The Skinny On Real Estate Investing
An Introduction to the Subject
Jim Randel has invested in real estate for 30 years, having bought and sold houses, duplexes, triplexes, apartment buildings, office buildings, retail properties, factories, land and a warehouse.
His real estate investing philosophy is as follows:
- It’s a tremendous opportunity for wealth generation.
- But, not “get rich quick,” or “risk-free”.
- If it isn’t fun, don’t do it.
- Never, never buy on the seller’s pro forma.
- If you can’t add value, pass on the deal.
- Asking prices are irrelevant.
- Institutional investing should be avoided at all costs by entrepreneurs.
- Houses are real estate investments.
- It’s a buyer’s market.
- It’s all about execution.
Know Your Real Estate Investing Vocabulary
Added Value: An investment strategy that requires the owner to play an active role in increasing the value of his/her property.
Cap or Capitalization Rate: The percentage which represents the return an investor will accept when buying on an unleveraged basis (no debt).
Cash Flow: The results after subtracting debt payments from Net Operating Income.
Equity: The difference between the value of real estate and the debt against it. Sometimes people use the word ‘equity’ to reference a person’s investment, e.g. ‘return on equity.’
LLC (Limited Liability Company): A common form of real estate ownership especially when there are several owners.
Leverage: The debt you put on a property. A property with no debt on it is called ‘unleveraged.’
Manager(s): Person or people who run an LLC.
Members: Owners of an LLC.
Net Operating Income: The result after subtracting Operating Expenses from Gross Rents.
Pro Forma: An outline of projected gross rents, operating expenses and NOI.
Return on Investment: The annual yield a buyer or investor receives on his capital invested.
Syndication: The raising of money to buy an asset by selling off shares (syndicating) to investors. The person creating the deal is often called the syndicator.
Real Reviews
“I’ve tracked Jimmy’s incredible run of successful real estate investments for 20 years and more recently invested very profitably with him. His new book, The Skinny on Real Estate Investing, provides all the tools for analyzing, buying, improving and profiting from the investment in income producing properties. It is a must read for anyone interested in real estate investing.”
- Jeff Dunne, Vice Chairman, CB Richard Ellis
“Before reading The Skinny on Real Estate Investing, I was very skeptical of the idea of illustrating financial lessons with stick figure cartoons…. By the second page I was chuckling and the next thing I knew, it was finished. Make no mistake: the information presented here is extremely important.”
- Margaret Picky, Top-1000 Amazon Reviewer
“Buy this book before you even think about real estate investing. It’s rare that I like a book so much I can’t wait to review it, but that’s just how I felt after finishing The Skinny On Real Estate Investing…. Jim Randel, is a Genius. Why do I say a man who uses Skinny Cartoons to teach something complicated…is a genius? Because it takes brilliance to make something so complicated so easy to understand.”
- Marsha Marks, Author and Real Estate Investor