Books are one of the most incredible bargains in the history of humanity. You can buy a book for the price of a few lattes. Want more articles like this? Create an account today to get BiggerPocket's best blog articles delivered to your inbox Sign up for free In return, they can spark life-changing ideas. What a deal! Books offer new insights. They can introduce a point of view that makes you say, “Hmm… I’d never thought of it that way.” They can open up a new door in your mind. If you walk through it, you might emerge a completely different person on the other side. In that vein, I wanted to share with you the three most impactful books I read in 2018 and the lessons to be learned from them. I believe that if I can persuade you to pick them up, they can really contribute to your growth as a real estate investor and entrepreneur. Atomic Habits by James Clear After reading The New York Times‘ bestseller The Power of Habit by Charles Duhigg a few years ago, I was fully convinced that I didn’t need to read another book on habits. Duhigg’s text was so well researched and comprehensive that I couldn’t picture what anyone could add to the conversation. I realized that I was wrong in that conviction just a few chapters into James Clear’s Atomic Habits. Where The Power of Habit was highbrow, academic, and scientific, Atomic Habits was practical and actionable. Clear took scientific discoveries and simplified them into a plan you can put to work to change your life. I must have underlined 75 percent of the book—it’s that good—but I wanted to share three key insights that had a major impact on me. 1. “Habits are the compound interest of self-improvement.” This was Clear’s central thesis. As a real estate investor and entrepreneur, my ears perk up whenever compound interest is mentioned. The more I thought about that statement, the more I realized the degree to which it’s profound. There’s a widespread myth that, if you want things to change, you need to take massive action. The truth is massive action does produce immediate results, but those results are not long-lasting. Given enough time, our motivation tends to subside, as does said massive action. We fall back into the same old patterns, which are dictated by our habits. 2. “You need to build a habit before you grow it.” As a self-motivated achiever type, this concept had escaped me until I read this book. For example, whenever I would decide to get in shape, I would get super pumped. I’d decide right then and there that I was going to work out every day for at least an hour. Three weeks later, I would abandon that plan completely. Or, if I wanted to clean up my diet, I would vow to never eat carbs again for the rest of my life. Fast forward a few weeks, and I would be devouring tacos al pastor from my favorite Mexican place. In Atomic Habits, Clear says the best way to build habits is to make sure they’re super easy. Instead of committing to work out every day for an hour, make it easier. Commit to working out for 10 minutes every day at a certain time. Once you’ve shown up consistently for a while, you can build it up from there and make the behavior automatic. I have used this simple but powerful concept to build several good habits over the last three to four months. 3. “We should be more preoccupied with our trajectory than our current results.” To illustrate, the author provides an example: if you’re rich but constantly spend more than you make, you will probably cease to be rich in the near future. Whereas, if you’re broke but living below your means and methodically investing your savings, you are on the way to becoming rich. Put differently, we should pay attention to leading indicators (current daily habits) not lagging indicators (current results). Related: 5 Transformative Productivity Books Every Entrepreneur Should Read Profit First by Mike Michalowicz Profit First is a book that significantly boosted the profitability of my business in 2018. It challenges the age-old equation revenue minus expenses equals profit on the basis of the “primacy effect.” The primacy effect says that we automatically place more importance and significance on what we encounter first. Therefore, when we think of business with regard to the traditional equation above, we are hardwired to focus on revenue and expenses, leaving profit to become an afterthought. This is how one might end up with a business that brings in lots of revenue without having much to show for that revenue at the end of the year (in terms of profit). Michalowicz taught me three important things that can boost profitability: 1. Turn the equation on its head and think of it as revenue minus profit equals expenses. In other words, focus on a target profitability that you’d like to achieve, and then restructure your expenses to make it happen. Of course, that’s a lot easier said than done—especially when revenue isn’t very high. But this system forced me to question the viability of my business expenses and really put them to the test. It made me ask, “Does this expense need to exist?” The most powerful effect of Profit First shone through during subsequent months of increased revenue. By questioning and trimming expenses upfront, most of the increased revenue flowed to the bottom line instead of getting lost in unnecessary expenses. 2. Build a formal business budget and forecast monthly. At the conclusion of each month, after all bookkeeping is complete, go through your profit and loss statement and compare it to your forecast from the previous month. At the same time, build a forecast for the coming month with the best information you have at your disposal. When I started doing this regularly, it became clear that I could tailor variable expenses (i.e., marketing) to match forecasted revenue, increasing the chance of showing a profit at the end of the month. It proved to be a game-changer. 3. Build an accounting system with dedicated bank accounts for categories like profit, taxes, emergency funds, etc. When you account for these items as you go, as opposed to at the end of the year, you’ll feel much more at peace while running your business. You will reach the end of the year with money in each of those accounts, and you will have removed a major source of stress for most business owners. Related: The Best Real Estate Books for Your Investing Business Never Split the Difference by Chris Voss [Hear Chris Voss’s BiggerPockets Podcast episode here!] When I heard about Never Split the Difference on The Tim Ferriss Show podcast, my first thought was, “Not another book on negotiation!” A few years back, I read some of the classics like Getting to Yes: Negotiating Agreement Without Giving In and Bargaining for Advantage: Negotiation Strategies for Reasonable People. I thought the topic was beaten to death. The world needed another book on it as much as I needed another hole in my head. Thankfully, I decided to give Voss’s take on negotiating a read anyway. It was nothing like the classics—in a good way. Voss used to be one of the top FBI hostage negotiators. He brings a real-life, street-smart perspective to the negotiation discussion. The aforementioned classic negotiation books are based on the premise that, when we enter into a negotiation, each party acts rationally in its own interest. As such, if you can figure out what the other side wants, you can propose a middle-of-the-road solution that works for all parties. (Think: a corporate merger is taking place and sophisticated negotiators are sitting around a walnut table wearing custom suits.) Never Split the Difference turns that premise on its head. It posits that, in real life, people make decisions that go against their rational self-interest all the time. In fact, many of our decisions are based on behavioral (as opposed to rational) reasons. Let’s look at a real estate example. How often have you seen the seller of a home pick a lower bid from multiple offers on the table because they were touched by a personal letter the buyer-to-be wrote? Rationally, they should take the offer that nets the most money. In reality, they made a decision based on how they felt. Based on this revised premise, Voss shares tactics like mirroring, labeling, and paraphrasing. Each will greatly improve your negotiation skills. Take my word for it, you want to pick up these books. I promise they’re worth a read. What have you been reading lately? Leave a comment below so I can add it to my list.