book suggestions on buying rental real estate?

[madrone]

Can anyone recommend a good book on buying rental property? We're looking to buy a duplex or triplex in a midwestern university town. I know the basics of buying real estate, but don't know the specifics of buying rentals.

Also, the rental we buy may be a beautiful old home. Any good books on buying old homes?

thanks

 

[Arif]

No book recommendations but I highly recommend the chat section at: www.mrlandlord.com
The posters there are very helpful and can steer you in the right direction and keep you out of trouble with the law.

 

[wildcat]

Arif-

Do you mind sharing your general real estate strategy during your accumulation phase?

 

[Nords]

Can anyone recommend a good book on buying rental property?

Try these classics:
(1) Investing in Real Estate, 4th edition or later, by Andrew McLean & Gary W. Eldred (who's taken over the new editions) and
(2) Landlording by Leigh Robinson (7th edition or later).

Also, the rental we buy may be a beautiful old home. Any good books on buying old homes?

Nothing comes to mind, but you're in for a real home-inspector challenge. Home Depot & Lowes probably sell how-to books focusing on this.

Before you start, you might want to watch the classic home-repair movies "The Money Pit" and "Pacific Heights".

 

[califdreamer]

Can anyone recommend a good book on buying rental property? We're looking to buy a duplex or triplex in a midwestern university town. I know the basics of buying real estate, but don't know the specifics of buying rentals.

Also, the rental we buy may be a beautiful old home. Any good books on buying old homes?

thanks

A couple of real estate books I like:
"Secure your financial future investing in RE" by Stone & Strauss (2003)
"Value investing in RE" by Gary Eldred (2002)

I personally prefer to invest in multi-unit housing rather than single family houses. I look for buildings that do not need much physical improvement but are underperforming due to poor management (squabbling partners, below market rents, etc.). Lots of reference material available about valuing rental property (Gross Rent Multiplier, CAP rate, cash-on-cash return, etc.) is out there. There are many ways to skin a cat. Others on the site may like SFRs and fixers better than fourplexes and apt bldgs. If you're in the Midwest chances are you are not in an overheated market so your timing could be very good.

 

[CyclingInvestor]

If you want one guru's rating of most of the other
ones, you can go to :

http://www.johntreed.com/Reedgururating.html

 

[Howard]

REITS offer participation in Real Estate with Professional Management and no Tenant hassles.

Buying RE at this juncture is too risky, Rates can only go one way, that cuts down on your potential Income Stream and also may decrease the value of the property?

My opinion only, never landlord and no desire to be one.

 

[Sheryl]

Try these classics:
(1) Investing in Real Estate, 4th edition or later, by Andrew McLean & Gary W. Eldred (who's taken over the new editions) and
(2) Landlording by Leigh Robinson (7th edition or later).

Nords, you must have a file of previous answers ready to paste -  I snipped your response to add to my list of books to read, and found it already there, verbatim. 

 

[HFWR]

Nords is really a 14yo female computer from Missoula...

 

[Sheryl]

I thought that was Uncle Mick?

 

[cute fuzzy bunny]

He's gotta be 15 by now.

 

[Arif]

(2) Landlording by Leigh Robinson (7th edition or later).

Nords, forgot about that one. Very good book.

Do you mind sharing your general real estate strategy during your accumulation phase?

When we started out the only retirement accounts that were available to us was IRAs and at that time the military didn't have Thrift Saving Plans (tsp) so we made a decision to invest our excess cash in RE back in 1998. The best way to describe our strategy in the accumulation phase (which we are still in) is as follows:

Buy a foreclosed property for $55k (other homes selling for 80k)
Repairs (HVAC, paint, etc.)       $2k
Sweat equity                          $23k
Rent for            $695/ mo
Monthly profit   $245/ mo

Let's say you can find five of these properties in three years (which we did) and your total equity is $115k. Now you can sell (or refinance, or take out a second)and do a 1031 with the proceeds and buy a $1M property with 10% down (your $115k equity) and a seller second or 500k without the seller second. Keeping in mind the main rule you "never pay retail" you should only buy a property with similar problems as long as you get it as a discount. So you buy the $1M property, do repairs, fix the mgt piece, and increase the value just 10% then you've created another $100k in equity for a total of about $200k. Also, your total net income from the property should have atleast tripled with the new purchase compared to your previous holdings.
There are a lot of snags along the way that can trip you up and are just part of learning. HOWEVER, the more you pay below FMV the more mistakes you can make and still come out with a profit and a lesson. If you pay market value you can't make any mistakes or your RE career will come to an abrupt end and your spouse will be pissed.  
Keep in mind these figures don't include realtor fees, closing costs etc. Also, this strategy works better in places that haven't appreciated to a point where value investing is much harder i.e. CA, DC, etc.
Bargains are out there you just have to look for them and be patient. I just saw a property listed for sale that needed repairs and good mgt. It was listed for $1.4M (104 units) and needed about $200k in repairs but after repairs it was worth atleast $2.5M. Someone realized the same thing and bought it already. Time on the market was 7 days before it was bought so someone (not me) will make a pretty penny not including the rental income.
These opportunities come along more often than I can keep up with. This is why I love real estate. 8)

 

[unclemick]

Hey!

I'm a 1000 miles closer to Missoula than I was in LA!

I was a duplex landlord for 15 years - did ok - but not my bag.

There is a lot of visible remodeling going on - old Vic's here in St Jo, MO.

If it's a long winter - may get the itch - even though I know better.

Will try to stick with doughnut shop B.S.ing, stocks and other hobbies.

But??

 

[Nords]

Nords, you must have a file of previous answers ready to paste - I snipped your response to add to my list of books to read, and found it already there, verbatim.

Uhm, yep. I get that question a lot, not just on this board.

It's part of my 10-page reading list...

 

[califdreamer]

Remember that the real estate boom mostly involved single family homes on the coasts. Many areas did not appreciate much at all and most multi-family markets were in tough shape because many renters were buying homes. Higher interest rates will actually be a boon to multi-family property values. I agree it's a poor time to buy real estate in CA, NV, south FL, greater NY, greater Boston, DC and some other areas. I think it's a great time to buy in the Rockies, a lot of places in TX and some places in the Southeast.

 

[Sheryl]

Remember that the real estate boom mostly involved single family homes on the coasts.  Many areas did not appreciate much at all and most multi-family markets were in tough shape because many renters were buying homes.  Higher interest rates will actually be a boon to multi-family property values.  I agree it's a poor time to buy real estate in CA, NV, south FL, greater NY, greater Boston, DC and some other areas.  I think it's a great time to buy in the Rockies, a lot of places in TX and some places in the Southeast. 

Unfortunately (for me) prices in Ohio seem not to have gone up at all in the last 20 years!  My mother's house, which my brother and I inherited is worth about $180,000.  Similar house here in WA would be about $375,000 or more!

 

[madrone]

I just wanted to thank everyone for your suggestions.  This forum is worth it's weight in gold...

 

[Mr._johngalt]

I just wanted to thank everyone for your suggestions.  This forum is worth it's weight in gold...

I agree with you on the forum. No book suggestions for you.
I could write a good one...........too lazy. But, here is a story
that may help someone.

When we arrived at the Texas condo, it had been cleaned
(I paid for that) but the tenants were long gone and as usual
owing me money. There was some damage
but their damage deposit had been applied to the back rent.
Anyway, I got a court judgement for $727.00 which usually
is worthless. However, there was a bunch of personal
property missing. I told DW "I think maybe I will call the cops!"
She said, "I think you should." Long story short, a deputy
came out and an hour later the tenant called me wanting to cut
a "deal". See, it was one thing for him to owe me rent money,
but stealing made it a criminal issue, so I had some leverage.
I told DW that we were lucky they were thieves as I was able
to scare the money out of them. So, it all worked out in a perverse kind of way.

JG

 

[bearkeley]

Weekend Millionaires Guide to Real Estate Investing is a straight forward and easy read which covers the basics on investing in rental Real estate. The focus is on making sure the properties you are buy will generate a positive cash flow. It is a get rich slow book. It was very helpful in gaining the confidence we needed to make our first purchase as an investment.

Mr Lanlord's forum is also a great place to look for information

 

[cute fuzzy bunny]

I could write a good one

Cute fuzzy bunny wishes you were more motivated! You could roll up all your real estate stories to great benefit for others! Cute and fuzzy bunny even has a title idea "Major mistakes to avoid when working with real estate"!

 

[sgeeeee]

. . . No book suggestions for you.
I could write a good one........

Having written several books and sat through many booksigning events and public appearances, I can tell you this. About 90% of the people in bookstores could write a good book. All of them feel obligated to tell actual authors this fact.

 

[poyet]

Curious that nobody mentioned commercial RE as an alternative or NNN props. Dealing with companies normally creates less problems as they either pay (and stay) or go bankrupt and leave (disappear, cease to exist and the problems with them). It may take some time to get rid of a bankrupt cie with a lot of stuff left in your prop - especially when we talk of industrial activities (happened to me last year, they were buidling heavy lorries and you cant remove stuff with your small hands...) - but is less of a hassle than families having social / financial problems... Returns are also between 15 and 10% (before taxes) and therefore higher than residential estate. 100% of my income stream is from commercial RE.
My two cents.

 

[Mr._johngalt]

Curious that nobody mentioned commercial RE as an alternative or NNN props.  Dealing with companies normally creates less problems as they either pay (and stay) or go bankrupt and leave (disappear, cease to exist and the problems with them). It may take some time to get rid of a bankrupt cie with a lot of stuff left in your prop - especially when we talk of industrial activities (happened to me last year, they were buidling heavy lorries and you cant remove stuff with your small hands...) - but is less of a hassle than families having social / financial problems... Returns are also between 15 and 10% (before taxes) and therefore higher than residential estate. 100% of my income stream is from commercial RE.
My two cents.

Good point! I had good luck with commercial, but the old
"location, location, location" is even more important IMHO,
and everyone needs a place to live, but everyone doesn't
need another bookstore, insurance office, etc etc. But, my
experience is the same ( Less trouble with personal/family problems)
The commercial tenant may not pay, but you will probably
avoid some of the other landlord curses.

JG

 

[Mr._johngalt]

Having written several books and sat through many booksigning events and public appearances, I can tell you this.  About 90% of the people in bookstores could write a good book.  All of them feel obligated to tell actual authors this fact.   

Almost everyone in the world has a good story to tell, if only they could get someone to write it. I use the anology of the college
professor who could take a terribly dry subject and make it
entertaining. Same with personal life experiences. A good writer can bring it to life and make it a "page turner". This doesn't detract
from actual authors. Many people could do it (write) but few actually do. I am firmly in the latter category. Writing well is hard
work. Thus, I avoid it (except here of course).

JG

 

[Mr._johngalt]

Having written several books and sat through many booksigning events and public appearances, I can tell you this.  About 90% of the people in bookstores could write a good book.  All of them feel obligated to tell actual authors this fact.   

Another point about "actual authors" (present company accepted).
I have met a great many people who gave their occupation as
"author". They may never have been published, nor made any money at all, but they wrote and so.......................

Another aside. I am a big Hemingway fan. He believed
writing well was about as hard as work got, but he was
compelled to do it and was religious about it. For example,
a notorious boozer, he didn't drink when he was writing.
However, I suspect he began as soon as he got up from his
desk.

JG