Real Estate Investing

[Leinie]

Does anyone know of some good books on real estate investing?  I am interested in purchasing a single family home and/or a vacation property for rental, but really don't know what I am doing.  I read the review of the John T Reed book on this site, but I am looking for something I could find at the library or used online.  It seems like real estate investing has the potential to be very costly if done wrong, so I want to go in with a better understanding of the pitfalls.

 

Leinie

[The White Coat Investor]

Definitely worth reading some books before jumping in. You can also dip a toe in using inexpensive crowdfunded deals and see if it is something you want to get more involved in. Not sure if you've seen these resources or not:

https://www.whitecoatinvestor.com/great-real-estate-investing-book/

http://astore.amazon.com/whicoainv-20?_encoding=UTF8&node=66

There are tons of real estate books out there, but some are way better than others. Here is a list from Bigger Pockets. I like Bigger Pockets, but they tend to be of the "cheerleader" variety of real estate advice. Not sure if these books are the same. I much prefer it "real" like Reed gives it.

https://www.biggerpockets.com/renewsblog/2013/04/14/best-real-estate-books/

[jfoxcpacfp]

Nolo.com is a great resource to help with the legal side of things (contracts, etc.) I've used their materials for over 20 years.

[psych007]

Curious.  Do real estate markets usually follow the stock market.  In other words, when would be a good time during this "bear" market to go house shopping?

[jfoxcpacfp]

psych007 wrote:

Curious.  Do real estate markets usually follow the stock market.  In other words, when would be a good time during this “bear” market to go house shopping?

Click to expand...

Not necessarily. Think of real estate as a separate sector that you are highly concentrated in - you should substitute the value for a % of REITS in your investment portfolio. You invest for the long term only. And prices are very dependent upon where you buy and what is going on in the surrounding market. Even over the long term, you cannot count on keeping up with the market as a whole.

imho, I don't really understand why anyone would want to keep up the management of a piece of property when investing in a well-balanced portfolio of equity mutual funds is so much easier and results are fairly predictable over the long term.

[Jim]

Check out John T Reed's collection of real estate investment books:

http://www.johntreed.com/collections/real-estate-investment

 

[Rocky L]

Here is the best resource I know to learn about real estate: https://www.biggerpockets.com/

There is tons of free information to go through before you need to pay.

[dragonfruit]

Johanna Turner wrote:

psych007 wrote:

Curious.  Do real estate markets usually follow the stock market.  In other words, when would be a good time during this “bear” market to go house shopping?

Click to expand…

Not necessarily. Think of real estate as a separate sector that you are highly concentrated in – you should substitute the value for a % of REITS in your investment portfolio. You invest for the long term only. And prices are very dependent upon where you buy and what is going on in the surrounding market. Even over the long term, you cannot count on keeping up with the market as a whole.

imho, I don’t really understand why anyone would want to keep up the management of a piece of property when investing in a well-balanced portfolio of equity mutual funds is so much easier and results are fairly predictable over the long term.

Click to expand...

Johanna, question for you: in general, is the rate of return of REITs in a well-balanced portfolio typically greater/less/the same than if I were to invest in buy and hold real estate properties?  What does it depend on?  I am super new to REITs.

[jfoxcpacfp]

We use REIT funds (listed REITs as opposed to non-traded REITs) in portfolios as a way to diversify into real estate without the concentration of buying a piece of real estate outright. I would equate buying rental property to buying stocks. Buying REIT mutual funds diversifies the risk. Real estate correlates positively with inflation and is a low correlator to equity mutual funds, meaning they don't move together, which is what we look for in a well-balanced portfolio.

For the return of REITs in a well-balanced portfolio, the periodic asset allocation table is very helpful. As you'll see (by clicking on the link in this article), REITs dipped during the real estate tumble in 2007/2008, but not as much as hard real estate. As I mentioned above, you do NOT want to own non-traded REITs. You want listed REITs that you can buy in and out of when rebalancing.

You can find various versions of the periodic asset table - some include REITs with other classes, so don't worry that the 2 tables are somewhat different. What's important is that you see that the asset classes move around from year to year in a a well-balanced portfolio. Rebalancing annually forces you to sell high and buy low, not concentrate on a single asset class. Btw, we do not include bonds in our portfolios.

[erictait]

Psych007 -

 

You have the thinking correct about buying property during a "bear" market. But I would quibble with your paradigm, you are using stock market terminology on a completely different asset

class that has very different risk and demand characteristics.  First off, you cannot opt out of real estate, especially residential real estate.  Even a bum living under a bridge is under a piece of

real estate. You do not have to participate in the stock and bond market.  Next, if you are buying real estate for investment purposes (longer term cash flow) and not to speculate (flip this house)

then what you are doing is buying a cash flow stream (I am referring to single family houses here).  What you want to know is are you buying in an area with increasing population, jobs,

tourism, retirement etc.... The decline in Detroit and the rust belt was decades in the making, real estate markets move at the speed of glaciers, not nanoseconds.  So if you find a property that

you can purchase "on sale" (there is a formula to doing this) relative to the rents it will generate and you have done your analysis to see that those rents will be durable for years to come, then

yes buying in a short lived price downturn is a smart thing to do.  We did it in spades during the Great recession.