Book Review: Adriana Dodge’s A Millionaire’s Real Estate Secret

An admitted “knowledge junkie” like many investors out there, I’ve devoured scores of books, tapes, courses, and seminars on real estate, investing, and tips and techniques to take your business to the next level. A large part of what is out there is, putting it delicately, quite literally WORTHLESS: old, misinformed, irrelevant, unrealistic, only “theory”-based information that cracks under the pressure of application- or is even downright illegal.

“My system is very complete”, says Adriana Dodge. For the most part, I completely agreed after having read her book. No fluff, no filler, just a simple single real estate investing technique spelled out from soup to nuts. If you’re looking for an encyclopedia of real estate knowledge or a bunch of motivational mumbo-jumbo, you won’t find it in A Millionaire’s Real Estate Secret.

What you will find is the correct mindset, organizational system, steps, forms, paperwork, and guidelines to easily complete a “subject to” house-buying transaction with no cash and no credit- and build a business doing more deals if you so choose.

Adriana claims she formulated her “subject to” investing strategies after having purchased numerous properties at courthouse foreclosure auctions, and becoming frustrated with the limitation of needing cash for the transactions. In putting her system together for herself, she has created an aggressive investment blueprint that others can follow.

As an investor, Adriana epitomizes the importance of mastering a niche before moving on to something else. With so many options and opportunities in the world, not to mention just the world of real estate investment, sometimes we can get bogged down and overwhelmed with all the paths we COULD take. For her, the niche was “subject to investing”, a technique of acquiring property with little to no cash needed that involves taking ownership subject to any existing financing which remains in the name of the seller until the buyer/investor completes their exit strategy (sale/refinance). While this kind of investing may not be the business plan for everyone, if you are an opportunist at heart it is certainly a great vehicle to get you where you want to go.

Adriana came to this country from Colombia with a job that sponsored her residency but did little else. It certainly wasn’t a career. Searching for something she wanted to do with her life, she also set a goal of buying a house that would net at least $10,000 when sold in a year or two. At the end of 1996, after coming to the country and saving money, and praying to God to show her a good investment, she bought her first house in Minneapolis on a one-acre lot for $63,000. In a little more than a year, at the beginning of 1998 she sold the house and acreage separately, netting over $41,000. That’s when she knew she wanted to be an investor. Those certainly aren’t huge sums to anyone likely reading this, but you’ll recognize in Adriana the risk-taker in all success stories. I’ll bet you have a similar story to tell, do you not?

On top of the many obstacles, risks, and frustrations of any typical new investor- like financing headaches, dealing with contractors, sourcing deals, and finding the right people to do the work- Adriana had to contend with becoming fluent in the English language, learning a new culture, battling residency issues, and contending with the somewhat non-businesslike image of a pretty Latina woman of less than five feet tall. These experiences uniquely qualify her to speak to that opportunist and believer in all of us, and give her the voice that people listen and respond to- even when others are singing the same song or preaching a similar message. I wondered how disarming her appearance must be to a motivated seller facing possible foreclosure, who sees others in her niche as “all-business” at best and at worst as vultures? She managed to turn what most would see as stumbling blocks into stepping stones.

As an author and teacher of subject to real estate investing, Adriana comes across very genuine. A certified coach and trainer who has been investing in real estate and training others full-time since 2001, she possesses that rare trait of the truly inspiring individual in that she achieved her status of today with the sweat and entrepreneurial risks of thousands of uncertain yesterdays- and is more than willing to share both the triumphs and struggles with those who ask for help.

To know Adriana Dodge is to know energy and excitement, focus and charisma, all coiled up and ready to explode from her cheerful 4 ft. 11 inch frame. I was pleased to have three distinct discussions with her where she shared with me and our readers her thoughts on success, real estate, “subject to” investing, mentorship, building a business and so much more.

Among the words of wisdom shared were these gems:

Always be duplicating yourself.
Listen to others but know that you must make the decisions.
In frustrating times, remember: we expand, we grow, and then we deserve more.
No matter what you feel, it really comes down to the numbers.
Hire people with a great attitude. You want people who go the extra mile.
Some people in your life are a liability- distance yourself from negativity.
Deal fairly with people.
Build relationships, don’t just do transactions.
Don’t fall in love with a property or investment.
Communication is key in business: always let people know what’s going on.
You cannot afford to burn bridges.
Surround yourself with a great team.
Have fun with negotiations.
Finding people who are “X” is easier when you are “X”…example: “honest”
You can keep your integrity and still make money in investing.

As I finished writing this, I thought of something powerful besides encouraging those who now want to read Adriana’s book to do so. Each of us as entrepreneurs often has someone in our life that we would love to empower to do something more, to take risks, to realize their potential, and to go after the better life it seems we want more for them than it they want for themselves. It may be a wife or girlfriend, a mother or sibling, a teacher or a preacher. Sometimes drawing encouragement from us isn’t enough; sometimes it’s not the message but the messenger that’s key in catalyzing great achievement. If you too have a person like that in your life, and they have an interest in real estate, give them this book and let inspiring Adriana Dodge be that messenger with A Millionaire’s Real Estate Secret.

Wealth Building With Real Estate

When it comes to saving for retirement, investment advisors generally recommend that one contribute regularly to an Individual Retirement Account (IRA) or a company 401(k) plan. Steady growth can be achieved, they suggest, by diversifying one’s portfolio with a mix of stocks and bonds. Rarely, however, do they recommend adding real estate to the investment portfolio. By neglecting to invest in real estate, one could be missing out on the many benefits afforded by this asset class.

Advisors and investors may shy away from this investment for many reasons. Advisors might avoid it possibility because they are not licensed to sell it. Thus, they have no incentive to decrease the amount of money that they have under management. Also, investors often avoid real property because often they don’t understand it. Even if they do, they don’t feel that they have enough capital to make an initial investment. But if they became better educated in the benefits of real estate, they would find that it offers some advantages not seen in other investments.

Often, advisors recommend utilizing investments such as mutual funds to achieve risk-adjusted, long-term appreciation when saving for retirement. By utilizing qualified retirement vehicles such as an IRA or 401(k) accounts, investors can often receive a tax deduction to offset income, reducing their current tax bill. They may also use Roth accounts to forego the upfront tax deduction enabling them to receive retirement account distributions tax free. Real estate may also provide long-term appreciation, as seen in stock and bond mutual funds. In addition to receiving up-front tax advantages just as qualified plans do, real estate investments may add other tax advantages when the property is liquidated.

Many might be surprised to learn that over the past ten years, despite the “real estate meltdown,” real estate prices have outperformed the Standard and Poor’s 500 stock market index by a wide margin. As of May 2011, data provided in the Standard and Poor’s Case Shiller index (CS) showed that real estate prices, based on a 10-region composite, advanced 30.1% over the latest ten year period. During that same time the Standard and Poor’s 500 (S&P500) stock market index advanced just 7.1%. This is despite the fact that over the past two years, stock prices nearly doubled off of their March 2009 lows. During this same period, bond and commodity prices have also moved dramatically higher, causing many to worry about future market corrections. Only real estate prices have not performed and remain 32% below than their peak. The S&P 500 was just 13% from its all-time high based on May data. This is a value that an investor might look upon as a good opportunity based on current prices.

Both qualified retirement plan contributions and real estate investments offer tax incentives. When one contributes to a qualified retirement plan, the investor can usually deduct the contribution from gross income, reducing the income tax liability. Real estate, even when purchased outside of a qualified plan, offers tax deductions, sometimes as great as a qualified plan contribution. Individuals who own their own home can deduct mortgage interest and property taxes paid if they itemize their tax deductions. If they don’t itemize, they can still deduct their property taxes to receive some tax relief. Investors who purchase real estate investment property do even better. In addition to the mortgage and property tax deduction that home owners receive, real estate investors also receive deductions for property maintenance and depreciation. If this investor is not generating positive cash flow on the property and the investor has an income of less than $100,000, he or she can write off up to $25,000 for losses against their gross income.

A residential real estate also receives a special capital gains tax exemption not offered to other investments. If one had lived in the home as a primary residence for two of the previous five years, the individual is allowed a capital gains exemption of $250,000. This amounts to a $37,500 tax savings based on the current 15% Long Term Capital Gain tax rate. Not so with distributions taken from a qualified plan. These are taxed as ordinary income, at your highest tax rate. If the investor owned a primary residence along with a rental property, the investor could sell the primary residence at retirement, take the capital gain, and move into the rental. The tax-free distributions from the liquidation of the primary residence could be used to pay off any remaining mortgage on the rental property and provide extra funds for retirement expenses.

Real estate offers many positive benefits that may be important to a person planning for retirement. Like stocks and mutual funds, real estate has the potential to appreciate, preserving purchasing power. Adding real estate to one’s holdings increases diversification and reduces overall portfolio risk helping to ensure a financially successful retirement. Residential and investment real estate often provide tax benefits not found in other retirement investments.