This year, I’ve read more books than I ever have in my whole life. My desire to learn, grow and make myself a better person has propelled me to crack open (or listen*) to a new book at least once a month this year.
So, I’ve read my fair share of books. Pat myself on the back, right?
Wrong. (Use your Trump-voice, “Wrong.”)
Yes, I’ve read a lot of self-improvement books, but how much action have I taken on the content in those books? Not enough in my opinion.
I’d rather read 1 book per year and take major action than 100 books per year and take no action. In this situation, I believe knowledge is useless without action.
As a follow-up to my MKM Challenge from September, I want to hold myself accountable and put my knowledge into action. I’m going to start with the most recent book I read called The Book on Rental Property Investing* by Brandon Turner.
What was this book about?
Well, this one had a pretty self explanatory title. The Book on Rental Property Investing* dove deeply into all things buy-and-hold real estate.
My wife Nicole and I are very interested in becoming real estate investors, but we needed a strong education on what it takes to truly buy, own and rent houses. And man, this book was an eye opener.
Through the book’s 23 chapters, Author Brandon Turner covers topics such as:
- Property research strategies
- Finding the best deal
- Financing options
- Landing the right tenants
I’ve had experience managing properties so I thought I had the chops to be a real estate investor right away. After reading this book, I realize that property management is only one piece of this huge puzzle.
What are the top three takeaways?
This book had a multitude of juicy knowledge nuggets (mmm, nuggets) but here were three major takeaways that I gravitated toward:
1. This Form of “Passive Income” Is Not Very Passive in the Beginning
Buying, owning and managing rental properties is a lot of work. If we want to do it right from the start, this is going to take a lot of our time, attention and energy. This cannot be a hobby. It is serious business that can make or break our path to wealth.
Over time, we can modify our investing strategy to become more passive (property management, trusted contractors, etc). If we want to get great deals and maximize our profitability in year one, we’re going to have to get a little dirty.
Kudos to Brandon Turner for not sugar-coating this like some late night infomercial might!
2. No “Get Rich Quick” Scheme Here
Just like investing in the stock market, success and decent earnings take time. If our time horizon is short and we need money sooner than later, real estate investing might not be for us.
On the flip side, if we have patience to increase our knowledge, learn from the experts and build our portfolio over time, real estate can become an excellent wealth builder. As luck would have it, we’re in it for the long haul.
3. Real Estate is an Excellent Way to Reach Financial Independence
If done right, real estate can make us very wealthy and help us to become financially free. As described in the book, here are four areas in real estate that will help build wealth:
This is the extra profit left over after all expenses have been paid.
For example, let’s say Nicole and I get a rental property with a monthly income of $1,200 and monthly expenses of $600. That would give us a monthly cash flow of $600 for that property.
Real estate prices can definitely fall (remember 2008?), but on average over time, real estate values grow at a steady rate. Long term buy-and-hold rental property investors take advantage of that appreciation.
Loan Pay Down
If you use financing to purchase your rental property, the rent you receive from your tenants will help you pay down your mortgage principal.
According to Brandon Turner, the US government likes real estate investors. When compared to regular W-2 income, owning real estate allows you to save more on taxes each year. Consult a CPA for specifics but as they say in Game of Thrones, “it is known”.
What are the action steps?
After reading this book, I decided that I needed to do three things immediately:
1. Save up for a down payment
I’m now automatically contributing monthly to a high yield savings account earning an incredible (not incredible) 1.2% in interest. We should have enough saved by fall 2018.
2. Build my network of real estate professionals in my area
I’m planning to attend my first Real Estate Investment Association (REIA) meeting in a few weeks.
Additionally, I’ve received the name of a real estate agent who specializes in rental properties in my desired area. I plan to meet with him and a few other agents that specialize in real estate investing.
3. Interview more experts in real estate on my podcast
To continue learning from the experts, the Marriage, Kids and Money podcast will feature some new real-estate focused interviews later this year.
In late 2018, when I have a decent amount of money saved up I will do the following:
1. Read this book again
I want to make sure my knowledge is up-to-date! Not only will I read this book again, but I’ll read a few others (and take action on them).
2. Practice researching properties
A huge factor in winning with rental properties is finding good cash flowing properties from the start. I will practice and practice until I feel like I “get it”.
3. Make an offer on my first property
With strong knowledge, the proper money saved up and the support of my family, we’ll land our first property of many. Financial independence, here we come!
Is the book worth the read?
If you are interested in learning more about the specifics of how to get started in real estate, this is an excellent book for you.
Since Author Brandon Turner is a practicing real estate investor, you feel like he’s working alongside you in your journey. His writing style is fun, humorous and very relatable.
If you’re interested in reading, The Book on Real Estate Investing and want to support Marriage, Kids and Money, please click on the icon below:
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