You heard your coworkers talk about real estate investing and now wonder what the best books on real estate investing are to start making some serious cash!
However, before you jump to reading any real estate book I recommend you first learn the basics.
Learning the basics will help you grasp the material you'll learn from reading real estate books and increase your chances of being a successful investor.
But, if you already know the basics and just want to skim through the best books on real estate investing, feel free to use the table of contents below.
Why Read Real Estate Books in 2021?
Do enough research and you'll quickly discover that wealthy people attest a big part of their success to reading books.
Educating yourself can come in different forms, college, reading articles on the web, or getting extensive data and research on real estate books.
Books give you new insights and practical lessons learned from the author who sometimes took years to obtain the knowledge they're sharing.
When you open a book, think about what lessons you can pick up from other people's decisions, whether it be a successful move or an expensive fail.
Consider this a self-taught 101 course in real estate education with the authors as your teachers, who discuss their mistakes, so you do not repeat them.
The best part is that you can buy most books for under $20 and if you're tight on money you can always rent a book from your local library. So, there's really no excuse to not read!
How to Spot a Real Estate Investing Opportunity
Being able to spot an opportunity and seizing it is not as easy as it sounds.
Otherwise, hundreds of millennials would do it.
But recognizing a real estate opportunity based on the factors below will guide you before taking the plunge.
- Judge property location on how near it is to the amenities, scenic views, and green space.
- Base the property Valuation on listing price, investment analysis, insurance, and taxation.
- Plan your investment purpose for the property and study if you will buy and self-use, buy and lease, or buy and sell.
- Project expected cash flows and profit opportunities for profit and expense from rental income.
- Negotiate to handle leverage on financing the property mortgage on a fixed-rate, adjustable-rate mortgage, interest-only, zero down payments, etc.
Which Real Estate Investment Is The Best?
You’ve done your research and read a few real estate books, but the question to ask yourself is what kind of real estate asset is best for you?
If you want to dip your hard-earned money and invest, you have many options to make your choice.
Types of Real Estate Investments
There are different real estate investments to choose from, depending on your budget and your plans. Listed are four categories for investment.
A residential property structure such as houses, apartment buildings, townhouses, condominiums, and secondary houses leased to a person or family.
The most common is the single-family home, but there are duplexes, multifamily properties, and vacation homes.
Residential properties are an ideal investment and can generate profits of about 1-4% based on the investing strategy and competition in the market.
Income generated from these types of properties depends on the length of stay or live-in period of the tenant, at most times an individual or a family.
Homes are rented on a 12-month basis, or the lessor collects regular payment for short-term rentals.
Sometimes there is a yearly agreement of seasonal stay in a vacation home during the summer or winter or school break, another form of income.
There is an exit strategy that removes the residential investor from the real estate deal.
Buy, hold, rent is a long-term strategy of buying a property then executing minimal improvements that are acceptable for a person to rent out.
The rent should be higher than the mortgage to enjoy a steady cash flow and gain equity leverage. You may have put a downpayment of 20% but, you receive a 100% rate appreciation.
Flipping involves buying a distressed or undervalued property in an area. Rehab improvements to increase the property value are done to enhance its key features, then selling it for a good profit.
Rent-to-own or a lease option involves purchasing the property and renting it to someone else for a certain period. There is an option to making payments directly to the property owner.
Commercial properties include office buildings and skyscrapers leased to companies and small business owners.
The company’s length of use and its employees will fall under a rental or lease agreement under the multi-year lease.
The lease is negotiated longer with a clause of rental escalation every period of months or years during the contract renewal.
The real estate market fluctuates, but when you draft a contract for a shorter period, you can cushion the blow if rental rates drop and enjoy higher rates when the market is good.
The contract protects the lessor from being stuck in a long-term contract agreement without the flexibility to adjust the rental rates.
Most commercial properties are managed under Limited Liability Company (LLC), which charges 5-10% of rental revenue.
But if you plan to do it yourself, get a license to handle maintenance issues for the commercial property. Be sure to factor in property management expenses when evaluating a property price.
Commercial properties offer more financial rewards but also have more risks. The earning potential depends on the area location and will give an annual return between 6-12%.
You can apply objective price evaluations on the set conditions of the lease.
Request for the lessor or tenant's income statement and adjust the rent to a percentage of their income.
The rental rate follows the prevailing cap rate of the office spaces around the area.
A triple net lease transfers all property expenses, including improvements and maintenance charged to the lessee.
The lessee takes care of real estate taxes based on the area of the rentable property.
You have flexibility in the lease terms, security deposits, and termination rules not covered under state laws.
Retail properties comprise shopping malls, strip malls, and storefronts. It is an investment vehicle that can be an expensive and limited commodity.
But if you have a suitable location, then you will have tenants all year around.
The denser the area is populated, the more expensive land will be. Retail properties that need visibility and presence for their storefronts and wares to be on full display.
It means that they need to seize any opportunity to get the customer to walk in and sell their products. A busy street with heavy foot traffic gives them the advantage to display and sell their wares.
A retail property built to last a long time has an extended lease period of 10-15 years on net – lease.
That means the upkeep, insurance, and taxes are all handled by the tenant or lessor. Since retail properties do not have rent control, inflation or escalation is 1-3% per year based on your lease agreement.
A rental or lease agreement is between the business owner or tenant and the lessor.
There are special payment arrangements, like when the lessor receives a percentage of sales on top of the lease to reward the lessor for keeping the property looking new and freshly painted.
Here are some tips to find good quality tenants:
- Work with necessity-based tenants located in grocery stores, pharmacies, DIY stores, banks, or even government offices.
- Get stable tenants who've been in business for a few years and can show you their track record.
- Find tenants who have multiple streams of revenue.
Industrial properties include warehouses, storage units, car washes, and other special-purpose use.
Typically, these type of properties are located in less dense areas because they require more space for their employees or to house their products.
The businesses that deal with research, storage, logistics, e-commerce, production, manufacturing, assembly, distribution, and drive-through car wash are some examples of industrial lessors.
The retail giants have moved their marketing sales to the online platform, needing ready inventory when an order comes in. In the past, the industrial vacancies were at 5.1% or less for small-sized properties.
The spaces converted into multifamily or retail areas are now in demand for industrial space, with the need to set up logistics in different locations.
The tenants or establishments generate income and sales from customers who use the facilities. Investing in an industrial real estate property is successful if you note the following:
- Value-Added Investment is renovating an outdated or neglected industrial property and bringing it up to current market standards.
- Market Value Purchase is choosing a property with existing lessors or tenants. It can be a space that is ready for leasing. Be sure the rental rates you charge are sufficient for minimal improvements.
- Land Development is choosing a property that you can construct for industrial use but has to cost out per square foot to build.
Make Smart Real Estate Investments (Even if You Have No Clue)
When you decide to invest in real estate, consider your cash at hand and your risk tolerance.
I'm sure that you’ve heard of your parents always telling you never put all your eggs in one basket, increasing your odds at succeeding.
REIT means Real Estate Investment Trust, owned by a company that operates or finances real estate that generates income. Similar to the framework of mutual funds, REIT’s pool of capital comes from many investors.
The investor earns dividends from the real estate earnings without needing to buy or finance the properties and managing the rental.
You can choose to invest in a REIT company because, like stocks, they are publicly traded. While the company is highly liquid, it offers little capital appreciation on different real estate.
The REIT properties include hotels, medical facilities, offices, retail centers, warehouses, apartment buildings, cell towers, and data centers.
There are different REIT Companies.
- Equity REITs is income-producing real estate that is owned and managed. Revenues come from rentals.
- Mortgage REITs lend money to real estate owners and operators through loans, mortgages, indirect mortgage-backed securities. The earnings come from the net interest margin spread between the interest earned on mortgage loans and the cost of funding the loans.
- Hybrid REITs are a combination of the Equity and Mortgage REITs that owns properties and holds mortgages.
Crowdfunding is a way for real estate investors to invest their money into large projects.
Investments range from $1,000 -$20,000 (or more.) The benefit of crowdfunding is being able to invest in large real estate projects even if you're a new investor!
Real estate rental is not a passive income earner, but it is an active and time-consuming form of investment.
It provides a regular income while property value appreciates. Before you invest, it is wise to study the basics of investing in real estate.
- How viable is the rental property?
- How do you get financing for it?
- What is involved in operating and managing a rental?
- How do you maintain the property?
You need to make an informed estimate on the return of investment (ROI) on the property you are interested in.
It is a bit more complicated to calculate this because you factor in capital-gains taxes on your stock sale and broker’s fees for buying or selling your shares. To predict the future, ROI will need estimates based on historical data.
- Market rental rates within the area.
- Vacancy rates within the location on a seasonal period.
- Ongoing expenses to maintain and operate the property.
- Reduced income because of rental vacancies.
The rental business assumes you will invest in a property for the long-term with two types of returns.
First, the property can appreciate because of property value and improvements made by the owner. The next is the potential of returns through positive cash flow through monthly rental payments from tenants.
There are two different investment strategies to flipping in real estate.
Owning real estate has the potential to accumulate wealth. Unlike the stock market that can fluctuate, the price of real estate increases its value.
Flipping provides a quick turnaround and avoids the hassle of finding tenants or maintaining the property, but at a higher price on the cost and taxes.
Note the opportunities in the real estate market.
It is best to consider passive income when you buy a property versus active income from flipping the property. A passive income continues to earn income while the property has monthly rental, while active income is the money you earn from the upgrades or rehabs done in the property.
These are some ways to flip properties:
- Buy/Sell Approach applies when you buy a property below the current market value on a property that is in financial distress.
- Fixer-Upper is a property with a structural design or condition issues that goes through upgrades to create value.
5. Real Estate Investment Groups (REIG)
Real Estate Investment Groups (REIG) are for people who want to own a rental property but do not want to deal with the hassles of running it. REIGs are like small mutual funds that invest in properties for rent.
Usually, a company buys a row of an apartment complex or condominium areas, allowing investors to purchase one or more by joining the group.
When you decide to invest in REIGs, you need capital funds and access to financing. A single investor can own over one unit. But it is the REIT company that handles the operations and management of rentals.
The maintenance and rehab, security, advertising of vacancies, and interviewing new tenants are all included.
Your name appears in the group lease, but the REIG pulls all the rent together to guard against vacancies.
You continue to receive rent even if your unit is empty as long as the vacancy rate does not spike too high to cover the costs. The REIG is a convenient management arrangement for owning rentals minus the effort.
Creative Ways to Invest in Real Estate With Little or No Money
You want to invest in real estate, but there is one big problem. You have no money or very little of it, so what are your options because you do not want to miss a golden opportunity?
Through creative financing, I will show you how to kick-off your real estate business.
Find a Partner
Partnering in real estate investment works well for new and seasoned investors, with many opportunities to cut a deal.
There is an understanding that one party might have more experience, but not enough money to pursue the opportunity. A partnership is formed and through negotiations and an equal share contract between two parties.
- Crowdfunded campaigns
- Informal written agreements between contacts
- Limited Liability Partnerships (LLP)
- Limited Liability Company (LLC)
- Joint Venture Agreements
The best type of partnership is when two parties bring a unique skill set to the table.
Most of the time, one party holds a great real estate deal but does not have the experience or resources to close the deal. It is when you should in a partner because:
- Have access to funds needs to gain and execute deals.
- Give another name to the ownership interest requirement of an asset-based or hard money lender.
- Wholesale properties and offer to a network of investor contacts.
- Spread your limited resources across more real estate deals.
- Learn from experienced investors.
Before you scout for real estate deals, decide on who to partner up with. Your partner will help you speed up and secure financing when you are short of cash.
The equity contribution will reduce your cost of leverage or getting into an enormous debt.
There are potential partners that you can approach and present your real estate ideas to. Some can be your blood relations, while others are experts in real estate:
- Family members and Friends
- Local Individuals with excess funds
- Real estate investors or Real estate groups
- Angel Investors and Venture Capital Firms
- Public Crowd of Peer and Accredited Investors
- Local Government and Housing Organizations
Find a Hard Money Lender
A hard money loan is a type of loan that is short-term bridge financing. It is secured or collateralized by real property and used in real estate transactions, with lenders as individuals or companies.
You use this option to raise money quickly but prepare for a higher cost and shorter funding time.
A hard money lender will loan you the total purchase price amount of the property, and some will give 100% of repair costs if you are an established house flipper.
The total amount of property value plus the amount of fix-up or repairs is the after repair value. As a newbie flipper, you can borrow 70% of the after repair value and payable within 1-3 years.
Some lenders will require the owner’s share or equity for the property to be reviewed for a loan. They will look if you have invested your equity or partnered up with another person to see if there is in the game.
The loan interest is higher than the banks’ or government lending programs because of the risk of lending money based on the collateral.
There are many reasons people make a deal with hard money lenders. Here are some factors why hard money lending takes place:
- Fast and ready capital that allows you to get started on the rehab of the property.
- The less stringent approval process, unlike going through the banks or government lending programs.
- Flexible repayment schedule on the rehab loan.
- Borrowers who have poor credit but substantial equity in the property.
- Stave off a foreclosure if the property has not been repaired or rehab for lack of financing.
- Useful to those who need funds during turnaround situations.
Wholesaling is finding a great real estate deal and signing the purchase and sale agreement with the seller.
Meanwhile, find an interested investor interested in the real estate deal and who will buy the property. You transfer the negotiated property to the investor who will pay you the wholesale fee for your effort.
Wholesaling in real estate investment puts you as a middleman by purchasing a property and immediately selling it to someone else at a higher price. It can be two sales or assigning your purchase contact to the person you are selling to.
You make a thin spread for a real estate property and turn it over to a house flipper who will then take rehab.
Some states have specific legal rules for wholesaling, but wholesaling is a legal strategy. You can enter an agreement without making a concrete purchase to the distressed seller.
The wholesaler markets the property to different investors and quotes a higher price than the actual amount. The investor agrees to the deal with the price difference as the wholesale fee.
The goal is to see the property or home to an interested party before the contract with the original homeowner closes.
There is no money exchange between the wholesaler and the property owner, not until an investor snatches up the deal. The profit of the wholesaler is the price difference.
To be a successful wholesaler and grow your wholesale business includes a lot of time, commitment, and patience.
You need good marketing and communication skills. But also keep in mind:
- Find the right property with homeowners who own distressed properties and eager to sell.
- Review the repairs or additions needed for the property.
- Pitch a price that is fair to the property owner.
- Add a contingency clause to the purchase contract that allows the wholesaler to back out in the absence of an investor.
- Try to build a network of investors that recognize a good deal.
10 Best Books On Real Estate Investing You Should Read Today
I’ve put together a list of books that will blow your mind with so many ideas.
Reading these books will eliminate any hesitancy on real estate investment because it will guide you through many options.
I’ve broken it down into three categories, books on having the right mindset, fundamentals of real estate, and flipping property.
1. The Millionaire Real Estate Investor by Gary Keller, Jay Papasan, and Dave Jenks
The Millionaire Real Estate Investor was published in 2005 and still in the top-ranked books for real estate investments.
More than that, it is a collection of 100 self-made millionaires who had the patience and perseverance to build their financial wealth and gain freedom from debt.
It is a leadership and training handbook for people to develop a mindset of a millionaire investor.
This book will teach you the criteria for identifying great real estate opportunities. It uses critical terminology in any transaction during negotiations.
Last, it will point out choosing your dream team to help manage your investments and grow your wealth.
2. Think and Grow Rich by Napoleon Hill
Think and Grow Rich was written in 1937 and published during the Great Depression. It is a narrative on personal development and self-improvement, not only for building wealth but also a philosophy that people can do and be what they imagine.
The writer was inspired by a suggestion of a business magnate and philanthropist, Andrew Carnegie.
This book is a follow-up on the earlier book, The Law of Success. It condenses the experiences of successful individuals into his 14 Principles for Philosophy of Achievement.
By suppressing negative thoughts and focusing on long-term goals, one can achieve success with desire, faith, and persistence.
Best Books On Real Estate Investing to Learn the Basics
3. Set For Life by Scott Trench
Set For Life is written by the CEO of BiggerPockets. Scott wants the reader to gain a solid understanding of money management, calculated risks, and hard work.
He shares his success in his real estate business three years after graduating college. Scott stresses living frugally to set yourself up financially and start house-hacking.
This book stresses how young professionals can build wealth while working full time. Earn an average income and make up for negative net worth.
Even if you start with zero savings, you can work your way to a substantial income that will lead to financial freedom.
4. Recession-Proof Real Estate Investing by J. Scott
Recession-Proof Real Estate is based on the 2008 Great Recession as a backdrop. In the story, some individuals survived and had better financial opportunities during economic turmoil and market crashes.
It explains the market twists and how to adapt multiple strategies to make money at every turn.
This book talks about the theories of four major phases of an economic cycle, namely expansion, peak, recession, and recovery.
There are economic shifts and real-world strategies for you to adapt to the distinct changes.
It uses a glossary of financial giving explicit instructions and an easy guide for every kind of investor.
5. Real Estate Investing With No Money Down by Brandon Turner
The author of The Book of Real Estate Investing is the same co-host of The BiggerPockets podcast.
He emphasizes one must use creativity, not cash, and never let your wallet’s contents define your future.
It discusses leveraging another person’s money for huge returns on your initial investment.
The book discusses no-money-down investing by calibrating your mindset into thinking that creative investing requires a creative mind.
It talks about attracting private moneylenders or partners to invest in your wholesale purchasing of properties, flipping houses, and income through rentals.
But it also tackles the downside of the business and how to overcome the ugly side of creative investing.
6. Landlording on Autopilot by Mike Butler
Landlord on Autopilot was written by a full-time police detective while managing 75 rental properties.
He discusses how to increase your cash flow with a push-button management system. There are also the little-known tax breaks available for full-time or part-time landlords.
The book identifies the most profitable property type with creative tactics to drive over 100% income.
It discusses screening and finding trustworthy tenants and getting rid of the bad ones when buying a property. It teaches you about landlord regulations and the legal rules of the city.
7. The Book on Tax Strategies
It discusses how to maximize deductions from your real estate business and ongoing strategy to make the next tax season less stressful.
This book will teach you how to protect yourself from an IRS audit and use your kids as a tax write-off.
It talks about the easy tips to cut down on bookkeeping time and writing off a few dollars during travel vacation. It supercharges the wealth and informs us how to save more than our income.
8. What Every Real Estate Investor Needs to Know About Cash Flow by Frank Gallinelli
The founder wrote this book to help investors and developers evaluate prospective deals.
It lists down 36 key financial measures using case studies to help the reader understand real estate investment. It emphasizes that real estate investments are all about the expected economic benefits of the property.
The book goes into detail about rates of returns, cash flows, and value estimates as measurements before making a big expensive purchase.
It teaches forecasting revenue streams, cash flows, expenses, and net operating income before you take the next step of investing.
It points out that if you buy a property; you need to look into the income stream derived from said property.
Best Real Estate Books for Flipping
9. The Book on Flipping Houses by J Scott
The Book on flipping Houses was written by an active real estate fix-and-flipper and website author of 123Flip.com. It is an A-to-Z guide for new and seasoned investors on succeeding on your first single-family house flip or your next-house flip.
It teaches you to look for a property worth investing on, learn how to fix it up, and walk away with a profit.
The book shows you how to learn creative financing options to fund the house you want to buy. It will point to properties that attract motivated investors and the real estate properties worth investing in.
It teaches you to create a working framework that includes budget financing and forecasted profit, contractor work lists for rehab, and selling the flipped property efficiently and as early as possible.
10. The Book on Estimating Rehab Costs by J Scott
The Book of Estimating Rehab Costs was written by an active real estate investor and fix-and-flipper expert. It is a guide on defining plans for renovation and working out a budget to do it.
It uses a professional framework to evaluate the renovation costs and a method from the planning to the execution stage.
The book will point out the most common problems that need repair and matching the right contractor to do the job. You will have an estimate guide on 25 components of the renovation.
You will learn how to budget cosmetic renovations and complex upgrades or installations.
Top Real Estate Resources
Reading real estate books will allow you to study and get the fundamentals, but there are other ways to learn.
BiggerPockets is a community that motivates its members to network with fellow investors and vendors, expand their financial portfolio, or guide you through your first investment property.
Signing up to be a member means direct access to resources like blog articles, podcasts, videos, and forums. You learn from the deal-evaluating calculators and updated resources for a better financial situation.
The biggest perk of being a member of BiggerPockets is exposure to Marketplace, where you get first dibs on the newest listings and off-market deals for investors.
You can buy books from the wide selection of investments and real estate strategies that will help you make calculated decisions.
EOFire is an outstanding community of entrepreneurs founded by award-winning podcast host John Lee Dumas (JLD). JLD’s podcast has remained a top podcast in Apple iTunes with 1.5 million subscribers and a multi-million dollar a year business.
JLD discusses Unique Selling Proposition (USP) to find your target niche market, build a rating fan base, and expand to creating income as an influencer marketer.
EOFire digs deeper through honest interviews, with the guests sharing the road to success and its milestones. But it analyzes the challenging times of a business owner and the mistakes done in the past.
The guest interviewee is encouraged to share the interview with their followers and creates a bigger audience. He emphasizes the importance of FOCUS which is an acronym for Follow One Course Until Successful.
Reach Financial Freedom by Reading Some of These Books
It is never too late to learn a new skill set, neither is it too late to learn real estate investments or rentals.
When you set aside time to read real estate books, you learn the general principles and strategies.
You need to sift through the listed books to gain knowledge on this business. The information from these books will help future dealings, forming the backbone of your success in the future.
As you read the books on this list, remember that taking action is just as important. It's easy to get caught up in reading and feel like you're accomplishing your goals.
Read 2-4 books to learn the basics and start taking action.
Whether that means saving money or making phone calls. Before you know it, you'll be a real estate investor and be on your way to financial freedom.