This publication is designed to provide competent and reliable information regarding the subject matter covered. It is sold with the understanding the author and publisher are not providing legal, financial or other professional advice. Real estate laws and practices vary from state to state. Consult legal or other expert assistance if you need professional advice. The author and publisher specifically disclaim any liability incurred from the use or application of the book contents.

Copyright © 2015 by Karrie Baysinger. All rights reserved. Except as permitted under the U.S. Copyright Act of 1976, no part of this publication might be reproduced, distributed or transmitted in any form or by any means. Neither might you store portions of this book in a database or retrieval system, without the prior written permission of the author.

Printed in the United States of America. ISBN: 978-0-9964885-1-8

Table of Contents

FOREWORD

It’s an author’s privilege to thank those who supported and helped his or her path to the completion of the book. I would like to take that opportunity to thank the following people who have been instrumental in my life.

I thank my grandparents, who raised me so unselfishly. They provided the foundation for my success. I am grateful for them and would not be where I am today without their love, their foresight and their desire to see me succeed.

I am grateful to my husband Michael, who has been one of my staunchest supporters over the years. He has encouraged me, been there to play sounding board and encouraged me to move forward. I don’t know where I would be without him and I don’t want to consider my life without him in it.

I am blessed by my daughter Madeline, who has taught me to enjoy the small things in life, love unconditionally, and to stop and appreciate the people and opportunities in my life. She has taught me to set priorities for family and business and allowed me to see how fortunate I am to have her and Michael in my life. I love you!

I am thankful for clients over the years who have demonstrated faith in me and helped me build my company. They have provided opportunities for me to learn by doing and growing into the business woman I am today.

I am also grateful for many employees who help me provide great service to our clients and tenants and who have taught me many valuable lessons along the way.

I want to thank Kathy Barr for being my friend and walking through this book project with me. I am grateful for her wisdom and assistance.

Finally, thank you, the Reader who took the time to pick up this book and let me help you enter the Real World Real Estate experience. I hope the lessons in this book will assist you to become successful in real estate investing.

INTRODUCTION

At the tender age of 15, I found myself alone and faced with real world concerns such as where to live, how to provide for myself and finish high school. My grandmother, who raised me, had passed away, but had left me the house where I had grown up. This house was to provide the basis for my early income and the foundation where I started my real estate education.

I finished my high school education and set my sights on college. Determination and anger helped fuel my success because many of those around me assumed I would fail without a family unit to support me. I pushed forward and enrolled at the University of Texas where I majored in political science and minored in business.

I continued to use my real estate skills to fund my college education. I earned my real estate license and spent part of my evening and weekend hours working with residential clients because it provided me with the freedom and flexibility to continue my education. During the week, I took classes and worked as a legislative aide to a congressman.

After graduation, I continued to work in real estate. I transitioned to commercial and multifamily properties then into property management. Each move provided new challenges and opportunities to succeed in a field dominated by men.

I taught real estate classes for approximately four and a half years. In doing so I realized most of the information out there on acquiring and managing property is directed at single family housing. I wanted to fill in the gap for those who have a different goal for their real estate investment dollars.

Today, I work with million dollar clients looking to invest in commercial and multifamily properties. My management company enables investors to continue with their careers and family responsibilities as their portfolio grows. I also teach classes and work to help new investors create a strong foundation for economic growth. My clients trust me with their economic futures because I have a strong work ethic and a dedication to the truth.
Use the principles provided in this book to expand your education in real world real estate investing. Within the pages of this book, you will find information from my experience and help with the skills you need to make wise choices in real estate investment.

Understand that nothing in this book takes the place of proper due diligence on your part. Reading this book does not guarantee that you will strike it rich in real estate or that you will not make a mistake. Nothing can substitute your due diligence.

This book is designed to explain my experience in real estate and how I have succeeded. It provides competent and reliable information to the best of my ability and knowledge. It does not provide legal, financial, tax or other professional advice.

Real estate laws vary by state. Consult a legal professional to assist you with matters pertaining to law. Consult a tax professional for information regarding taxes and accounting requirements.

The author and publisher specifically disclaim any liability incurred from the use or application of the book contents.

WHAT? PLAN FOR THE FUTURE?

In a world where you have no guarantee you will have a job tomorrow or the plans you make for retirement will provide adequately for you, it does not make sense to leave your financial future to chance. History demonstrates you cannot depend on the stock market or the banking industry to safeguard your retirement funds. With inflation rates at four percent or higher, if your investments or retirement funds are not making at least that much, you are peddling backwards. You need investment strategies that surpass inflation. Real estate is one such investment.

Economic analysts continue to warn Americans the Medicare and Social Security systems are nearing bankruptcy. Your only real hope is taking matters into your own hands and plan ahead through investment income.

You might wonder what options you have. You determine your options by:
• the kind of risk you are willing to undertake
• how much research you are willing to do
• how much money you have to invest
• how quickly you want a return on your investment
• your risk tolerance

Real estate acquisition of properties that provide cash flow can provide you financial security if you are willing to do due diligence before finalizing your purchase. Real estate provides advantages as an investment vehicle when compared to other investments.

Cash Flow Production The main purpose for investing in real estate is to make money. Without cash flow, you have no income and you can quickly find yourself with a negative return. Many commercial and multifamily properties provide real income, making these options true assets and cash flow producers. Your tenants pay you to make the mortgage payment and provide upkeep and repairs. Utilizing a property management company can free you from the day-to-day tasks of interacting with the tenants if you do not want that responsibility. You can pocket a significant portion of the rent you take in once you pay off the property.

You should realize, however, you must set aside a percentage of the profits each month to take care of the property, complete improvements and perform make-readies when you have a vacancy. If you do not budget for these expenses, you might find yourself unable to rent vacant units because you do not have the capital to make the unit presentable for the next tenant.

A property that does not produce enough revenue to cover the mortgage and expenses, regardless of what you do, is not an asset. When it costs you money to keep a property, it is a liability you might need to sell, even at a loss. Some situations might allow for temporary losses because you know the negative cash flow is short term. Short-term situations you need to evaluate on an individual basis include loss due to vacancy or a period of scheduled improvements. However, if you consistently lose money there is a long-term problem, and if not quickly corrected, selling might be your best option. The longer you hold the property, the larger the loss. We will discuss how to reduce the risk of buying such a property in future chapters.

A quick note here about the business aspect of owning property: Do not get emotionally attached to the property. You will lose objectivity and find yourself unable to see and make clear decisions based on the economics of the situation. I will provide more information on this as we progress, but this is a key strategy when investing in real estate. If you forget this or violate it, it might cost you a considerable amount of money before you finally understand this vital truth.

Appreciation. Income producing real estate typically appreciates in value over time, although housing values might decline during times of economic recession or depression. Commercial properties maintain value much better over time, but might also decline in value when the economy is poor. Appropriately maintained properties in healthy neighborhoods attract tenants and allow property values to increase as wages and commerce increases. An increase in property value means you can raise the rent and secure a larger profit margin. Obviously, your due diligence research prior to purchase helps determine where property values are increasing and where neighborhoods are declining.

Identify characteristics of a community or city where property markets are improving. For example, if fair market values over the last six months are increasing, you might have chosen a healthy area.