Real Estate Cash from Treasure and Trash

I liked this book right from the get go. Anyone whose mantra in relation to property is “to be the best at creating beautiful spaces for people to live in, invest in and enjoy” is – in my opinion – in the property investing market for a great reason.

Real Estate Cash from Treasure and Trash begins with a small amount of history about the author, including her main sources of inspiration in relation to building her ‘property empire’ and introduces the reader to the first property investment purchase when in her late teens.

Motivation and Dynamics forms the first section of the book and covers such topics as the money mindset and conditioned thinking – understanding what inspires and drives your interests. Pearce stresses the importance of knowing what limits and inhibits you emotionally and the need to develop a positive relationship with money. Most of this information is not new, however it is presented in an interesting way, defining behavioural patterns, or broad personality types – the consumer, the conservative and the clever. Within this section, Pearce also explains why property was her chosen investment strategy, touches on the entrepreneurial mindset and the necessity for some degree of risk-taking. Pearce discusses the importance of integrity, philosophy and values and talks through having goals and planning for those goals.

Section two of this book is all about Money Matters. Pearce takes the reader through the ‘Monopoly Formula, then reminds readers that investing in property is a risk business, even for the well-researched. The three strategies – paths to profit – are introduced; Tenant, Time and Renovation and ideal scenarios are explained for each one. Diversification is acknowledged as a sound concept for long-term successful investment along with comments regarding the difficulty of achieving this at the outset of an investment career.

Within the third section, Prowling for Property, Pearce begins with a word of caution, “don’t be lured too far from home, or, more specifically, into unfamiliar territory”. She cautions the beginning investor to start their portfolio on their own turf, as when looking outside of familiar territory, investors can become more vulnerable to the influences and opinions of others. Also discussed are the differences between a buyers market and a renters’ market with comments that many property investors buy in an inflated market because everyone else is doing it. Treasure and Trash properties are introduced within this section; some tips for identifying Blue-chip locations are listed as well as key points to consider when researching the desirability, demand and profitability of a property.

The Feasibility Study and Your Budget section comes next stressing the importance of all feasibility and general considerations being completed before purchasing a property. It is explained that a lot of work needs to be done on a property in terms of due diligence regardless of whether the property is purchased and advises the reader to walk away if the information they need cannot be obtained in time, the sale is urgent or there are other purchasers “breathing down your neck”. Pearce cautions the reader “Don’t buy until you know you are buying the right property for the right reason.” Some of the more important questions to consider when buying a property as part of the planning stage are listed as well as costs that need to be considered – conveyancing, legal fees, title searches etc. She has also included a check-list of the procedure she follows in assessing a property.

Property Strategies are discussed in section five – Cash from Treasure or Trash. These are Cashflow positive – no, or slow capital growth, Cashflow neutral – positive capital growth, Cashflow negative – positive capital growth and Treasure from trash – fast-tracking profit. This section also covers ways that the beginning investor with a relatively new portfolio can realise early profits and short-term success that can help fund longer term development. Passive income is explained as an income source that has potential to create its own energy and the investing ‘recipe’ is outlined as “every one part knowledge and expertise needs to be accompanied by two parts enthusiasm, passion and a verve bordering on obsession.”

The sixth part of the book is all about The Art of Persuasion. Negotiation tactics is what this is all about. Five things to avoid talking about are listed in this section as well as five key questions that do need to be asked. Other tactics such as time-limited offers, unconditional offers and deposits are discussed also. As with some other property authors and presenters, the see 100 properties, look at 30, make offers on 10 and buy one strategy is mentioned. Advice on private buying and auction tips are contained in this section, as well as some ideas for marketing a property for sale to different groups of people – young professionals, single people and families with children. Positioning the sale of a property for profit also features in this section.

Section number seven – Targeting, Renovation and Feng Who? This section is about identifying who will potentially rent or buy the property you are looking to purchase, location lifestyles and expectations, and things to consider when renovating a property. This section goes in to detail about using colour when renovating, landscaping, and natural light and yes, feng shui tips – Pearce has a feng shui expert who works exclusively with her projects. Whether you believe in feng shui or not, the principles make good sense and it is worth at least reading this part of the book and taking the ideas in to consideration. Clearing clutter, furnishings and garden spaces are just some of the aspects of a property that can be adjusted using the feng shui principles for appealing to your ‘target’.

Finance and Leverage is the topic for section eight and introduces Leverage as the ‘secret weapon’ for all successful property investors. As well as bank finance, other sources of funds such as joint-venture partners, private investors and syndicates are mentioned. Pearce explains the process of property assignment for quick profit and how to get a lender to advance funds against the predicted value of a property on completion of the renovations.

The final section of this book is Professor of Profit. This focuses more on success, building relationships, taking time out to enjoy your progress and success, taking care of yourself so you can in turn take care of others, what to do when things go wrong and a summary of the rules that the author has introduced throughout the book. The final comments come from Pearce with regards to being a woman in a man’s world.

Whilst I initially questioned the author’s choice of the word ‘trash’ to describe the properties this book is about, it was clarified relatively early on. Pearce writes “Throughout this book I will refer to ‘trash’ as property I have been able to secure very cheaply because no-one else could see the benefit in it. Learning to spot ‘trash’, and what this represents price-wise to a seller in order to pay accordingly is one of the greatest skills you can learn as a property investor, so get used to the term and the concept as I have described it. It can make you rich if you become acquainted with it.”

The book is littered with real life examples of properties the author has purchased and introduces the reader to characters such as Ping Pong; The Good, The Bad and The Ugly; Yes Man, Yes Woman, Mr Reliable and Bionic Man. It is both informative and entertaining. Cathy Pearce has been in business since 1997 and comes across as a very savvy property investor. She appears to have had her share of disasters, as well as successes and seems genuinely interested in sharing the learning’s – that have come from both situations – with anyone who chooses to read her book.

Real Estate Cash from Treasure and Trash is available from the Good Returns Bookstore; http://www.goodreturns.co.nz/books/product_info.php?cPath=30&products_id=388 or call 0800 345 675.

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