Books

Book 617: The Book on Rental Property Investing – Brandon Turner

There is so much information packed into this book that you definitely have to read it cover-to-cover and then go back and use it as a reference or re-read each section as you need them.

The writing is straight forward and he offers dozens of tips and tricks for those interested in, those new to, and even those veteran of using real estate as an investment option. Turner walked a fine line of saying this is the best way versus this is what was the best for me, but might not be the best for you. That being said, he did a lot of pimping for BiggerPockets (hand that feeds you, etc. blah blah blah).

I get it, and as I neared the end of the book I decided to try out one of the calculators Turner mentions constantly on BiggerPockets, so I went to the website and got all the way through entering  the  information and was then required to sign in. Well played BiggerPockets. I didn’t mind signing in because I figured I’d check out the forums eventually, however since May 30, I’ve received ELEVEN emails not including the various password/account verification emails with six of those coming over two days! That is at least 5 emails too many. I get it you’re trying to engage me before I lose interest, but eleven emails over the span of five days and having three land on two different days was too much!

I won’t harp on about it, but I’ll also say almost all of the other books he recommends are published/produced by BiggerPockets too, so take that for what it’s worth.

One of the strengths of Turner’s writing is his humor and repetition.

“A great property manager can mean the difference between success and failure for your investment. I hope you didn’t just skim over that line. Just in case you did, I’m going to repeat it in all caps, bold, and italics: A GREAT PROPERTY MANAGER CAN MEAN THE DIFFERENCE BETWEEN SUCCESS AND FAILURE FOR YOUR INVESTMENT.” (106)

“They are doing a car loan for Bill Johnson, a house refinance for Sally Wiggins, and a broom loan for Harry Potter.” (280)

“Without action, you are just another book reader. Without action, you are just another wantrapreneur. Without action, you are just a wisher, a dreamer. Without action, you are destined to continue down the same path as everyone else. Without action, you are stuck.” (378)

That first quote made me laugh and then the dropped Harry Potter reference and “wantrapreneuer” nearly killed me because they just came at the perfect time. Turner had just dropped a lot of facts or was getting ready to drop a lot of facts and the break in seriousness of what he was explaining was great. That being said, there were also times where I questioned his (or his editors) judgement in allowing him to include some lines/references.

“Remember that high school movie where the homely girl was transformed into the beautiful prom queen when she removed her glasses and put on some makeup? (Yeah, me neither. I was watching Die Hard.)” (160)

“Your goal is to keep working the negotiation until both sides get what they want, so unbunch your panties and sit down at the negotiation table until you get what you came for.” (239)

“Tenants are like pets but with cell phones, Facebook, and lawyers. They need to be poked and prodded into submitting to the will of the landlord.” (346)

I don’t believe he was going for toxic masculinity, casual sexism, or trying to demean anyone (he actually said he wasn’t with the third one and was exaggerating for a reason), but that being said each of these read wrong to me, enough so that I highlighted them to go back to and consider in a larger picture. There had to be better ways to get some of this across without leaning into heteronormative/sexist stereotypes and crude analogies. It’s so hard to remove the author from a work that you have to take into account their religion/origin/politics/etc to get an idea of the shade of what is being told to you. I haven’t looked into Turner but I could make some general guesses based on the personal stories he shared and these types of passing comments.

And to sandwich the things I had issues with in the middle, there were two more that bothered me to no end. A large portion of the book was about “keep reading and I’ll tell you later” or “we’ll cover that shortly” and those are great, but there didn’t seem to be enough of acknowledgment of “remember when I said we’d cover x, y, or z later, well now is that time. I kept waiting for there to be a big sign saying that exact thing. Remember when I talked about loan types and said more to come in chapter two, well now is that time. He did this a couple of times, but there were so many more to come references I have no idea if he covered them all and I honestly finished thinking there’s got to be more still to cover because it felt like up until the last 10-15 pages he was still saying more to come. The other BIGGER issue was the copy editing/proof reading. As the book went along the errors got worse. I only pulled three out, but I highlighted half a dozen in the last hundred or so pages.

“Because of the legal scrutiny your loan must go through and the mounds of paperwork you’ll must provide, the process of obtaining a loan can be arduous, usually taking 30 days or more.” (253)

“This way, when you suddenly need a lease, application, or other form, you’ll won’t have to go digging to find it.” (302)

“The only trouble I’ve had is that some banks don’t work with Dwolla (usually small community banks) so prepared for such an instance.” (333)

I get that BiggerPockets is not a publisher, but they really should invest some money into a good proof reader/copy editor because this was the same mistake twice in a row (the first two) and just a dropped word for the last one.

Now on to the good, what was great about the book were the dozens of tools and tips that Turner provided. The book was clearly thought out and I felt that I understood more than I did going in. He also did a great job of categorizing how overwhelming the entire process can be and that you can have diving board fear and never actually leave the board. Go back up and read the wantrapraneur quote—he clearly gets that so many people (and he quotes a stat at some point) want to own real estate either as their own or an investment and yet get stuck in the planning and never jump.

And then, I was really glad to see something in his final thoughts chapter under “The Five Success Principles of Rental Ownership” that included giving back. Sure, he once again pimped for BiggerPockets from an educational and building a real estate investors community (he is the VP of Growth after all), but he also made a pitch for charitable giving to your local community.

“I believe strongly in giving back financially. If life has rewarded you, I feel you should give back financially to help those with fewer opportunities than you. Do some research and find an organization you can trust to use your money to make a difference in the world.” (377)

So even though I could make some assumptions based on his throw away comments above, I can make additional assumptions because of the inclusion of this as one of the five key things to do once you’ve become a successful real estate investor.

Recommendation: I wanted to like this more than I did, but overall I found quite a few bits of information that were useful and helpful even if it was overwhelming to read all in one go. If I were rating it on information and usefulness it would be five stars, but because of the devolution of the copy editing/proof reading and a couple of off hand comments I was put off at the end and it ended up around 3-4 stars.

Opening Line: “What if I told you that you could make millions of dollars in real estate, doing nothing but sitting on a beach?”

Closing Line: “Don’t sit on the bench while others take the field. Get out there and make it happen. Don’t wish it, don’t want it—do it.” (Not whited out as this is a work of nonfiction.)

Additional Quotes from The Book on Rental Property Investing
“Then I discovered another investing niche that took advantage of not just one but of four different sources of wealth generation: rental properties. Those four sources are appreciation, cash flow, tax savings, and loan paydown. Let me explain each one in more detail.” (14)

“Treat appreciation for what it is: a possible reward for an investment done right.” (16)

“Break even on cash flow or lose money on cash flow, and you are on a path to financial ruin. I’ll repeat myself one last time: buy rental properties that offer cash flow today.” (17)

“Tax benefits will never make a bad deal good, but they can make a good deal even better.” (17)

“Remember, price does not equal value. As Warren Buffet says, ‘Price is what you pay, value is what you get.'” (22)

“The amount of cash you should have in reserves depends on a number of factors, most notably the number of properties you own, the condition/age of those properties, the anticipated cost of fixing the properties (would you do the work yourself?), saving for larger future big-ticket expenses, and your management abilities. However, I would encourage you to start with six months of expenses for each unit you have.” (23)

“Find what you love to do in life more than anything else, and do that for a career. If that means teaching high school math, teach high school math. If that means traveling the world, then find a job that lets you travel the world. And if that means investing in real estate for income, then invest in real estate for income.” (32)

“Additionally, do you want just enough income to ‘survive?’ How much income do you need to thrive? A good friend of mine advises investors that ‘your business should bring in at least 3X of your current job before thinking of quitting your job. 1X for tax, 1X to survive, and 1X for reinvestment and unexpected events.’ I think his advice isn’t too far off.” (36)

“The key to rehabbing a BRRRR property is to make the property as ‘tenant proof’ as possible, using materials that will last a long time and won’t need to be redone later.” (78)

“In fact, passing the 2% rule test doesn’t really mean anything universally. The 2% rule test comes in handy once you know your local market. For example, in my local real estate market, I know that if I can find a property that gets close to 2%, it’s probably going to cash flow well. I know that because the rental income is so high compared with what typical expenses are, it should do pretty well. At the same time, I know that if something falls below 1.5%, it’s probably not going to cash flow unless the tenant pays the majority of the bills. When I get down to 1%, I know for an almost absolute fact that it will not cash flow in my area!” (24)

“Often, certain investments are working in your town, but they are just not working at your financial level. In other words, the numbers work, but they are so high that the barrier to entry is keeping you out.” (139)

“Using all cash is just one option for financing real estate, and for most people, the possibility doesn’t even exit.” (249)

“You may have found the real estate deal of the century. You may have achieved the best financing available. You may have the best plan, the best forms, the best mentor. But if you get the wrong tenant, you can lose it all.” (321)

“First, understand that the 1031 exchange is not just for real estate, though that is how it is most commonly used. In reality, a person could use a 1031 exchange to defer taxes on numerous asset types, from paintings to businesses to cattle to automobiles, but given that this book is specifically about real estate, we’ll keep our focus on that.” (361)

Other Books Mentioned

  • Think and Grow Rich – Napoleon Hill
  • Rich Dad Poor Dad – Robert Kiyosaki
  • The Book on Estimating Rehab Costs – J. Scott
  • The Book on Flipping Houses – J. Scott
  • The Boon on Investing in Real Estate with No (and Low) Money Down – Brandon Turner
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