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Best Real Estate Investing Books for Beginners

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Are you looking to get into the world of real estate investing? This is a great opportunity for people to make extra money by letting your property do all the work: if you know the tricks of what makes a good investment. There are classes available for those who want tutorials from the best, but if you want to get a jump start, the best real estate investing books can give you everything you need to know.

So what are the books that real estate gurus like Jason Hartman use to guide their investment? As more people look to real estate as an easy way to make a passive income that lets them retire early, we’re seeing a boom in books that are suitable for beginners while also providing content for veteran investors. In this article, we’ll look at the best real estate investing books for beginners, and how they can help you get a fast start in the real estate market.

Our Top Real Estate Investing Books for Beginners:

The Millionaire Real Estate Investor

Is there a better place to start than with an aspirational book that will show you where you can go if you hit it big? Written by Gary Keller, this book is a collection of wisdom, experience, and helpful tips from one hundred of the most successful real estate investors in the world, all of whom are now millionaires. Geared towards beginners and full of ideal tips for making your first investments, it’s also a great motivational book that will get you excited about jumping into the real estate pool. 

The Book on Rental Property Investing

If you’re looking for a practical book that focuses on long-term investment for rental income, this guide from Brandon Turner is an ideal start full of easy-to-use strategies. Turner is a successful real estate investor and vice president of one of the top real estate websites available, and his focus in this book is on generating cash flow and avoiding the most common mistakes of rookie investors.

The step-by-step approach is ideal for keeping on top of things all the time. You never know when you need help to make a tricky investment decision.

The House Hacking Strategy

Some of the biggest challenges of real estate investing are the overhead costs of rent or mortgage along with the expenses of flipping a house and getting it up to sale shape. With this exciting book by Craig Curelop, it becomes possible to “hack the system” and save thousands of dollars on monthly costs by getting someone else to pay some or all of your rent or mortgage.

With this strategy, you turn your house or apartment into an asset that constantly generates money for you that you can flip into other investments with little to no work.

The Book on Flipping Houses

One of the most profitable strategies for real estate investing is house-flipping, but this requires a lot of knowledge on this risky, fast-paced practice. J. Scott’s book on the practice focuses on all areas of the discipline – finding the right properties to flip, rehabbing them for sale without eating too much into your sales, and finding the right buyers who will give you the maximum gain on your investment.

Like the others in the “The Book” series, this is a practical and comprehensive book ideal for giving new investors an exhaustive course in this area of real estate investment.

Retire Early With Real Estate

The best real estate investing books always keep their eye on the main goal of every investor – replacing that tiring nine-to-five job with a life of reaping money from investments. This book by Chad Carson, a wildly successful real estate investor who retired at age thirty-seven on his investments, focuses on the core investment techniques that will let you become financially independent.

It urges you to think big and start by creating your own five-step plan to retiring early on real estate income, and it’s full of practical advice ideal for anyone starting out in the investment world.

Rich Dad, Poor Dad

Equal parts investment guide and autobiography from investment guru Robert T. Kiyosaki, this classic book is a comprehensive guide on how to build and grow your wealth. Kiyosaki makes the case for tangible assets like real estate over intangible ones, and it’s full of strong advice on general personal finance help.

But if you’re looking for specific real estate advice, this book is helpful for its in-depth guide on how to generate passive income and ensure you’re working smarter, not harder, as you build your portfolio.

Buy, Rehab, Rent, Refinance, Repeat

Another essential guide for house-flippers, this book by David M. Greene has developed a comprehensive approach to turning around houses in the fastest timeframe, ensuring maximum profit. The biggest challenge facing real estate investors is ensuring healthy cash flow, and this book sidesteps that by focusing on how to get a speedy return on your investment.

It tackles each of the five steps to effective house-flipping, focusing on practical strategies like identifying the best properties to flip, negotiating effectively, and increasing your property value for little cost.

Every Landlord’s Tax Deduction Guide

No one likes paying their taxes, but if you’re going to make a career of real estate investing, it’s essential to know the ins and outs of tax policy. For those who are planning to handle their own taxes, Stephen Fishman’s book is an essential guide to the tricky layers of real estate tax policy if you want to avoid paying costly fines to the government.

It also focuses on the specific tax benefits landlords can take advantage of to boost their bottom line and what expenses can be deducted from tax filings.

The Perfect Way to Kick Off a Real Estate Investing Career

With the best real estate investing books, you’re now fully equipped to make your first investment. Used alongside digital tools like those available from Real Estate Tools, these books can help you get on the path to financial independence.

investor calculating cap rate

How to Calculate Cap Rate for Rental Properties

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As you start looking into rental property investments, one of the first terms you’ll hear is cap rate for rental properties. What is it, how is it calculated, and is it actually a good metric for determining the value of your property?

What is Cap Rate?

The cap rate (or capitalization rate) is the net operating income divided by the market value of the property.

cap rate formula chart

How to Calculate Cap Rate

To calculate the cap rate of a property, you will first need to find the Net Operating Income or NOI. The NOI is the income from rent minus expenses. If you’re looking at a potential property, you can get the income and expense reports from the current owner or you can estimate expenses. You can also contact the county accessor to find the property taxes for a specific property.

Once you have your net operating income, you divide the NOI by the price of the property to determine the cap rate. The more detailed your calculations, the more accurate your cap rate will be. For most properties, an accurate operating cost summary includes property management fees, HOA fees, taxes, insurance, and estimates for maintenance or repairs.

How to Value Real Estate Using Cap Rate

To determine the market value of a property using the cap rate, you will need the cap rate and the net operating income.

To find the market value of a property using the cap rate, determine the NOI and divide it by the cap rate to calculate the market value.

A simple example would be if your target cap rate is 10% and you estimate that the NOI is $10,000 per year. Divide $10,000 by .1 and you get a market value of $100,000.

What the Cap Rate Is Good For?

The cap rate is just one among many metrics and it has many limitations. It’s important not to focus solely on the cap rate when making an investment decision, for reasons that will be explained below.

Cap rates can give you a quick way to compare similar properties, but it’s important to remember that what counts as a good cap rate in one local market might not be a good rate in another local market. It can be useful when you’re comparing similar properties in a single local market. The cap rate can also come in handy in flagging unusual expenses. As you’re digging in to operating expenses to calculate the cap rate, you may notice an unusual cost that could be addressed. For example, an inefficient HVAC system could be raising operating costs dramatically.

Finally, a quick cap rate calculation can also help you understand trends in a local market. If you’re able to get data on cap rates for a specific area for five to ten years back, you can generate a profile that shows you at a glance what profitability is like and whether the trend is up, down, or flat. You must dig deeper before making any decisions, but knowing the trend might be helpful to start.

What Is a Good Cap Rate for Rental Properties?

Some experts use 10% as a standard minimum acceptable cap rate. A lot depends on the area where you’re planning to invest. In a profitable real estate market with steady, growing rental demand, an 8% cap rate might be much better than an 11% cap rate in a market that’s been stagnating for a while.

It’s important never to use the cap rate for rental properties as your only metric for making an investment decision, and especially when considering residential real estate. A better metric to consider is the overall return on investment. After that, the cash-on-cash return can also give some useful data, but, like the cap rate, it doesn’t give enough information to be the sole determiner for any investment decision.

Is Cap Rate a Good Metric for Rental Properties?

Cap rate doesn’t account for appreciation or leverage, which are two crucial metrics you can’t leave out and truly understand the value of a property for investment.

Popularity in Commercial Real Estate

The cap rate is a popular in the commercial real estate market but it is not as useful for single-family rentals. Firstly, commercial real estate doesn’t appreciate as well as residential because it’s based on income, and that income is tied to the consumer price index. Secondly, commercial real estate doesn’t have good leverage compared to residential. Lastly, financing isn’t as good with commercial investments as with residential.

Other Measures

The overall return on investment is the key metric to look at for residential real estate investment. If you want a metric close to the cap rate, use cash-on-cash return instead.

Cap rate and cash-on-cash return don’t account for inflation-induced debt destruction, the hidden wealth creator in real estate investments. They also don’t include the overall lifetime value of your property portfolio and the huge advantage you get from the 1031 tax-deferred exchange, which allows you to reinvest capital without paying tax at the time of sale. That’s in contrast to other forms of investment where you have to pay a significant tax before you can reinvest the money.

There are a few minor areas where the cap rate can be helpful, but overall it’s a flawed metric because it doesn’t consider appreciation and leverage.

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Best Software for Real Estate Investors in 2020

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Software can make life a lot easier, and now more than ever, it’s possible for the real estate investor to manage properties from nearly anywhere in the world. There’s a lot out there, but the following are definitely among the tried-and-true choices of the best software for real estate investors.

Best Software for Real Estate Investors in 2020

1. Property Evaluator

You’ve gone to a great deal of trouble to find a deal, and you run home to start crunching the numbers. That takes all afternoon, and by the time you’re done, the property is gone. If that sounds familiar, put an end to it with Property Evaluator.

You can run hard numbers on properties right on the spot in less than five minutes. You can also get a quick 30-year performance projection that takes into account all the key financial metrics, from CAP rate to cash flow. Use the app to compare several properties instantly and then just click a button to create a professional PDF report.

Features and Costs

The free standard version lets you evaluate up to three expenses on a single property, edit the values, save changes, store a photo, and use the built-in mortgage calculator. You can also do semi-annual compounding if you’re considering Canadian mortgages, and you get full support for international units and currencies. You get access to the reports but can’t print or email them.

If you move up to the Premium version at $20, you can add multiple properties and create what-if scenarios. You can email or print performance projections and compare and evaluate multi-unit and commercial properties. Finally, there’s a $40 Pro version with all the features of standard and Premium plus the ability to create portfolios, add multiple photos with captions, estimate costs of improvements, and create your own custom categories for itemizing closing and improvement costs.

2. DealMachine

Dealmachine allows you to enter an address, or even just take a picture with your phone, and get instant data on who owns the property, when it was last bought and for how much, and the approximate current value. If you’re interested, you simply click a button to send an automated note to the owner expressing your interest. If you want to send a more personal message, for a small fee, you can get property owner emails, physical mailing addresses, and phone numbers. Dealmachine is a great way to get talking with sellers, fast.

Features and Costs

In addition to what’s already been mentioned, this app will keep track of your driving route for you, so you never waste time in areas you’ve already been. Even better, if you’ve got more than one person working on finding properties, it will integrate the whole team, so everyone’s map shows what’s been covered. It will also keep track of mileage for tax purposes.

The Basic version runs about $50 a month and allows unlimited owner lookups but only one full-access user. The Professional version is close to $100 a month but allows two full-access users and two limited-access users, more sophisticated personal letters to send to sellers, and lowers the fee for accessing detailed contact info.

3. Property Fixer

If you’re looking to flip properties, this is the perfect software for getting it done. Simply input the information about a property and then get a detailed flip analysis with profit, return on investment, and a thorough analysis of the property before you buy. Whether you’re looking at a short sale, REO, or commercial property, Property Fixer can do it all.

Features and Costs

The free Standard version lets you evaluate up to three expenses and one property. Change your holding period anywhere from 0 to 30 years to see how the numbers update and use the built-in mortgage calculator with payment schedules to get a clear view of expenses. The $20 Premium version lets you create scenarios, compare multiple properties, figure for unlimited expenses, and then create reports you can send by email or print.

The $40 Pro version allows for property portfolios, multiple photos for each unit, and more control for estimated, categorizing, and itemizing your closing and improvement costs.

4. Property Tracker

Property Tracker will replace your accountant and tax adviser costs while saving your hours of time and missed opportunities. This is a Jason Hartman-approved piece of software that makes it simple to make smarter decisions about when to refinance, sell, or remove your PMI.

Features and Costs

There’s a free 30-day trial with this software. After that, you get access to everything for $37 a month or an annual membership of $347. Track monthly income and expenses, get detailed and customizable performance reports, create Schedule E and Schedule of Depreciation documents for your taxes, store all your documents online, and much more.

5. Call Porter

When you’re in the midst of making a deal, you don’t want to miss a single call. Unfortunately, that’s just not possible sometimes. With Call Porter, you never have to worry about that again. This amazingly sophisticated software is actually your access to a live answering service. When you get a call, Call Porter routes it to expertly trained staff who only work with real estate. Meanwhile, the software alerts them to who is calling and why so they can turn the call into whatever you need: an appointment, a lead, or even a negotiation.

Features and Costs

Reps are available to take calls from 8 am to 10 pm, Monday through Saturday. If a call comes in after hours, it gets transcribed and instantly sent via email to Call Porter’s team, who will contact you if it’s something urgent. All the Call Porter reps are based in the US, highly trained exclusively in all things real estate, and go through a 90-day probationary period. Plus, all conversations are recorded, and you can access recordings or talk to the person who took the call.

Pricing is based on your estimated monthly call volume. If you get up to 25 calls a month, the cost is $500 a month. If you’re expecting 150 calls a month, expect to pay just over $1,000, and so on.

Use Them to Your Advantage

The most successful investors know how to find the best software for real estate investors and make it work for them. With the market getting more crowded by the day, keep your place within it through the best software choices.

property tracker app

5 Best Apps to Self-Manage a Rental Property

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Managing your own rental property saves money and allows you greater control and supervision over your investment. You can only realize those benefits, however, if you’re not losing too much time (and thus money also) in the process. Managing an investment property can be a tough job, but there are some great apps that, according to Jason Hartman, will most certainly make the process easier and streamlined.

5 Best Apps to Self-Manage a Rental Property

1. Landlord Studio

Costs

This is one of the cheapest apps out there. There are no setup fees, and you’ll pay just a dollar a month for each unit you add.

Features

Landlord Studio offers tenant screening, income, and expense tracking, and outputs schedule Es when it’s time for taxes. You can also keep track of all your communications with contractors and tenants and send out late rent notices directly from the app, keeping a close eye on when they’re received. The app even allows you to generate leases that are state-specific, so all your bases are covered.

There are some things missing here, though. While this is a great app for communication and can help with taxes, it doesn’t have all the robust features for keeping track of key financial indicators that other apps offer. And while it does play nicely with ZellePay and Venmo, it doesn’t allow for ACH deposits, which are always your smartest choice as a landlord.

2. Spark Rental

Cost

This is a pricier option at $19 a month for 5 units or $39 for unlimited properties. This one does allow ACH withdrawal direct from tenant bank accounts, though there is a 4% charge for that service.

Features

This app allows you to put up ad listings on most of the big sites, like Trulia and Zillow, and offers tenant screening, online rent collection, and income and expense tracking. It also allows you to get schedule Es, send out late notices, and keep track of your communication as well as logs of maintenance and calendar features.

There are some downsides to Spark Rental, however. When things work, they work really well. When something goes wrong, you might not get much help. A common complaint about this app is that it’s hard to get in touch with a real person, especially when too much money is accidentally taken from a tenant’s account or there’s a fee tacked on for the landlord that shouldn’t be there.

3. Property Tracker

Cost

This app is definitely best for covering all the bases, especially if you have multiple properties to work with. The price is comparable to Spark Rental, but you’re getting a lot more value for your dollar. After a 30-day free trial, you spend $37 a month, no matter how many properties you need to track.

Features

Property Tracker is simple to use and integrated across platforms, so you can use it on your phone and then check on things from your computer. In addition to all the basic features offered by the apps already mentioned, this app updates you monthly about your key financial indicators, shows you directly how you can maximize profits and tax savings at the same time, and tracks vacancy rates and lease expirations. It gives you Schedule Es but also Schedule of Depreciation forms, so taxes are simple to calculate.

There’s simply a lot more here than with most apps and for a competitive price. This cloud-based app is easy to customize and has good support for all platforms, including phone, email, and live support, as well as ticket creation. Training is also easy to access and helpfully designed, so you get the most from the app’s features.

4. Propertyware

Cost

Propertyware is an expensive option at $250 a month with no free trial period, though you do get a free demo.

Features

This app works across platforms, though it’s technically a very mobile-friendly website login rather than an actual app for those operating systems. In addition to the basics, this app offers billing and invoicing, insurance management, and late fee calculations. One of its strengths is how highly customizable it is. In many ways, Propertyware adapts itself to you rather than requiring you to adapt to it.

For the price, however, we’d expect this app to be able to do more on the financial side. For most, though, it won’t be an ideal solution, and you may find yourself turning to Quickbooks or paying for an accountant to make up the loss. There are also more technical issues than we’d expect given how expensive it is.

5. Rentec Direct

Cost

Rentec Direct’s pricing is more in line with what we’d expect for the level of service you get. There is a free trial, and then it’s $35 a month.

Features

One of this app’s strengths is how well it plays across platforms and operating systems. The support with this app is very good, though there’s no live training available. Rentec offers you credit checks, an online payment portal, tenant and vacancy tracking, tax management features, and even the ability to manage your website. The tenant database is very helpful, and it will calculate late fees for you automatically as well as keep your portfolio and communication all in one place.

The one stand-out feature of this app is, unfortunately, also where it tends to fall down. It allows you to migrate your website, and if that worked seamlessly, it would be an amazing feature. The problem is that it just doesn’t. HTML coding issues crop up everywhere. Our other complaint is that while it will send reports automatically by email, it doesn’t keep any record of who you sent it to. If you send it or copy it to yourself, you have a copy, of course, but if you send it elsewhere, it would be nice to have a record in the app itself.

In Summary

Property management apps aren’t really just a convenience anymore. They’re essential to effectively manage your investment without wasting any of your valuable time. With the right app, you’ll maximize your investment while minimizing costs and get everything from your property that it should be giving you.