May I get some suggestions regarding which book I should thoroughly pick up and read and understand first? I plan to read both of them as I have already purchased them both but unsure which one to read first.
First - The book on Rental Property Investing
Second - The book on Flipping Houses.
Now I know I can't expect to compare apples to oranges but does one book have more "general" or "common" or "basic" learning material than other?
Any answer is appreciated.
Both books are excellent--why not get both? You could initially skim them and then go back and study them one at a time. If you decide to flip (or fix up distressed properties and rent them), you should also get "The book on Estimating Rehab Costs" by J. Scott.
Deciding what kind of investor you are is probably one of the most important things you can do as a real estate investor. In one way, you can compare it to being the choice between buying blue bonds or penny stock on the exchange. One is for long-term steady growth (via rental properties), and the other is a faster, albeit riskier, short turnover for quick cash where you can 'win' or lose a little or a lot.
You'll need to ask yourself about your risk tolerance, your knowledge base, your present situation, and your future plans.
Building wealth through rental properties is a systematic way to create passive income, making your money work for you while you're not lifting a finger. You buy a property, ensure enough cash flow that you have all the bills covered, and the tenants slowly but surely pay off the mortgage for you. If you have arranged it so there is surplus cash flow, you can funnel that surplus into savings to purchase your next rental property - and then your next - all with the aim of having your tenants pay off the mortgage and leaving you with that equivalent income when the mortgages are all paid off. If you prefer, you can choose to use the surplus cash flow as income now but, for this longer term strategy, you usually set a goal of how much income you would like to be earning passively in the future and just keep buying properties until that monthly target has been attained or surpassed. One rental is unlikely to support you in the manner you'd prefer to become accustomed. That's why this strategy is so much the better started as early as possible. It's also a reason that most flippers will eventually or simultaneously purchase rental properties. Other than purchasing instruments that earn interest or dividends or what have you, it's the most straight-forward source of 'passive income' that you'll find - your money earning you money without anything further that you have to do (well, other than keeping up with your property manager, etc).
Flipping, on the other hand, is a job, even if you're just the general manager. It's not passive, it's not slow and steady, and it's definitely riskier. It's a means to make quick cash. It's very important to know before you purchase a property, what you want to do with it because the calculations which will render it profitable or not-so-much rely on much different calculations. Finding a property that will be profitable according to the Bigger Pockets flipping calculator in the education tab above is much more difficult than finding a rental investment property.
As mentioned above, you'll need to look to yourself to decide on your risk tolerance, your patience and motivation to look for that 1:100 property that will work for flipping, your present situation and whether you have the time and money necessary, etc. etc. It's a decision that's impossible to make without insight into yourself.
Best of luck!
If it's your first book in real estate, you need to get a copy of a text book used by agents in real estate school to obtain their license, they can be had cheap on Amazon and an older text is fine because the basics of real estate haven't changed.
First you need to learn real estate, then look at how to deal in real estate, this way you'll understand what the heck is going on! Good luck :)
As others have said (and I agree), it's important to decide on a direction to start your investing career.
Every book I have read that BP has published has been great and has helped me. So I would recommend everything they produce.
I also have a recommendation for a book that came out recently- great read- that covers both subjects, almost all facets of investing- That Flipping Book. Here is a link below:
Hello @Valerie Hiscoe thank you for the great comment. I am a full time business owner and I initially wanted to buy and hold but I noticed how much flipper make (significantly more than buy and hold investors) but I think it's their full time job (for the most part) so I wanted to FLIP. But, considering how my business requires my attentions even on weekends, no fixed timings, I feel much better starting out as buy and hold investor and take it from there. So I'll start reading the book on Rental Property Investing first and understand it. thanks again.
A big thanks to other people as well.
Lakshay, I would also mention that it really depends on your market and timing. You can align yourself with a good realtor that understands investing, and see if they can give you some data. The market can dictate whether you want to buy/hold right now if the trend is going in your direction, or if the trend is moving toward flipping. Either way, I think you can do both in any market and be successful, just depends on the individual deal, knowledge, having a great team, and your negotiating skills. Just start out with one book at a time, and devour the information. Be a sponge. Action will create experience. Experience will produce wisdom. And wisdom my friend, is more valuable than gold or silver.
That's probably one of the most important things I've ever said on this site, I'll put it at #1 in fact.
Besides making a shameless self promotion like Ben L. (haha) you can go get the basics from my website, free, if you want to study real estate. I suggest you do that too.
If you were going to begin investing and dealing in diamonds, don't you think it would be logical to understand what those rocks were, how they cut, what different grades were, why they are used in industry and for jewelry or simply left as investment grade before you jump in and start dealing in this area? There are all kinds of ways you could buy or control these gems, different techniques could be applied to facilitate transactions, but unless you understand the product you'll fail at being a successful dealer because you won't understand why they are valuable or why there is a demand or why the market acts as it does.
If you went to work as a sales person for any company the very first thing they will ask you to do is to learn their products, know what it is you're supposed to be selling.
Most on BP don't know what they are dealing in, they think they do, but they really don't, even some of the old been there done that types don't understand the basics of real estate. (If they had they would have been more successful in this arena).
Lesson number one is the difference between real property and personal property, most assume techniques for dealing in real property are the same as dealing in personal property. That is not the case, legally or ethically, real property is one of the functions of our economic system, cars, boots, software, or dishes are not.
There is no guru book, no BP book, no investor site that teaches you real estate, it's always "how to" deal the cards, it's never about the rules of the game or the odds of selecting the right card. The stories of winning the jackpot and how they played the hand is seen as an education (sold by the gurus). If you attempt to duplicate, step by step, what another player did, you'll lose because no game is identical to another game.
You need to understand why real estate is unique, why it is valuable, how it is valued, why no two parcels are the same, what effects value that can be changed to profit from, why different regions have different market conditions, what the requirements must be to establish market value, how title effects value and how does title transfer, how government plays on real property requirements that effect value, and the list goes on.
Yes, you'll learn terms, legal terms, like encroachment, easement, plat and survey, property descriptions, market value and what must be present to establish a market value, what a single family dwelling is (many here don't even know what that is, yet they try to deal in them), you'll learn what property rights are and how certain rights are conveyed, what may cloud title or encumber title, what a lien is and types of liens as well as their priority, what responsibilities there are with ownership.....and the list goes on.
You really need to know what is and isn't legal or ethical in dealing in real property as opposed to personal property. Ethics isn't what you may believe, it's not religion or an opinion, business ethics is an accepted way of doing business in a certain industry and not all industries are the same. It's when the gurus take you off the beaten path with unacceptable practices that gets you in trouble and can ruin your reputation and business.
At the most, it only takes a couple weeks to learn the basics, in just a few days you can learn enough to know where the answer is for most any real estate topic or problem. Many on BP have been "reading" for months and still don't get it, that's why, because they don't understand real estate at a basic level.
About 90% of all the real estate questions I answer on BP comes from a simple understanding of the basics and applying those rules or theories, it's not complicated!
As long as folks don't study properly I guess my post count will continue to grow keeping BP stuck in a beginner mode. It would sure be nice if we could get past that elementary hump and move on to more advanced topics and strategies, but the lazy will always be with us.
You can read real estate folklore, like Rich Dad or How to Buy And Make A Million, but without understanding the industry you're trying to deal in and the influences that play on real estate, you're going to be lost and chances of failure go up.
So, the very first book you should study is one that teaches the basics of real estate, not real estate investing or dealing or operating. After you really understand what it is you're dealing with, then you can begin to apply tactics, your "system" or your strategies. :)
@Bill Gulley Thank you for that and thank you for always explaining the basics to all these newbies (including myself). I thought I knew enough, but I'm encouraged to go back to the basics and really understand the commodities I am dealing with.
I am interested in Flip and hold at first. I have a full time job and attend college online, so my only time would be some evenings and weekends. I just read the book "Fix em up Rent em out" from Terry Sprouse and that is basically what I would like to do; get a small fixer upper, renovate a little, then rent it out, and do this with a couple houses or more. If all goes well, then upgrade to fix them up and sell them.
You are so right! I had been reading here on BP, and many books for over 6 months and learning a lot; however, once I began studying for my license, suddenly so many concepts and terms really began to take on a whole new meaning.
To the OP, definitely consider reading an agent educational text, or start with whatever book you will actually read and are interested in pursuing. Reading something that doesn't really interest you makes for a slow, difficult read.
@Lydia S., Most of the new folks wanting to start out are 20 something, I've probably been on BP since they were in high school, started making mortgages before they were born, bought rentals when their daddy was in school, just putting things in perspective.
Getting out of school is a great life event and most don't want to go back to any text book!
What I found out is that any any profession or vocation, if you're going to be any good, learning never ends and the reading required isn't going to be real estate novels in real estate, it will be dry, factual and more technically specific, like a text book.
The instruction to put the real estate puzzle together are in the text books, otherwise you're just being shown pieces and many of those pieces don't fit.
Read the instructions first, then look at the pieces! :)
@Bill Gulley What do you think about learning about the actual nuts and bolts of house construction? Speaking of textbooks, I spent all my college years in construction textbooks for my degree in construction management. I read 600 pages of materials and methods of construction and even took a wood shop class, survey class, structures class, etc. What's your thought on people learning the construction and being able to under stand how foundations are made, windows are installed, what flashing is used for, and that concrete is not the same as cement?
A very good thing to study, need to know all the parts! It will be a huge help with contractors if they see that you know what a sofit is or a jam or a ridge beam. Kinda like trying to buy cars and not knowing where or what a master cylinder or fuel pump is. :)
Thank you all for the input. I'm reading The Book On Rental Property Investment and it's such a great book. Big thanks to Brandon Turner. I know I'm going to do my first deal before Summer 2017.
I also listened to Podcast 200 and it was a really good one for beginners.
I am almost done reading The Book On Rental Property Investing by @Brandon Turner and boy I feel so much more knowledgeable. I am analyzing deals and working on getting pre approved for loan from smaller banks already. As Brandon mentions, it's important to reread the book multiple times and he is so right, knowing what I know now from the book itself, reading it at least once more will clear up lot of smoke for me. I am motivated, pumped and excited to start journey of real estate rental investments and I know the grass will not always be greener on the other side, but at least, I will have a view of grass within my sight.