I love investing in real estate, and it’s been more profitable and personally rewarding than any other investment strategy I’ve tried.
I’ve read a lot of books on real estate investing, and I’m occasionally asked to list my favorites.
There are tons of books about investing in properties out there. Many make outlandish promises such as “Buy real estate with zero money down!” or “Grow wealthy through real investing without quitting your job!”
While these best-case scenarios are possible, they’re not the norm. I avoid books by so-called “gurus” who promise the moon and make it sound easy.
Instead, if you’re just getting started, here are some that helped me build a strong foundation of practical knowledge (listed in no particular order).
Brandon Turner is an experienced real estate investor. He is the co-host of the “Bigger Pockets” podcast, which is the best resource I’ve found for a “boots on the ground” education in real estate investing.The Book on Rental Property Investing is a must-read primer on investing in buy-and-hold properties. It is full of takeaways that helped me build a strong foundation that’s enabled me to invest with confidence and expertise.
The book succinctly discusses how to analyze deals and make wise choices before you buy rental properties, how to do the basics and why cash flow is so important, and how to find tenants you actually want living in your rentals. You’ll learn about the mistakes to avoid when investing in rental properties. There are strategies for finding competitive deals and details about financing: what to consider and how to find financing to grow your rental portfolio.
If math isn’t one of your strong suits, real estate investing may not be for you. Buying properties isn’t the same as going shopping for other things. We’re talking about sizeable financial outlays on fixed assets that can’t be moved. The numbers are of crucial importance, and there’s a huge amount of financial risk you need to mitigate and manage. You’ll lose money (and potentially a lot of it!) if you don’t know how to expertly analyze deals, calculate the key factors that influence wise decisions and manage cash flow.
Frank Gallinelli’s What Every Real Estate Investor Needs to Know About Cash Flow… and 36 Other Key Financial Measures can help you figure it all out. Key takeaways include how to gather the data you need to make informed investment decisions, how to estimate what an income property is really worth, how to forecast the appreciation potential of properties. And there’s info on how to measure the returns on your investment – internal rate of return, capitalization rate and cash-on-cash return are all defined and explained in this resource. You’ll also find detailed explanations of all the calculations you need to learn and use to evaluate real estate deals.
Whether you plan on doing a complete tear-down or a minor facelift on a property, you need practical and battle-tested strategies to move forward efficiently and cost-effectively. The Book on Estimating Rehab Costs by J. Scott is my go-to book for figuring out what rehab tasks to undertake and then estimating the costs of completing those renovations. Scott breaks it down into 25 primary functional components of any rehab (10 interior, 11 exterior and four general) that you need to be concerned with and what to think about and budget for in each category.
This book details how to develop your scope of work — your essential game plan, which details what needs doing, the rehab costs, and creating and managing your budget. You’ll find out what questions to ask, who to ask these questions, and what to do with the information you receive. Also learn the best practices for paying for each of the rehab components. At the back of the book, an invaluable reference chart breaks down the detail and cost estimates for each of the 25 functional components.
Mark Ferguson is another hands-on, no-nonsense real estate investor. He shares what he’s learned on his website, Invest Four More. (In fact, you can read a guest post he wrote for Investor Junkie here.) He’s completed hundreds of fix-and-flips by building a well-run team of contractors, realtors and support staff. His book, Fix and Flip Your Way to Financial Freedom, shows you how you can successfully fix and flip.
You’ll learn how to determine whether to fix and flip or buy and hold a property, how to determine the real market value on investment properties, and how to make sure the contractor you hire will do a great job. You’ll also learn about financing options for your fix-and-flips, as well as how your rehab budget and scope of work should differ between fix-and-flips and rental properties.
If you’re embarking on a fix-and-flip strategy, another of J. Scott’s books, The Book on Flipping Houses, is an essential book to read before you get started — and refer to as you move forward. There are chapters to help you determine where to buy properties, what types of properties to buy and how to analyze deals.
Scott breaks down the basics of real estate contracts. These include how to make offers, what to include in your offers, and how to give yourself the best chance of getting your offers accepted. He provides checklists, goals and strategies for completing your due diligence tasks, and tips on navigating the world of contractors. You’ll also read about how to create a rehab schedule that ensures the project doesn’t drag on unnecessarily, how to prepare for inspections and appraisals, how to deal with difficult situations, and strategies to deal with common problems when they arise. Also included is what you need to know about staging, working with your agent to get your property listed, and handling potential buyers.
Taxes are complicated, especially when investing in real estate. The tax code actually provides for a lot of deductions that benefit taxpayers. The trick is making sure you take full advantage of them. Effective tax strategies can be the difference between opening your wallet to pay a large tax liability and depositing a tax refund in your bank account.
Amanda Han and Matthew MacFarland, the authors of The Book on Tax Strategies for the Savvy Real Estate Investor, are CPAs who specialize in real estate investing. They share the tax strategies they use for their real estate investing clients. That’s who I want giving me tax strategies on my real estate fix-and-flips and buy-and-holds.
The authors discuss how depreciation works and how accelerated depreciation can boost your investment returns even more. They cover what expenses you can really deduct and how to gift properties to your family rather than to the IRS. Other key takeaways are details on using retirement accounts to fund your investments and useful tips on bookkeeping to make tax time less painful. There’s also a clear breakdown of tax landmines and how to avoid them.
While long-distance real estate investing doesn’t appeal to me (I see more risk than potential reward investing in a property I haven’t personally walked through and analyzed), David Greene’s Long-Distance Real Estate Investing is a good book for those embarking on this investment strategy. More importantly, there are valuable takeaways useful for other investment strategies, including fix-and-flip and buy-and-hold.
You’ll find tips on paying less for quality rehab materials, what to consider when assembling your real estate team, the basic must-haves when hiring contractors, and the best practices for setting up good working relationships from the start. The book also covers how to find deals in other states. This is particularly important if you live in a state where real estate prices are so high that you can’t afford to get started. And you’ll learn how to evaluate a neighborhood. This is one thing that is vital to investing success, because you can’t move a house to a different neighborhood.
Readers: Do you have any favorite books on real estate investing that aren’t on this list? Tell us about them in the Comments Section below.