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Friday, 15 January 2010

Peter Conti and E-books on Real Estate Investing

Starting 2007, America has experienced what is called the "subprime mortgage crisis": the collapse of financial institutions caused by risky lending practices, especially loans and mortgages on risky properties that simply could not be justified. When loan payers defaulted, foreclosures and auctions ensued, but financial institutions simply could not recoup their capital. The whole idea of foreclosure is that financial institutions should be able to regain their capital by auctioning off the property -- property which theoretically was sound collateral, being equivalent to the loan amount. Under ideal situations, these properties would enable the lenders to regain their capital, fetching a handsome auction price. However, in a situation where massive foreclosures take place at the same time, auction prices will be depressed. Further, when properties are overvalued, it is unlikely that bidders will offer high prices. In the end, it's the theory of demand and supply, applied to a scenario where there is oversupply, and simply not enough real demand (willing and able to purchase).

Interested readers can follow up by reading Wikipedia's entry on the subprime mortgage crisis.

Having dispensed with that, I discovered the existence of a "real estate guru", Peter Conti, whose methods have become synonymous with the "no money down" investing technique. Peter Conti was originally a car mechanic, who earned $5 per hour, but somehow figured out through a series of events at his workplace that he needed to be financially independent, and identified as real estate as the means to his wealth. He saved and scrimped to buy properties and educational materials on property investing, eventually consolidating his experiences and conclusions into a method he called "Purchase Option Investing". The whole story can be read here. (Ref: Real Estate Gurus, Peter Conti. Accessed 15-1-2010.)

Here is a short promotional video on Peter Conti, hawking his course.

Peter Conti's book, originally printed, published, and marketed in bookstores, is available on the Internet for free. Click on the link below to download the said e-book:

How To Create Multiple Streams Of Income by Peter Conti and David Finkel, 289 pages.
ISBN No. 1-893384-15-2, Published in the United States of America (2001).

There's actually more from where that came from. Click the following link to access multiple free e-books, a number of them being about real estate investment.

Free e-books, hosted by The REI Brain

I quite like Dan Auito's Magic Bullets (2004), which you can also find on the page.

As you can see, I've become interested in real estate investing. My experience is that you will need 10% of the purchase price in order to sign the sale and purchase agreement; however, this 10% is an arbitrary figure, based on industry practice. If it does not serve your situation, perhaps you can consider negotiating with the seller for a creative solution. From my conversations with established investors, it seems that auction properties are often cheap, but often also carry hidden costs: unpaid maintenance, arrears in utility bills, termites or white ants, irate occupants who refuse to budge, etc. I was advised that it is better to buy from an owner directly, so that he will take care of the nitty-gritty of the property, failing which he is considered to be unable to fulfill the conditions precedent on the agreement. This is the safest means, by which a buyer can secure his rights: in contrast, in purchasing auction property, the buyer is expected to know all there is to know about the property, and will have to bear all the duty of obtaining state consent, etc.

I found one such webpage where Tenant/Buyers were encouraged to sign-up to purchase their dream home through Peter Conti's method. Click to visit.

Rent 2 Own Houses (UK)

I can't help but wonder if the Tenant/Buyer concept is being practised in Malaysia.