Starting out

Sticky: Seven Must-Read Books for Real Estate Investors

by Brandon · 33 comments

Real estate investors disagree on many topics, but one that nearly all agree on is the necessity of investing in yourself. There are literally thousands of books out there that deal with real estate investing, and I’ve probably read most of them! The following list is the top of my top.  Without further suspense, I give you my Top Books For Real Estate Investors:

The Best Books for Real Estate:

The Book on Rental Property Investing by Brandon Turner

The Book on Rental Property Investing 3D Cover MASTERCash flow and wealth don’t happen overnight. But if you are willing to work hard and invest smart, this book is designed to help you achieve your financial goals through the power of rental properties! This book will give you practical, real-world advice for those looking to build wealth and cash flow through rental properties! You’ll learn:

You’ll learn:

  • Why Many Real Estate Investors Fail (And the mindset, processes, and systems you’ll need to succeed.)The-Book-on-Managing-Rental-Properties-3D-Cover-SMALL-No-Background-copy-208x300
  • Numerous Easy-to-Follow Strategies (Gurus love to tell you about some single “secret” method to build wealth. Instead, you’ll learn numerous!)
  • Finding Deals, Financing Properties, Management, and More. (This comprehensive guide will give you exactly what you need to get your first, or next, rental property.)

You can get this book alone on Amazon, or get it on BiggerPockets and get $500 of bonuses FREE including The Book on Managing Rental Properties!

The Unofficial Guide to Real Estate Investing by Spencer Strauss

The Unofficial Guide to Real Estate InvestingSimply put, this book is amazing. From making a plan, buying your first property, fixing things up, managing property, to selling for premium prices  – it’s all here.  This book was the inspiration for the real estate strategy that I used in my life to grow my portfolio, and also the inspiration for my other short (free) book “7 Years to 7 Figure Wealth” which you can get for free later on this list!Overall, this book is an excellent summary of the whole process of buying an investment property.

Rich Dad Poor Dad by Robert Kiyosaki

Rich Dad Poor DadThere may be a lot of hype and motivational talk in this book (not to mention the Rich Dad marketing machine you see everywhere), but this classic among investors contains an unbelievable amount of life-changing, thought-provoking content. Rich Dad is all about opening our minds to the possibilities of letting our money earn money, rather than our time. Kiyosaki does an excellent job of putting to words what I had been feeling in my heart for a long time.

Rich Dad’s ABC’s of Real Estate Investing and Rich Dad’s Advanced Guide to Real Estate Investing by Ken McElroy.

Rich Dad's ABC's of Real Estate Investing
These are two books that work as a team to teach one huge method of investing in real estate – multifamily investing.  These two are the best books on “big picture” real estate investing through apartments I’ve read.

If you want to start making serious money in real estate, check these two books out.  Also, these books contain the best descriptions and examples of harnessing the power of cap rates while investing in real estate.

The Book on Investing in Real Estate with No (and Low) Money Down by Brandon Turner

f8e37d4f-no-money-3d-book-cover-png_0aj0f60aj0f6000000Looking to get started using other people’s money? Struggling to find out how to pay for your first (or next) property?  This is the one book on this list you CAN’T afford to miss (see what I did there?!)  Usually the term “no money down” is synonymous with the late night TV gurus with big hair, big smiles, and big promises – but this book is different. It’s not about one “secret” strategy – it’s about numerous strategies used  by real investors in today’s market – both newbies and advanced.   Of course I’m a little biased on how awesome this book is – because I wrote it, but being one of the top real estate books on Amazon definitely validates my bias!If you want to pick up a copy of this (either digital, physical, audio – or all three) head over to BiggerPockets.com/nomoney and get it!

 

The Four Hour Workweek by Tim Ferriss

The Four Hour WorkweekWhile not about Real Estate at all, The Four Hour Workweek is still an excellent book on living outside the “status quo” of slave, save, retire, die. It transformed the way I look at the world, retirement, money, etc.  I recommend this book to almost every person in any field.

might be turned off by Ferriss’ “personality” and bravado but I find the information and motivation invaluable. If you are feeling overwhelmed by life and the busyness of it, don’t skip this one. I think you’ll like it.

Landlording on AutoPilot by Mike Butler

Landlording on AutoPilotMike Butler’s book is hands down the best book on being a landlord for single family homes. There is so much good information in this book about dealing with tenants it is insane. This single book helped me dramatically to improve my landlording business and make my business so much

If you are struggling at all with being a landlord or fearful of jumping into real estate because of the thought of being a landlord, read this book.

 

Other Great Real Estate Books: Honorable Mentions

BiggerPockets.com

Okay, Bigger Pockets may not be a physical book.  It’s actually the world’s largest real estate community.  However, anything you could ever learn in a book is found on this site.  Tons of investors, lots of info, amazing stuff. Really, this site taught me a lot about real estate investing. Now I am one of their contributors to their blog (which is super-duper cool). Seriously any question you have about rea estate (besides asking me, which you totally can and should!) you can ask in the forums and you’ll get a bazillion seasoned real estate investors to answer you. It’s a living book. I love it.

7 Years to 7 Figure Wealth7 Years to 7 Figure Wealth by … me!

  Ok, it’s a shameless plug, but I had to include this book in the list! If you want to check it out, it’s 100% free and you can download it right now.  This book is a complete summary of my investment strategy and one avenue to earn a million dollars in real estate purchasing only five properties in seven years with almost no money.

What Every Real Estate Investor Needs to Know about Cash Flow… And 36 Other Key Financial Measures by Frank Gallinelli.  This book is about math, and making that math easy. If you don’t understand the principles discussed in this book, you will never be successful in real estate or any business, period.  If you want to understand it fully, devour this book and keep it on your shelf. This is definitely not a “check out from the library” sort of book.  (Also, read “The Buy and Hold Guys'” interview with Frank Gallinelli here)

Investing in Duplexes, Triplexes, and Quads: The Fastest and Safest Way to Real Estate Wealth by Larry Loftis. This book, as the title suggests, is my favorite book dealing with small multifamily properties. Being one of the first investment books I read, it really opened my eyes to what is possible out there, and caused me to buy my first duplex – which still brings me almost $400 per month in cashflow. I owe that purchase and success to this book.  If you are just starting out, I highly recommend this book.

Set For Life 3DSet For Life by Scott Trench. Scott is a great friend of mine and one of the smartest people I know. He wrote this FANTASTIC book that anyone under the age of 40 needs to read. Like… right now. Seriously – it’s life changing. It’s all about how to set up your life so you can achieve financial freedom sooner than you’d ever imagine. Part real estate, part personal finance, part motivation, and 100% awesome. Read it.
How to Manage Residential Property for Maximum Cash Flow and Resale Value – By John T Reed. This hard-to-find book (he doesn’t sell on Amazon – just on his website) is really like an encyclopedia on managing large multifamily properties. Known for his straight-forward, no-fluff attitude, Reed has thousands and thousands of tips on managing larger properties. I re-read this book at least twice a year and learn new things every time.  I have not (yet) read his other real estate books, but if they are anything like this one, they will be amazing. 

[FREE] 20 Ways to Buy a House for $2,000 or Less – Written by Ben Leybovich, and 100% FREE for you to read, this book contains a TON of great suggestions for buying real estate using other people’s money. In a way, this was the book that inspired me to write “The Book on Investing in Real Estate with No (and Low) Money Down.” In addition to this free book, Ben offers a ton of other great content for free, so be sure to download all his free content.

 ***Update – Check out the sequel to this post titled, “Seven MORE Must Read Books for Real Estate Investors”  ***

What are your favorite real estate investing books? List them in the comments below!

P.S. looking for hard money loans in California? Be sure to check out my friends over at northcoastfinancialinc.com. They have very competitive rates, can fund within a week and specialize in fix and flip loans and other hard money loans.

Ten Ways to Fail as a Real Estate Investor

by Brandon · 2 comments

 

This list might look familiar for those who have downloaded my free e-book, “7 Years to 7 Figure Wealth,” but I thought I’d share it here for everyone else and dive in a little deeper explaining each item more fully.

Also, I’ve got big news about my newest property acquisition coming out later this week!  Be sure to get automatic updates by entering your email in the bar at the top of this page and sign up for my newsletter by entering your email on the right (I know, there is a lot of signing up around here! I promise I don’t use your email for bad purposes!)

So without further ado, here is:

Ten Ways to Fail as a Real Estate Investor:

  1. Don’t Read- If you really want to stop moving forward, stop reading about investing. Don’t learn new strategies, because you will be left in the dust when the market changes. Don’t read quality real estate blogs or download a free e-book. (shameless plug, I know!)
  2. Don’t Connect with Other Investors – Associating with other investors will give you confidence and knowledge, as well as help navigate muddy waters. Therefore, be sure to steer clear from other investors. Especially don’t join websites like BiggerPockets.com or your local real estate investment club.
  3. Don’t Have A Plan – Knowing the direction you want to go will only get you there faster. Instead, simply aimlessly “invest” in whatever floats your boat at the moment.
  4. Only Listen To Gurus – Pay lots of money to attend seminars full of up-sells and “hidden secrets.” Make sure you only listen to them and don’t ever question their dated information or underhanded sales techniques.
  5. Do Everything Yourself – By stretching yourself thin, you will lose both interest and money – so be sure to never ask for help or hire a professional.
  6. Run Your Business On Emotion – Don’t be rational when making business decisions. Instead, rely on how it feels at the moment. Feel bad for tenants who spend their money on drugs instead of rent and give them another break.  Be sure to take everything personal as well and take our your frustrations on your family at home.
  7. Get Fancy and complicated – Investing is fairly straightforward and simple, so if you want to fail – be sure to get real fancy and complicated. Using seventeen layers of LLC protection, cross-collateralize everything you own, and take huge risks to help speed up the process of failure.
  8. Spend your money frivolously – There are many ups and downs when investing in real estate, so be sure you don’t save enough money to cover you in the down times. Be sure to leverage yourself out as thin as possible, buying the best new cars and toys so you look as rich as you want others to think you are.
  9. Don’t stick to your standards– following a recipe is for those who want the food to turn out tasting delicious. Instead, deviate as much as possible, buying property that doesn’t meet your standards and rent to tenants who would never qualify. Combine this with number six above for even faster failure.
  10. Wait Until Tomorrow –You will never succeed if you don’t start, so make sure you sit back and watch one more episode of Desperate Housewives. You can always invest when you have more time, more energy, and more desire. Besides, the government will take care of you when you retire.

 

Do you have other ways to fail you want to add to the list?  Comment below and let me know! (That rhymed. I’m a poet and I didn’t know it!)

Also, if you enjoyed this article, share it by using the buttons below!

 

Image courtesy of FreeDigitalPhotos.net

P.S. looking for hard money loans in California? Be sure to check out my friends over at northcoastfinancialinc.com. They have very competitive rates, can fund within a week and specialize in fix and flip loans and other hard money loans.

eBook Now Available!

by Brandon · 12 comments

Hey everyone!

After many days of writing and editing, my first eBook has arrived and I’m giving it away for free! Yep, just as a gift for hanging out at Real Estate In Your Twenties.

And yes, you can still get the eBook free if you are thirty, forty, or a hundred years old!

Simply add your name and email to the box below!

Also, let me know your thoughts about the book!

P.S. looking for hard money loans in California? Be sure to check out my friends over at northcoastfinancialinc.com. They have very competitive rates, can fund within a week and specialize in fix and flip loans and other hard money loans.

How to Quickly Analyze a Single Family Home for Investment

by Brandon · 10 comments

Looking for the “right” home to buy can take a lot of time and effort, especially when trying to comb through the hundreds or thousands of deals that are on the market today. It is important not to waste time and maximize your efforts (see my last post on the 80/20 principle).  The following is the quick mental math that I use to analyze a single family home quickly and decide if it’s even worth looking into.

First, I only look for homes in areas that I am financially comfortable with. So, if I am not comfortable with the average sale prices, rent prices, days on market, etc of a given area – I learn that first. I live in a fairly small community, so it is fairly easy where I live.  If you live in a large area, like a major city, you should be focused on a small area that you can fully wrap your mind around. Never invest where you don’t know the market.

Second, I determine how much it is going to cost me to rehab the place. This is a VERY loose number, and generally just use $10,000 for a small paint/carpet turn,  $20,000 for a medium turn, and $30,000 for a major remodel. This includes labor, material, closing costs, and holding costs.

Third, I look at the purchase price and add the repairs. So, if I found a house for $65,000, and it needed $10,000 in repairs, I use the number $75,000.

Fourth, I then take that final number and knock off two “zeros”. This gives me a good estimate of my monthly mortgage payment with taxes and insurance. So $750 becomes $750 per month. I know this is a bit high, but I like to be conservative.

Fifth, I add a few hundred for vacancies, repairs, etc. So I might say this property is going to cost me on average $1000 per month.

Finally, I just need to know what the average rent will be. If the average rent, on the low side, will give me $200 per month in cashflow, this is probably a deal worth looking into. If not, I’ll move on. Additionally, if the total cost I would have invested in the  the property is $20,000 less than it’s value, then I will also move forward.

I believe any property needs to have both positive cashflow and good equity. There are too many good deals today to buy something that doesn’t have both.

That’s pretty much my quick and easy strategy to sort through all the listings to find a gem. I do this whole process in about thirty seconds per home, and it has worked great for me. Obviously, if I decide to pursue it in more detail I will learn exactly how much repairs are going to cost, what the mortgage will be, and more. This is simply a very quick way to sort out 90% of the deals and only focus on the ones that might be good.

 

image credit: NNECAPA

 

P.S. looking for hard money loans in California? Be sure to check out my friends over at northcoastfinancialinc.com. They have very competitive rates, can fund within a week and specialize in fix and flip loans and other hard money loans.

Five Huge Mistakes I’ve Made Investing In Real Estate

by Brandon · 7 comments

I once asked Seth Godin (marketing genius and internet blogger) via email what he would change if he could go back and do it again.  His response:

If I went back and changed something,

then things would be different and I wouldn’t be me.

But I like being me. So I’ll take this life

He makes a valid point. If we were to go back, it would change who we are. However, what about if we could help someone else learn from our mistakes?

People don’t like to dwell on mistakes.  Our pride likes to say “I’m awesome” but the reality is we make mistakes all the time.  While I’m sure it will hurt my image as an “expert,”  I am going to talk about the mistakes I’ve made because I want to save others from making the same ones. This article is designed to help you learn from those mistakes and hopefully avoid them yourself! Without further ado, my five biggest mistakes I’ve had in my investment career:

  1. Not Saving Enough – I have been lucky, but stupid. When I started investing in real estate, I had no money. I bought my first property with close to nothing down and was fortunate enough to sell it and made a decent profit. While I am completely in support of investing with no money down, I believe any investor needs to have at least some money in savings because the road to real estate riches is a bumpy one.
  2. Using Credit Cards – Building off number one, because I didn’t have solid financial resources, I often turned to credit cards to finance various things. I wish I had never used them.  When I first started, I bought into the “credit cards are a tool” mentality, which caused me to quickly max out several cards during rehabs. This is fine when the market is great and the proceeds from the flip can pay off the card, but when the market turned and I turned those rehabs into rentals, the credit cards didn’t get fully paid off. I have spent the past four years tackling them now.  As Dave Ramsey likes to say, debt is slavery.
  3. Renting To Family – I’d heard it said a thousand times but still fell into this trap. Do not rent to family. Ever.  I’m sure you can think of many reasons that this could turn out bad – and they are all true. As a landlord, you will always be seen as a “greedy” S.O.B. by your tenants, so it is best not to have one of those tenants be in your family.
  4. Renting to Friends- Similar to number four above, renting to friends is a mistake. I have rented to friends and it has turned out great, but the few times it has turned out bad it turned out REAL bad.  It simply isn’t worth it.
  5. Not Learning From A Mentor – Most of my mistakes could have been solved by simply listening to someone who had been there before. If I could go back, I’d have joined my local real estate investment club immediately, followed around the good investors until they were sick of me, worked for free on a flipping crew to see how it was done, and become a real estate expert before ever spending a dollar on investments.

That said, I know that if I were to go back and change things, I would not be where I am today and I like where I am. However, I believe strongly in the importance of learning from mistakes as to avoid future ones and help others avoid the same.

Are there things you wish you had known? What would you change if you could go back? What can you teach others from your mistakes?

P.S. looking for hard money loans in California? Be sure to check out my friends over at northcoastfinancialinc.com. They have very competitive rates, can fund within a week and specialize in fix and flip loans and other hard money loans.

How To Qualify For A Mortgage: Three Key Numbers

by Brandon · 0 comments

So you want to buy a house.

Unless you have all cash, you are going to need to obtain a loan – called a mortgage.

So how do you get a mortgage?

Whether it is for an investment, a personal home, or any other reason – mortgages in today’s market can be tricky and difficult to obtain. However, mortgages are not a mystery and the rules are fairly straightforward when trying to obtain a mortgage. This post is going to look at the top three different areas that a lender is going to analyze before saying “yes!” to your mortgage request.

  1. Your Credit –  This is most widely known and the easiest of the bunch to understand. Your credit score is a number given by one-of-three private scoring companies. Your score is determined using computer-driven algorithms that take into consideration the amount of debt you have, the amount of late payments you have had, the length you have had that debt for, and several other factors.   A credit score can range between 300-850.  Lender’s want to know they are making a safe investment lending you money, so before applying for a mortgage, make sure your credit is at least 640. The higher your credit score, the lower you will pay on your loan.
  2.  Your Debt-To-Income:  This number is a ratio that looks at the amount of monthly debt you have compared to the amount of income you make. In other words, a lender looks at all the loans you have (credit card minimum monthly payments, auto loan monthly payments, other mortgages minimum monthly payments, etc) plus the monthly payment on the new loan and divides it by the total gross income you make per month.  For example, if I have a $300 car payment, $100 in credit card payments, and I am looking to pay $800 per month on my new mortgage, my total debt would be $1200 per month ($300+$100+$800).   If my total gross (before taxes are taken out) income for the month is $3800, my debt-to-income ratio is $1200/$3800 or roughly 32%.   In order to qualify for a mortgage, make sure your total debt-to-income percentage is below 50%, but ideally below 40%.
  3. Loan-to-Value: The loan-to-value (also called LTV) is another ratio that looks at the amount of the loan you are trying to get compared to the total value of the property. Generally speaking, the difference between the loan amount and the value is going to be your down payment. For example, if a property is worth $100,000 and you put down 20% and obtain a loan for $20,000 – the “loan-to-value” would be 80%.  This number is also important when you try to “refinance” a home.   What is an acceptable LTV? It differs widely between lenders and programs, but for a normal loan lenders do not like to loan at higher than 80%.  However, if you use an FHA loan (a loan guaranteed by the US Government), you can get up to 96.5% loan to value.

If you fall within the guidelines of the three areas above, there are still several other features that a bank will looks at before giving you money. For one, they like to see consistency at your job. If you recently (within two years) changed jobs, getting a loan can be much more difficult. Also, if you have never used any “credit” before, obtaining a loan can be difficult as well. Finally, remember that each lender has different programs and even within the same programs some mortgage professionals are simply much more competent and can help you get the loan you want.  If you are interested in buying a home for yourself, your first step is to talk with a mortgage professional. The meeting is always free and you will learn exactly what you will qualify for.

 

P.S. looking for hard money loans in California? Be sure to check out my friends over at northcoastfinancialinc.com. They have very competitive rates, can fund within a week and specialize in fix and flip loans and other hard money loans.

123