Here are the ten new chapters in Real Estate Investment Strategy, 2nd edition:

• Outappraising the market
• Finding value by using a sharper pencil
• NAFTA and real estate
• Natural disasters and real estate
• Nonconforming uses
• Hedging real estate
• Craigslist.org
• Short sales and taxes
• Political violence and your real estate
• Can you spot hot markets in advance?

Outappraising the market

Outappraising the market is, in one phrase, the essence of what active real estate investing is about. Active investing is making profits from real estate on purpose. Passive investing is about buying a property and hoping it goes up in value. You get bargain purchases (at least 20% below market value) or find properties with hidden upgrading potential when you can see value that the seller and other buyers cannot see. In other words, you appraise the property and its potential and situation better than all the other people who know about it. By outappraising them, you make far more profit than the average investor.

Finding value by using a sharper pencil

Certain details of a property can make a big but generally overlooked difference in operating expenses and value. For example, forced warm-air heat costs about half as much as hot water heat—because of greater fuel efficiency and smaller plumbing bills. Some towns have extraordinarily high or low property tax rates, thereby nullifying the usefulness of rules of thumb.

Other similar issues involve swimming pools, exterior lighting, landscaping, remaining life on expensive replacement items, wasted space in buildings, and more.

NAFTA and real estate