Real estate investing is one of the top ways for average individuals to build long-term, generational wealth for their families. So why don’t more people invest in real estate? Some people simply don’t know how to get started.
Investing in commercial real estate can feel overwhelming, especially for those who have never invested in alternative assets. Learning about the sector is a great way to build both knowledge and comfort with the asset class. In fact, even the most experienced real estate investors will continue to read books on the subject. Simply as a way of mastering the field.
Key qualities of “good” partners include
people with high ethical standards, strong morals,
intellectual curiosity, and abundant curiosity.
There are thousands of books on real estate investing. Some are more worthwhile than others. In this article, we provide our recommendations as to the top ten books that every real estate investor should read.
Top 10 Books for Real Estate Investors
1. Rich Dad, Poor Dad by Robert Kiyosaki
This book is considered a classic among real estate investing books. Kiyosaki starts by teaching very basic financial lessons, just as an average father or mother might teach their young children. Then he pivots and starts to discuss the financial lessons that a “rich” dad would teach his children. For example, a poor dad might tell his children, “we can’t afford to invest in real estate” whereas a rich dad will ask, “how can we afford to do so?”.
One of the key features of Kiyosaki’s book is his “Cashflow Quadrant”. The four quadrants are as follows:
- Employee: The amount of active work determines income (time = money)
- Business Owner: Income does not depend on active work (employees = money)
- Self-Employed: Amount of active work determines income (time = money)
- Investor: Income does not depend on active work (money = more money)
As you can see, for someone looking to build their wealth. They will want to fall into the investor category where their money is working hard for them.
2. One Rental at a Time by Michael Zuber
Here is a classic real estate investing book for those who have full-time careers but who are excited about the possibilities of reaching financial freedom through buy-and-hold real estate. Zuber chronicles the journey he and his wife took to build their portfolio, as you might expect, one rental at a time. Unlike other books that read like a “how to” guide, this book is written in narrative form, with Zuber sharing honest, candid lessons he’s learned along the way.
This book is easy to read, entertaining, and most importantly, very practical for those (especially those with full-time careers) looking to start their real estate investing journey.
3. The Snowball by Warren Buffett
Warren Buffett is one of the savviest investors of all time. In this book, he answers the question: how do I use time to my advantage rather than it working against me? This is an important concept for every prospective real estate investor because ultimately, the goal of real estate investing is to earn passive income without having to spend additional time in that business. To that end, Buffett argues, “Time is the friend of the wonderful business, the enemy of the mediocre.”
Buffett also compares life to a snowball: “Life is like a snowball. The important thing is finding wet snow and a really long hill.” The concept here is that investing a small amount in real estate today. If invested wisely of course, can result in compounding wealth that continues to build over time. This is why it is important to invest early and often, as those investments are key to long-term success.
Reinvest your profits is the only way
to take advantage of compounding growth.
Other advice from this book includes:
- Reinvest your profits. This is the only way to take advantage of compounding growth. If you buy a cash-flowing property, continue to reinvest those dividends in the property or other real estate assets.
- Be willing to be different. Those who follow the herd never get ahead in life. While it may be scary doing something considered outside of the “norm,” like investing in real estate. It can pay off in spades if done properly.
- Never suck your thumb. Here, Buffett is trying to stress the importance of taking action. Some real estate investors are struck by “analysis paralysis”. For example, they spend so much time evaluating individual deals that they lose out on the opportunity altogether. Instead, Buffett argues that people need to be prepared to take action when a promising opportunity comes along.
- Spell out the deal before you start. Buffett is a proponent of getting all details of a deal in writing before taking action. Those who rely on verbal or handshake agreements will eventually get burned.
- Watch small expenses. The book recounts a story of a man who counted 500-sheet rolls of toilet paper to make sure he wasn’t being ripped off. While this seems like an extreme example, the point Buffett is trying to make is that small expenses eventually add up. Meaning a savvy investor will want to track every penny accordingly.
4. The Art of the Deal by Donald Trump
Putting all politics aside, arguably one of the greatest real estate negotiators of the modern era is former President Donald Trump. The Art of the Deal is a classic real estate investing book that stresses the importance of negotiation skills.
Trump also recognizes that not all negotiations will be successful, to which he argues “sometimes by losing the battle, you find a new way to win the war.” In other words, there are lessons to be learned from every unsuccessful negotiation. Real estate investors should take these lessons and apply them to future negotiations, to overtime, increase their likelihood of success.
5. The Millionaire Next Door by Thomas Stanley, PhD
Many would-be real estate investors continue to sit on the sidelines because they are unsure of how to access the capital needed to invest in their first deals. The Millionaire Next Door is a great read for those looking to save money now so they may invest in real estate later.
Stanley touts the benefits of being thrifty with statements like, “wealth is more often the result of a lifestyle of hard work, perseverance, planning, and most of all, self-discipline” and “whatever your income, always live below your means”.
Stanley comes to this conclusion after having studied the habits of millionaires. He found that, typically, millionaires have seven things in common:
- They live below their means, which ensures they have more money to invest.
- They use time, energy and money efficiently.
- They seek financial independence, not “wealth artifacts” – i.e., symbols of wealth.
- They have no “parental economic support” and must persevere on their own.
- They raise self-sufficient adult children.
- They leverage the market based on current economic conditions.
- They choose the right vocation(s) that enable them to succeed.
6. The Richest Man in Babylon by George S. Clason
This book, first published in 1926, is a collection of stories that highlight wealth-building that, like the great ancient city of Babylon, have endured the test of time.
For example, one “rule” the book puts forth is “money comes gladly to those who save one out of every ten coins.” This refers to the need to save a certain percentage of your income, and that savings can then be reinvested into something like real estate – an asset class that can generate passive income that will help to grow an individual’s wealth.
Another pertinent rule is to “control your expenses,” a theme that runs through many of the books profiled here today. The Richest Man in Babylon urges people to study their living expenses. Finding ways to control, reduce or eliminate costs completely.
This book is a simple, easy read for those looking to invest in real estate. Providing lessons that will continue to be valuable regardless of how large someone’s portfolio goes on to be.
7. Who Not How by Dan Sullivan
While this book is not focused exclusively on real estate, it is a popular read among real estate investors. The book is designed to shift a person’s thinking from “How am I going to get this done?” to “Who is going to get this done?”. It teaches individuals to become the quarterback of their investment portfolios—i.e., steering and helping to execute decisions, rather than being like a golf pro whose success is solely dependent on their own performance.
Sullivan advocates for people to serve in a CEO capacity instead of trying to project manage each of their own deals from start to finish. This, he argues, is how people grow their businesses and achieve scale.
One lesson with direct applicability to real estate is as follows. If we assume that each real estate investor is not keenly familiar with the ins and outs of commercial real estate, then we can start to imagine a situation in which those investors step back and ask: who is better equipped to do this on my behalf?
Those investors will often determine that the most practical approach to investing in real estate is, therefore, to co-invest in a syndicate alongside other like-minded individuals whose investment(s) are managed by an experienced sponsor on their behalf.
8. Extreme Ownership by Jocko Willink and Leif Babin
The basic premise of this book, co-authored by two former Navy SEALs, is that if you are the leader of an organization (or an investment portfolio, in other cases), then you must look at everything as though it is your fault. This is the concept of “extreme ownership” – taking ownership of all decisions, large and small, regardless of the outcomes, good and bad.
For example, if you own an apartment building and the property manager makes a mistake. Ultimately you are the one responsible for the actions of that property manager and you must own those actions accordingly. If the property manager makes a mistake, it’s on you. You either hired the property manager, chose not to fire the property manager, failed to have proper quality control systems in place, and so forth.
Too often, real estate investors point the finger at others. “The contractor screwed up,” or “the permits were delayed,” etc. If you are the leader, these become your mistakes that you should own and take responsibility for correcting.
The author argues that those who embrace this mindset will continue to grow and learn from their team’s mistakes. In the long run making the team stronger.
9. Pitch Anything by Oren Klaff
On the surface, some readers might be turned off by a book titled “pitch anything” – after all, the notion of “pitching” something to others can seem very sales-y. But despite the title, this book is a tremendous read about how to get people to see things from your perspective.
This is an incredibly important skill for those in real estate. Klaff discusses the concept of “frame control”, which is how you build credibility with people so they take the time to listen to what you have to say.
Notably, Klaff talks about how the brain processes information in different ways. For example, if someone tells you that they think investing in real estate is too risky. You might respond by telling them about the great returns you’ve made or the equity you’ve built up over time by doing so.
Appealing to someone’s sense of logic, which the Klaff notes happens through the brain’s neocortex region, is not always the most efficient way of convincing someone of something. In fact, they don’t want to hear about any potential rewards associated with real estate investing. This is until you have convinced them first that they won’t lose money by investing. A “fight or flight” reaction that occurs in a different part of the brain.
Pitch Anything Real Estate Scenarios
Let’s look at how this applies to real-world real estate scenarios. A sponsor looking to raise capital for a deal might be trying to convince people to invest with him. However, that sponsor has very little experience.
Rather than touting the soundness of their business plan. The sponsor might instead talk about how they’ve already lined up $15 million in capital from a national lender. That lender has conducted thorough, rigorous underwriting already and after vetting the deal, saw the merits in making a substantial loan on the property.
This is a good way to help provide prospective investors with comfort. Moving away from the emotional “fight or flight” area of the brain, to the area of the brain that focuses on logic. At this point, the sponsor can then talk about the business plan, expected returns, etc.
In short, when someone understands how the brain processes information. They can then use this to their advantage as they “pitch anything” to others.
10. Trammell Crow, Master Builder by Robert Sobel
This story brings to life the journey of Trammell Crow, one of the world’s most visionary commercial real estate developers whose buildings span from the U.S. to Asia and on continents in between. The book follows Crow’s journey from small-scale real estate investor to global CRE icon. His portfolio includes more than 100 million square feet of office, warehouse, retail and multifamily development.
The book is a tremendous guide for those interested in real estate entrepreneurship. The key to his success was largely the strength of his partnerships. The book talks about how to identify, structure and manage partnerships. Some key lessons from the book include:
- People generally like dealing with nice people, so be nice, but be shrewd.
- Key qualities of “good” partners include people with high ethical standards, strong morals, intellectual curiosity, and abundant curiosity.
There are thousands of real estate investing books that have flooded the marketplace. Especially in recent years as it has become easier to self-publish books online. There are many more real estate investing blogs, YouTube channels and social media accounts hosted by “experts” trying to pass on their advice onto others.
Real estate investing is one of the top ways for
average individuals to build long-term,
generational wealth for their families.
Assuming that each person has limited time to devote to their real estate education. It becomes all the more important to identify the most valuable real estate investing books and begin there. The ten books featured here today are all a great start in that direction.
Of course, it’s one thing to read a book—but another to put that advice into action.
Are you ready to take action? Contact us today to learn more about how Smartland’s platform is helping investors grow their real estate portfolios.