wjs-bookI’ve always been interested in how to make money within the real estate market. I decided to read David Crook’s Complete Real-Estate Investing Guidebook.

A very good read despite the age of the book. Here were some of the learnings:

  • Real Estate investing is a marathon, not a sprint. Avoid the get-rich-quick schemes.
  • Real estate is a key part of the portfolios of men/women on the Forbes 400
  • This is the path. Steady income with no significant debts. You still have to be frugal and similar to the Millionaire Next Door approach.
  • A modestly successful investor should be able to amass a seven-figure fortune.
  • 3 Questions to ask with all answers that should be yes. Be okay to walk away. Its business.:
    1. Is buying this property the best use of my money
      1. We could just invest in treasury bonds at 4%. After expenses, does the property make this amount?
    2. Will the property pay for itself?
    3. Can I increase the value?
      1. When you purchase, what can you improve to increase rent? Don’t just increase rent because you want to. Find value.
  • 4 most important rules in real estate:
    1. Buy a property for less than you can sell it
      1. Look for properties and neighborhoods that show improvement
    2. Use as much of other people’s money as you can
    3. Make sure your property pays for itself
      1. Its an investment. Treat it as such. You wouldn’t pay $1000 to just have an Apple stock.
    4. Take maximum advantage of tax laws
  • Your primary home is not an investment. It will always lose money. Rentals though are different.
  • Real estate business is good business. It’s giving people a place to live.
  • Real estate booms with the job market of certain areas
  • Smart. You make more money renting out 4 25 sq ft spaces… compare to one –  100 foot space.
  • A good location for your home may not be a good home for an investment property.
  • Keep houses within close proximity. Avoid long-term deals.
  • Approach like a business and have a business plan.
  • No property should ever cost more than it makes
  • Gov’t love real estate investors
    • Passive income benefits
    • Depreciation
    • Don’t use your house as an office for tax breaks. Bad news.
  • Look at opp for building sole proprietorship or LLC.
    • With little debt, some savings, liability insurance – you’re probably safe from excessive claims
    • Many investors setup LLCs for each property they own
  • Commercial is complicated. Contracts are more custom. And support is needed 24/7.
  • Residential:
    • Make sure the people on the lease are the only ones living there. More people = more rent.
    • Be consistent in checkups on the house. Do this at least six months to ensure everything looks good. Don’t lose touch.
    • Do annual maintenance
    • Liability insurance
    • Renters insurance
    • Review and ensure contract covers you. Also define terms of eviction.
  • REITs – Diversify. Ensure company has holdings in different regions, as well as different channels
  • Buy only properties that you can sell for a profit from right away
  • Keep investing and keep growing. 5th secret to real estate.
  • Leave your IRA alone. It shouldn’t be touched to pay for real estate investments.
  • In any market, there may be deals on the multi-family homes. When houses are in a sellers market, these houses may have better deals for the same price. Keep in touch with your property. This is not a business to pay money and then hope for the best. You have to keep a close hand on it.
  • Be frugal. Rich people have one dominant trait. They’re frugal. They drive ordinary cars, live in ordinary houses, and never overspend.
  • If done right, real estate investing can give you financial freedom. You can support your children’s educations, have a good retirement, and pass an estate to your children