment, and real estate quandaries and questions. A former management consultant to Fortune 500 financial service firms, Eric is dedicated to teaching people to better manage their personal finances. For more than 25 years, he has successfully invested in real estate and securities and started and managed several businesses. He earned an MBA at the Stanford Graduate School of Business and a bachelor’s degree in economics at Yale.

Foolish Assumptions

Whenever an author sits down to write a book, he has a particular audience in mind. Because of this, he must make some assumptions about who his reader is and what that reader is looking for. Here are a few assumptions we’ve made about you:

• You’re looking for a way to invest in real estate but don’t know what types of properties and strategies are best.
• You’re considering buying an investment property, be it a single-family home, a small apartment complex, or an office building, but your real estate experience is largely limited to renting an apartment or owning your own home.
• You may have a small amount of money already invested in real estate, but you’re ready to go after bigger, better properties.
• You’re looking for a way to diversify your investment portfolio.

If any of these descriptions hit home for you, you’ve come to the right place.

Icons Used in This Book

Throughout this book, you can find friendly and useful icons to enhance your reading pleasure and to note specific types of information. Here’s what each icon means:

This icon points out something that can save you time, headaches, money, or all of the above!

Here we’re trying to direct you away from blunders and boo-boos that others have made when investing in real estate.

This icon alerts you to hucksters, biased advice, and other things that can really cost you big bucks.

Here we point out potentially interesting but nonessential (skippable) stuff.

We use this icon to highlight when you should look into something on your own or with the assistance of a local professional.

This icon flags concepts and facts that we want to ensure you remember as you make your real estate investments.

Beyond This Book

In addition to the content of this book, you can access some related material online. We have posted the Cheat Sheet at www.dummies.com/cheatsheet/realestateinvesting that contains tips for investing. (You can also find the Cheat Sheet in the book, so feel free to share the online version with your friends and family and encourage them to read the book.)

We also share some additional bits of information and pointers at www.dummies.com/extras/realestateinvesting that can help you take your real estate investing to the next level. We also include a sample purchase agreement there.

Where to Go from Here

If you have the time and desire, we encourage you to read this book in its entirety. It provides you with a detailed picture of how to maximize your returns while minimizing your risks in the real estate market. But you may also choose to read selected portions. That’s one of the great things (among many) about For Dummies books. You can readily pick and choose the information you read based on your individual needs. Just scan the table of contents or index for the topics that interest you the most.