In The Skinny on Real Estate Investing: An Introduction to the Subject
Jim teaches us to instead look at some basic fundamentals when considering any property as an investment: What’s the cash flow? He introduces rates of return as well as risk, and he also mentions adding value to the property as a way to increase returns. Jim also reminds us that buying real estate isn’t like buying a mutual fund through your bank, and there is a lot more legwork involved in not only the buying and selling, but also in dealing with tenants and in ongoing maintenance.
What I found less than relevant is the fact that he analyzed the investments using an interest-rate only mortgage. While this helps avoid any confusion between the paying down of equity and interest, I don’t find it’s very realistic to look at only interest-rate only mortgages, especially in today’s market and economy. I would have liked to see some data using more realistic mortgages. There are also a few pages devoted to syndication, which is forming an LLC with partners to develop property. This a concept that is probably too advanced to be included in a series that presents itself in a comic-book style.
I also would have liked to see more focus on the lifestyle considerations and impacts of being a real estate investor, and less focus on the numbers. The format isn’t really well-suited to so much number-crunching, and I’m not sure anyone reading a comic book-style series has the time or patience to go through all of that. 🙂
Although the belief that “prices always go up” has already been shattered in the U.S., many people unfortunately cling to this very same belief up here in the Great White North. They would do well to read The Skinny on Real Estate Investing
If you would like to read more, you can order the title direct from Amazon:
OK, added to my reading list. I’m becoming a real estate investment convert since we started renting out our old house. The stock market is great for the long run, but I like the solid rental income every month.
One of my friend minimize his stock investment and purchased 2 houses to rent out. He told me one house is for each kid and he’ll sell them when the kids are ready for college and that’s their college fund. He doesn’t have positive cash flow, but I think this is an awesome idea. He has a well paid job to fund this investment.
Real estate is relatively expensive up here, but if I had some money to spend I might be shopping around for bargains, too. Actually, I think rental properties haven’t inflated to the same degree as other types of properties, as a triplex for example won’t be THAT much more expensive than a single family home depending on where you buy.
Thanks for this review. Of course another option for the investor is the REIT. It’s a great way to invest in real estate with minimal risk and hassle.
Kind regards!
REITs are also a good option to get in without the hassles of personally dealing with tenants or the risk of winding up with a bad property. Thanks for mentioning that!
P.S. I added your URL in; I don’t use Akismet here (not sure if that’s what you were worried about) so no worries about getting caught in the spam here. 🙂
Timely book review. In the U.S. there are a lot of “bottom fishers” looking at real estate and asking about real estate investments. I have to say that there are what look like good values for the long term investor.
Some rental properties could indeed be a good buy… cheap asset prices now, and if inflation picks up, even if property prices fall in real terms, rising rents will compensate somewhat, and since Americans have the option of buying long-term fixed mortgages… the real value of the debt will fall, too. Might not be such a bad hedge in places.
Investing in real estate might also be a good way to make retirement plans. Of course, when you’re getting older, dealing with tenants might be less attractive but selling it as a retirement income seem to be interesting to me. I’ll take a look at this book!
It might definitely be something for older. I don’t know if I’d join in the game myself; dealing with those tenants might be a real headache!
Thanks for the tip. Any book with stick figures playing Monopoly has to be worth at least checking out. 😉
If only they landed on my hotels more often… 😉
I think Robert is right. There are great deals south of the Canadian border right now. I wouldn’t want to be paying an interest only mortgage though.
I like the idea of the book covering what sounds like a Wealthy Barber concept following to fictional characters. That’s a nice touch that might appeal to many people. How did the find the book Kevin. Did the author approach you?
I think the book would be stronger if the author removed the interest rate only mortgage and replaced it with a conventional mortgage, and kicked out the stuff about a syndicate completely.
I was approached by the publisher some time ago and they asked me if I would like to review some books. Doing book reviews has been one of the more interesting aspects of blogging!
Hi Kevin, Having invested in real estate for many years, it’s really important to look at cash flow and return on investment. As anyone alive today can tell, real estate appreciation is not guaranteed! BTW, The cover of the book is quite cute:)
You should share that advice with some Canadians. Until prices start going down or at least plateau for a while, nobody will believe you. It’s always different “here”, right? 😛