Friday, July 3, 2009
The book this week was The ABC's of Real Estate Investing by Ken McElroy. I was introduced to this book by a friend of mine. He has become quite the adviser on the subject of Real Estate Investing, starting his own Investment Group LLC at the early age of 22.
McElroy's book is slow starting, (which is expected with any book that has "The ABC's" in the title) but it really picks up after a few chapters. I know that after reading this book I could make six figures in the business of real estate investing in 5 years or less. The first step is exactly that: Making a goal for yourself. Tell yourself that you want to make more than $100,000 annually in 5 years in multi-unit real estate investing. The goal you set for yourself has to measurable- "over $100,000", Time based- "5 years", and specific- "multi-unit real estate investing."
And now that you have your goal, it is time to hit the ground running. You will need to find a team because great things are seldom done alone. You will want a lawyer, accountant, engineer, etc. People that you can turn to and ask questions when they arise during your research. Another great thing about having a team to help you with your real estate dreams is you have people to keep you accountable. If you have ever worked out.. weight-lifting, running, or biking. You know it is so much easier to succeed when you have a partner to help you through.
You will then have to go out and find your ideal real estate. McElroy line-items just about everything you will need to look for when you are researching. This can be a fun time. Once you find the right property for you, this book will tell you how to find the "right" asking price. In the book there are detailed guides to writing your letter of intent to your buyer and how to go through the final process of acquiring your property.
After you have your property you will need to decide if you are going to be a the property manager- the person that handles the landlord duties- or are you going to outsource that job to property management company. I recommend outsourcing for any property over 8 units. Let someone else handle the rent checks, leaks, broken appliances, flooding, evictions, background checks, criminal checks and the list goes on. Outsourcing this job will allow you to work on researching other properties or continuing career goals. Property management companies will charge between 8% and 14% depending on the number of units and the company. However, remember that like all things, you get what you pay for.
As you venture into this new world of Real Estate Investing you may start small with a duplex or a small apartment complex. If you follow the guidelines laid out in this book you will have a steady cash flow to reinvest in new larger properties. The goal that I previously outlined in this review is not far-fetched. If you are motivated, put the excuses aside, believe in yourself, and really go for it you can reach this goal. In the current economy you have a goldmine of opportunity. Go do some research and put yourself out there. Interest rates are low and everybody is selling. Its a buyer's market, so take advantage!
I think this book is good for anyone that has ever thought about investing in property to supplement their income, but never really knew what steps to take. If you have any questions on the book don't hesitate to ask me a question. I would be more than happy to help anyone that needs it.
Amazon Link to The ABC's of Real Estate Investing by Ken McElroy