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Book Review

The Idea Is Profit, but the Explanation Is Poor

"Real Wealth by Investing in Real Estate" by Ralph R. Roberts with Joe Hafner (Prentice Hall Press, Paramus, N.J., 2001), $22, 250 pages.


Ralph R. Roberts' claim to fame is selling more than 600 houses each year. That is a major achievement. In his latest book, Roberts focuses on real estate investments and explains why owning rental property, especially single-family houses, is the key to "real wealth."

"To achieve real wealth in the real estate industry," Roberts says, "you have to invest in property yourself." Then Roberts, who was voted "most likely not to succeed" in high school, shares what he has learned during his 20 years as a real estate investor.

When I began reading this book, whose first section is "Raising Money," I thought something was missing from my copy but, after checking the page numbers, I found nothing was omitted. Instead of how to find money for real estate investments, the first chapter should have addressed the question, "Why invest in real estate?" That vital question is never answered in this book.

To Roberts' credit, in Chapter 22, he finally writes, "Real estate can make you rich." But even that chapter never tells the reader why he or she should invest in real property.

The benefits of realty investing, such as tax shelter during ownership, long-term appreciation in market value, upfront profits from buying below market value and adding value through fixing up properties, are mentioned along the way but never clearly explained.

The book's first few chapters are about raising money to invest in real estate if you don't have money of your own. Roberts says, "Have a plan before you get started." Then he lists sources of starter cash, such as parents, credit cards, borrowing from an IRA or retirement account, borrowing against a life insurance policy and borrowing against home equity (if the reader owns a home).

But Roberts seems to favor having an investor co-owner who will put up cash if the reader does the work of finding potentially profitable investment property. Another source, he says, is a "hard money" lender who usually charges high interest rates.

An especially valuable chapter covers understanding appraisals and how to avoid paying too much for property. With the help of appraiser Hugo Garofalo, Roberts explains "insider secrets" of what appraisers look for when evaluating properties. Each section of a standard appraisal form is explained in detail.

But the book's primary emphasis is on acquiring distress and foreclosure properties at below-market prices. Roberts also explains why paying all-cash for a property can reduce its purchase price if the seller's primary motivation is a need for cash.

In Chapter 11, the author explains how to acquire investment property for no money down. This material would have been better placed toward the beginning to show readers why large amounts of cash aren't always necessary to invest in real estate.

The book contains forms, letters and checklists for property acquisition, especially for buying properties in various stages of foreclosure. Roberts shares a story of how he came to develop checklists after he bought a distress property that burned down the day after purchase. Unfortunately, he forgot to buy fire insurance. Now his checklist includes arranging fire insurance before purchase.

The section on being a landlord doesn't go into detail about managing rental property tenants. The focus is generalized and without much substance.

And the final section on divesting property explains how to maximize sales profits. Surprisingly, Roberts doesn't say to list with the best realty agent in town but instead emphasizes why it is important to put a for-sale sign in your yard.

But I learned a term--"white-boxing"--which means preparing a house for easy sale by making it look good without doing any serious fix-up work.

Compared with Roberts' previous books--"Walk Like a Giant, Sell Like a Madman," "52 Weeks of Sales Success" and "Sell It Yourself"--this book is not up to par. Its lack of effort and disjointed organization shows.

More personal examples from the author's experiences would have helped add realism.

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