In this book summary of The ABCs of Real Estate Investing by Ken McElroy, you’ll find my notes, valuable lessons, and important action steps.
The ABCs of Real Estate Investing Summary
Myths of real estate investing: you have to be wealthy, big deals are too risky so start small, flipping places or using no money down will get you rich, some people are just always lucky, you need to know everything, you don’t have time, you need connections to start, and you need to be a skilled negotiator.
Setting a goal is the first step to accomplishing anything of significance. So set a specific goal for your real estate investment business and break it up into smaller milestones to get there. Also, have someone hold you accountable to doing it and then tell people about it for extra pressure to follow through.
It’s far better and more profitable in the long run to have a team than do this on your own. You’ll want to hire a business team (attorney and accountant), property search team (broker and property manager), and offer team (attorney, lender, investor, and contractor), plus others.
Have fun researching potential properties through online research, face-to-face meetings with government workers, property walk throughs, and detailed phone calls with informed community members.
Supply and demand is what to look for in your property’s market. Steady employment, a strong local economy, schools, high population, and high drive-by-traffic are some positives to look for in your property. Never buy a sight unseen or a property you haven’t spent significant time researching.
“Identifying investment property is like dating. You want to make sure you choose wisely because you will be committing time, energy, and money.”
Narrow down to a submarket and get extremely specific about what property you’re looking for. It should be the right area, right price, right expectations to make a profit. Preparation is everything.
You’ll know whether to buy or pass on a property when you verify property income, verify expenses, determine net operating income, find the capitalization rate and valuation, and calculate the loan payment and your profit.
Never take an offer at face value from the seller. Crunch your own numbers to see if it’s a profitable deal or not.
Once you find a property you want where the numbers make sense, work fast to get a letter of intent and close the deal.
Due diligence can’t be overlooked. You must review every document, walk through every unit, and be aware of every details (good or bad). If you find problems not reported, then the seller has to pay.
Always seek to treat your residents with respect and quickly fix their problems to maintain residency and cash flow. If you’re not up for this 365 days, 24 hours a day gig then hire a property management company.
Real estate investing, when done right, will provide you incredible financial freedom and the lifestyle of your dreams.
The only thing you need to focus on is finding the right deal where you can make money off of it. Don’t think you need a personal fortune, you have to start small, or you have to be a real estate genius before you can get started.
Look for diamonds in the rough where the property is undervalued or the operations aren’t getting as much money out of the place as they could. Then when the market or you right the ship, there’s plenty of money left over for the bank, your investors, and yourself.
If you work hard to study the markets and property, properly evaluate the real income and expenses and property worth, and improve operations, real estate investing lets you sleep well at night while building unbelievable wealth that will change you and your family’s life.
Three Favorite Quotes
“It is easy to think that people who are successful investing in real estate have some sort of Midas Touch. But there is no such thing. They are just people who see opportunities and know how to make them real and profitable.”
“Realize you get what you pay for in property management. And how you treat your property management company is directly how they will treat you.”
“There will come a day when the properties my partner and I own will be sold. But until that day, the cash flow generated from them, and their appreciation in value, ensures that we have the ability to do the things we love today, and in the future.”
Action Steps For You
If real estate investing is not something you’re interested in, then I don’t have any action steps for you other than to get into the stock market by buying an index fund.
You need to invest your money in some fashion or you’ll fall behind financially.
When real estate investing is a priority of yours, you just need to get started now.
It’s free to research properties and their financials. It’s free to talk to locals and government officials to see where the market is going and some locations with big potential. It’s free to sign up for real estate newsletters.
Then start building your real estate team because it’s not worth it to try to execute a big deal on your own.
And buy this book to get the exact strategies to make offers, ensure you have a profitable deal, and boost profits once you own it.
You’ll build confidence and experience over time. But only if this is a priority and you take action.
Order The ABCs of Real Estate Investing
Or check out other book recommendations to become more successful.