7 topics beginners (and all investors) need to study
OK, rookie. You have a long road ahead of you. In addition to a whole lot of hustle, knowledge will be your key competitive advantage.
There will always be more to learn—but don’t underestimate the power of intense, focused study. Commit to daily, real-world learning plus deliberate study of these topics and you’ll be better-educated than 90 percent of real estate investors.
- General principles and strategies
- Deal analysis
- Rehab and construction estimating
- Finding and negotiating deals
- Property management
- Legal and contracts.
These are your educational building blocks. Look at these as the “101 courses” in your real estate investor self-education. The books you read, the experienced investors you meet, and the mistakes you make will all be your teachers.
So take good notes!
BiggerPockets’ favorite reads
The Richest Man in Babylon by George S. Clason
BiggerPockets experts, like our Money Podcast co-host Mindy Jensen, adore this quick read. It’s only 144 pages and can easily be read in a single day or two.
The Richest Man in Babylon highlights a powerful personal finance principle: paying yourself first. Author George S. Clason walks you through a few simple, relatable stories to explain how to get out of debt while still paying yourself.
Clason goes on to point out that saving for saving’s sake is not enough. You need to save to invest.
So once you’ve gotten yourself out of debt and started paying yourself first, you can begin investing those savings. Which brings us to the next book…
Rich Dad Poor Dad by Robert Kiyosaki
There’s a good reason this is our most-recommended book on the BiggerPockets Podcast. Rich Dad Poor Dad has helped tens of thousands—if not hundreds of thousands—of people change their mindset and build serious wealth.
Author Robert Kiyosaki outlines a number of ways the rich separate themselves from the poor by sharing stories about an actual rich dad and poor dad in his own life.
The “rich dad” is a friend’s father, who is a successful entrepreneur in Hawaii. The “poor dad” is his actual father, who works a job and makes good money but never buys any assets and ends up never accumulating wealth.
Kiyosaki explains how to get out of the rat race and separate yourself from those who never accumulate assets and wealth.
The three biggest takeaways are:
- Make your money work for you, instead of working for money
- Know the difference between assets and liabilities
- Focus on acquiring as many assets as possible.
Building Wealth One House at a Time by John Schaub
John Schaub is the Warren Buffett of real estate investing. He offers down-to-earth, solid advice from more than four decades in the business as a landlord, house flipper, and lender.
Some people complain that investing books can be too basic. Those same people often ignore fundamentals while searching for glitzy, more complicated concepts that are—supposedly—”better.” But Building Wealth One House at a Time is all about the fundamentals. Schaub outlines a detailed strategy for achieving financial independence with residential real estate, including finding, financing, renting, and selling properties.
Schaub shows how you can build a fortune and achieve everything you want in life by investing in little real estate deals like single family houses and small multi-units.
He also discusses real estate appreciation and how it can make you rich. However, be careful depending upon appreciation as part of your real estate evaluation. Appreciation is uncertain and difficult to predict or depend upon.
A more conservative plan is to make enough money using other methods John talks about, like cash flow and amortization of loans. Appreciation may come, but your deal should work without it.
General real estate investing advice
Set for Life by Scott Trench
Now that you are paying yourself first and making your money work for you, what should your first investment be? A house hack, of course!
Set for Life by Scott Trench, the CEO of BiggerPockets, illustrates how to go from $0 in net worth to financial independence in three clear, repeatable steps:
- Create $25,000 in savings by being frugal and efficient with your money. Scott rides his bike to work and cooks all of his meals even today.
- Go from $25,000 to $100,000 in net worth by house hacking, which eliminates your housing cost. Additionally, find ways to increase your income, such as earning bonuses and commission at your job or taking on side hustles.
- Reach financial freedom by becoming a savvy investor and tracking your progress. There are a number of different ways to invest your money, including buying stocks and purchasing rental properties. Scott outlines both of these investment vehicles and highlights the advantages and disadvantages of each.
No matter how you invest, you must track your progress. Know your spending, track your investments, and take action to optimize both.
How to Invest in Real Estate by Brandon Turner
By know, you know to pay yourself first, house hack, and make your money work for you. But how can you acquire more assets?
The perfect introduction to real estate investing is a book titled, appropriately, How to Invest in Real Estate. It was written by Brandon Turner, who hosts the BiggerPockets Podcast, and Josh Dorkin, the founder of BiggerPockets.
Brandon and Josh detail a number of real estate investment strategies, such as BRRRR investing, fix and flipping, wholesaling, and even apartment investing.
Brandon and Josh provide actionable advice and effective strategies from their own experience—plus the experiences of 300-plus guests on the BiggerPockets Podcast. Seriously, there may not be another book out there that does a better job of describing all the ways you can invest in real estate.
Recession-Proof Real Estate Investing by J Scott
There’s little to no chance you haven’t heard news of the coronavirus and its dramatic impact on the economic outlook. In uncertain times, smart investors begin to plan for a possible recession and look for ways to safeguard their investments.
Even though Recession-Proof Real Estate Investing was written with the ’08 recession in mind, its lessons still very much ring true for 2020 investing, should the economy continue towards a downturn. If you’re looking for peace of mind amidst today’s panic, absolutely give this book a read. You’ll walk away armed with information on economic shifts, why they happen, and the strategies most likely to help you survive (and even thrive) during a recession.
Real Estate Finances
The Book on Investing in Real Estate With No (and Low) Money Down by Brandon Turner
Here’s another great book from Brandon, which is thorough and detailed in its coverage of non-traditional financing tools. He practices what he preaches—he has used most of these tools himself to create a great portfolio of real estate.
The title includes “no money down,” which might (understandably) be a turn-off. But realize that the book is not about getting rich quickly with tricks or buying something for nothing. The book simply provides a full toolbox of real estate financing techniques.
You can always use more conventional strategies—go to the bank, put 20 percent down, and take out a conventional loan, if you want. But do yourself a favor: Learn how to make money outside of traditional lending. That way, the rest of this real estate game will be a lot easier.
What Every Real Estate Investor Needs to Know About Cash Flow by Frank Gallinelli
This book is all about the numbers, which is perfect for real estate nerds. Success in real estate always comes back to the numbers. But amazingly, some so-called investors can’t even calculate them correctly.
This book explains both big-picture concepts, such as deal analysis, and nitty-gritty formulas. It covers just about every analysis tool in great detail, along with examples. Beginners will learn a ton, and any investor of any experience level should keep it on their bookshelf as a reference and refresher.
Frank also includes free Excel spreadsheets that let you get “under the hood” and see how the formulas in the book actually work.
However, the strength—and weakness—of this book is its thoroughness. Beginners may risk becoming overwhelmed or intimidated by so many formulas and analysis method. Yes, math is important for investors—but so are psychology, momentum, and consistency. Fear of failure or analysis paralysis can kill your investment dream.
Our recommendation? Pick the gold nuggets from this book and learn the essential, basic formulas. Then, return to this excellent resource over time as you grow.
The Book on Flipping Houses by J Scott
We like the way the author J Scott’s mind works. And we’re only a little biased: He’s cohost of the BiggerPockets Business Podcast. But we bet beginner flippers will love him too—he is systematic, thorough, and understands both the big picture and the details. That’s rare!
This book is a comprehensive guide to the house-flipping business. J also dives into the nuances of analyzing and choosing a target market. Many novices miss this fundamental step.
Use his insight to analyze your own market for potential flips—or any future markets you may venture into.
The Book on Estimating Rehab Costs by J Scott
Now that you’re well-versed in the basics, dive into flipping finances with this second excellent offering from J. This book, too, is systematic and thorough. It flows well and you can take the concepts and apply them successfully right away.
We love the way J Scott sections house rehab into 25 components, which makes estimating a flip’s total cost much more accurate. After all, missing just one or two repairs can make a big difference in your profits—so using a system like J’s is critical. Why reinvent the wheel? J wrote the book. Just copy him!
Every Landlord’s Legal Guide by Marcia Stewart, Ralph Warner, and Janet Portman
This book is a detailed reference manual specifically for all the legal issues landlords face. And it’s extremely comprehensive—it covers all of the normal sticky landlord legal issues like rejecting applicants, handling security deposits, and evicting tenants in addition to other issues, like potential liability for your property manager’s acts and how to handle subletting requests.
The book comes with a downloadable library of forms. However, it complements, not replaces, a great attorney. A resource like this is helpful when working with attorney—after all, you need basic knowledge before you can even ask the right questions.
Landlording on Autopilot by Mike Butler
Mike Butler is a funny guy, and he also provides a lot of great property and business management ideas and systems. There are many different approaches to property management—and yes, Mike has his own particular style, geared toward single-family houses and hands-off self-management.
You may not choose to adopt every single method he suggests, but it’s still one of the best books for its mix of practical, nitty-gritty details, funny and eye-popping stories, and big-picture strategies for investing success.
Building Your Business
The 4-Hour Workweek by Tim Ferris
There can’t possibly be anything left to learn about becoming a successful real estate investor. Right? Yes, by now you have all the tools necessary to invest and start to skyrocket your net worth—but there’s still one thing you should learn how to do. Create systems for your business so that it can grow and scale without you having to manually do all the work.
Tim Ferris’s book The 4-Hour Workweek illustrates this concept perfectly. He outlines how to create a lifestyle business that can be run on as little as a few hours a week (hence the title).
Most important? Define your goals, focus on the most important things, and outsource the rest. By following his approach, you create a scalable real estate business that is spitting out cash flow and constantly growing—even when you aren’t working.
Article by Connor Anderson for biggerpockets.com