There are countless books about real estate for an active property investor who is negotiating for acquisitions, overseeing refurbishments or managing an apartment building. However, there’s much less education available for investors participating financially but not becoming closely involved with the properties.
Investors in this “limited partner” role need education about:
- how to evaluate the risks and rewards of different property types;
- which real estate markets are strong;
- how to select an real estate business partner;
- and what milestones to look for while monitoring project progress.
In this blog, we recommend five books that are especially relevant to limited partners, whether they are about to invest with a partner in a local project, or online through an investing marketplace/crowdfunding site. The books are listed in order of easiest to most advanced reading.
People admit to liking the “Dummies” series about as much as they admit to liking the musical group ABBA, but let’s face it, the books get the job done. “REI4D,” as you’ll allow me to call this book, covers whether real estate investing is right for your situation; how to evaluate properties; what kind of supportive professionals you’ll want to work with; and much more.
For those who like to learn about an industry by reading about the ‘players’ in that industry, it’s hard to beat Donald Trump for big picture insights. This overview is written by his lawyer of 25 years. It’s actually the best Trump book to encapsulate principles for achieving a premium on a property and negotiating an arrangement to your advantage. The author also recounts some of their biggest property ‘scores’ from which they profited. A memorable and easy read.
Real Estate Investments Trusts generally are publicly traded securities that can be purchased through your broker, just like stocks. Each REIT holds large numbers of properties of a particular kind, which together generate profits for investors. Their unique characteristic is that at least 90% of their taxable income must be distributed to investors each year, making them high income-yielding assets. While they don’t provide the same hands-on approach of investing in a specific property, they can be useful to diversify one’s real estate portfolio. Ralph Block’s book covers the economic dynamics of each key RE sector – apartments, office, industrial, storage, mortgage and more. Understanding the sectors also can help you select investments through crowdfunding.
This book excels at combining case studies about different types of properties and how they perform, with key financial ratios needed to understand to find identify the strongest opportunities, and predict and monitor the properties’ investment returns. The same author penned another great financial book, “What Every Real Estate Investor Needs to Know About Cash Flow”.
Due diligence about the state of a property and the local real estate market is the foundation for successful investing. This book starts with basics then gets into a thorough listing of checkpoints. While a passive investor in real estate won’t need to perform all these steps themselves, they should feel comfortable asking the right questions and understanding for the answers about a property before investing.