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Book Review

Guide to Investing in Real Estate

"Buy and Hold: Seven Steps to a Real Estate Fortune," by David Schumacher (Floating Gallery Press, 331 W. 57th St., New York), 2000, $14.95, 306 pages.

November 12, 2000|ROBERT J. BRUSS

"Buy and Hold: Seven Steps to a Real Estate Fortune" by David Schumacher is an enjoyable memoir by a multimillionaire real estate investor. It is an outstanding collection of do's and don'ts for realty investors.

Schumacher has been investing in real estate more than 30 years. His simple strategy is to buy and hold. Most of his properties now have no mortgages, so he and his wife enjoy living off the cash flow. Although he is still involved with his properties, he hires a property manager to handle the details. This book is a great collection of realty investment stories.

The author is a retired appraiser who also taught real estate courses at a community college. With this background, he started buying real estate with low down payments. Many of his investments were in beach towns.

Schumacher is the only real estate investor I've ever encountered who has profited from investing in rental condominiums. Apparently, he bought at low enough prices so the rent was sufficient to pay the expenses. Most of his condo mortgages are now paid off, and those properties are cash-flow machines for him. In addition, the condos have appreciated substantially in market value.

If you are a serious real estate investor, or want to be, this is a classic book to study and reread several times with a red pen and yellow marker to highlight the most important advice. Schumacher has an opinion on virtually every topic for realty investors. For example, he explains how to handle applicants with pets (he charges a big security deposit). And he emphasizes ideas to increase property value, such as adding paved parking for tenants in a weed-filled backyard.

But the author readily admits his investment mistakes. To illustrate, he once bought a bargain property in a distant town where he expected to earn profits. He soon learned the tenants there were "difficult." He couldn't attract tenants who would pay the rent on time and not cause problems, so he soon sold that troublesome property; he doesn't buy and hold everything.

I'm not sure how old Schumacher is today, but he's semiretired. Yet he advises retirees to invest in real estate because, he says, "It gives you something to do in your old age." He tells a story about his elderly father who enjoyed talking to his tenants so much when he went to collect rents that he sometimes forgot to pick up the rent.

But please don't get the idea Schumacher is out of touch. His book includes a chapter on how to use the Internet to purchase real estate. He lists Web sites I've never heard of but am eagerly checking out.

This is one of those rare real estate books that cannot be recommended too highly. By practicing what he preaches Schumacher amassed a real-estate fortune of at least $15 million.

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