2. CHAPTER 16Slide 1 of 8 Chapter 16. MAKING YOUR MONEY GROW: REAL ESTATE AND OTHER OPPORTUNITIES How to Wisely Buy, Finance and Manage Real Estate… Knowing the Risks In Commodities, Metals, Gemstones and More A. Myths and Facts About Real Estate Investing 1. A World of Opportunities B. Income-producing Real Estate 1. Factors Affect Income - Producing Real Estate (See Personal Action Worksheet, Text page 462) a. Quality and type of tenants b. Nature and quality of the building c. Property taxes d. Utility costs

3. CHAPTER 16Slide 2 of 8 B. Income-producing Real Estate, (continued) 2. Management of the Property 3. Financing 4. The Lease a. Length of lease b. Rental rate c. Use of property d. Repairs and restoration e. Default 5. “Compounding” Your Income 6. Tax Implications a. Depreciation deduction i. Now the bad news

4. CHAPTER 16Slide 3 of 8 C. Investing in Vacant Land 1. Factors Affecting Vacant Land Investments a. “Known” land b. “Unknown” land 2. Appraisals 3. Tests 4. Surveys 5. Dollars and Cents D. “Turnover” Investing 1. Buying right 2. Financing right 3. The profit margin

5. CHAPTER 16Slide 4 of 8 E. Investing in Mortgages 1. “Taking back” a mortgage 2. Initiating a new mortgage 3. Buying mortgages at a discount 4. Mortgage pools 5. Pitfalls - Return of principal and early payoffs F. Group Investing 1. Syndication and limited partnerships 2. Real estate investment trusts (REITs) 3. Private partnerships

6. CHAPTER 16Slide 5 of 8 G. Investing in a Small Business 1. Working for yourself (See text, Chapter 21) H. Gambling in Commodities 1. Commodity funds I. Foreign Exchange and Deposits 1. Bank accounts 2. Stocks and mutual funds J. Precious Metals K. Strategic Metals

7. CHAPTER 16Slide 6 of 8 L. Gemstones M. Collectibles N. Television “Investment Opportunities” O. Private Lending P. Knowledge

8. CHAPTER 16Slide 7 of 8 TALKING POINTS… Chapter Sixteen, Number One You’re thinking of investing in a nice four-unit apartment house that’s very near the local university. You would live in one unit and rent out the other three. Evaluate the following concerns: 1. Most of your tenants are likely to be college students. 2. The university is expanding and always needing more property. 3. The building is quite old and may need a lot of refurbishing, much of which you could do yourself. 4. A gang neighborhood is only three blocks away, and you’re not sure if it’s getting bigger or smaller.

9. CHAPTER 16Slide 8 of 8 TALKING POINTS… Chapter Sixteen, Number Two A salesman for a commodity trading company has phoned you with a powerful sales pitch. How would you respond to each of these statements of his? 1. The U.S. Department of Agriculture has announced that due to evidence of possible hoof and mouth disease, 30% of the pigs in the U.S. will have to be destroyed. 2. How would you like to triple your money in just six months? 3. I’ve put every penny I can scrape together into pork-belly futures. I’ve even had my mother put most of her retirement nest-egg into it. 4. You have my personal guarantee - if pork bellies don’t go up by at least 10% a week for the next four weeks, I’ll get you a refund.