Turner - The Book on Rental Property Investing: How to Create Wealth and Passive Income Through Intelligent Buy & Hold Real Estate Investing!

The Book on Rental Property Investing

Copyright 2015 by BiggerPockets Inc. All Rights Reserved.

Written by Brandon Turner

Published by BiggerPockets Publishing LLC, Denver, CO

This publication is protected under the U.S. Copyright Act of 1976 and all other applicable international, federal, state, and local laws, and all rights are reserved, including resale rights: you are not allowed to reproduce, transmit, or sell this book in part or in full without the written permission of the publisher.

Limit of Liability: Please note that much of this publication is based on personal experience and anecdotal evidence. Although the author and publisher have made every reasonable attempt to achieve complete accuracy of the content in this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. Your particular circumstances may not be suited to the examples illustrated in this book; in fact, they likely will not be. You should use the information in this book at your own risk.

Any trademarks, service marks, product names, and named features are assumed to be the property of their respective owners and are used only for reference. No endorsement is implied when we use one of these terms.

Finally, use your head. Nothing in this book is intended to replace common sense or legal, accounting, or professional advice and is meant only to inform.

ISBN: 978-0-9907117-9-7

First Edition

Acknowledgments

Feeling gratitude and not expressing it is like wrapping a present and not giving it.

- William Arthur Ward

Writing a book is hard, but certain key people have made it much easier.

I want to thank Josh Dorkin, CEO of BiggerPockets Publishing for his encouragement and guidance in putting this book together, as well as the rest of the BiggerPockets Team who have been amazing to work with on this project.

Thanks to Seamane Flanagan, my fantastic editor who cleans up my messy words and makes me look less stupid, to Jordan Thibodeau who read the first draft of this book and offered incredible (and humorous) insight, and to all those who helped record video interviews for this book launch you guys rock!

And of course, to my amazing, thoughtful, intelligent, spunky wife Heather who, without her assistance, this book never would have been completed.

Thanks to the hundreds of real estate investors whose words, actions, and encouragement made their way into my head over the past decade and, thus, into the pages of this book.

Finally, everything I have, everything I am, everything I will ever be I owe entirely to the grace of God.

Dedication

This book is dedicated to my many mentors who have brought me from where I was to where I am today. No words could do justice the appreciation I have for you.

PROLOGUE

What Do You Want?

About Me

About This Book

CHAPTER 1 - WHY I LOVE RENTAL PROPERTIES

Why Do I Love Rental Properties So Much?

The Four Wealth Generators

How Much Money Does One Need to Invest in Rental Properties?

Top Five Difficulties of Rental Property Investing

But I Dont Want to Fix Toilets at 2:00AM!

Why Do So Many Rental Property Owners Fail?

Quitting (or Not Quitting) Your Job Through Rental Properties

What Next?

CHAPTER 2 - THE FIVE KEYS TO RENTAL PROPERTY SUCCESS

1. Think the Right Thoughts

2. Study the Right Source

3. Picking the Right Plan

4. Acquire the Right Asset

5. Manage the Right Metrics

Conclusion

CHAPTER 3 - FOUR SAMPLE PLANS

Plan 1: How to Make $1,000,000 Through Rental Properties

Plan 2: Building Wealth Through Single-Family Homes

House Hacking

How to Make $100,000 Per Year Using the BRRRR Strategy

Conclusion

CHAPTER 4 - THE TEN MEMBERS OF YOUR REAL ESTATE TEAM

1. Spouse

2. Mentor/Accountability Partner

3. Real Estate Agent

4. Lender(s)

5. Contractors and Handymen

6. Bookkeeper

7. CPA

8. Lawyer

9. Insurance Agent

10. Property Manager

CHAPTER 5 - ANALYZING A RENTAL PROPERTY

How to Analyze a Rental Property

What Is Cash Flow?

123 Main Street Analysis

Putting It All Together

CHAPTER 6 - INVESTING WHILE LIVING IN AN EXPENSIVE AREA

Are You Looking for Homes on Sale?

Is the Price Relative?

What Is Working in Your Area?

Have You Checked the Outskirts?

Investing in an Expensive Area: Wrapping It Up

CHAPTER 7 - TYPES OF RENTAL PROPERTIES

Single-Family HomeS

Multifamily Real Estate

Condos

Townhomes

REOs/Foreclosures

Fixer Uppers

Five Questions to Ask Before Investing in a Fixer Upper

Commercial Real Estate

Wrapping It Up

CHAPTER 8 - LOCATION, LOCATION, LOCATION!

Neighborhood Classes

Crime

Drugs

Schools

Jobs Versus Unemployment

Population Growth

Housing Starts and Building Permits

Transportation

Proximity to Local Businesses

Price-to-Rent Ratio

Vacancy Rate

Property Tax and Insurance Rates

Moving On

CHAPTER 9 - HOW TO FIND RENTAL PROPERTIES

1. The MLS

2. Direct Mail Marketing for Deals

3. Driving for Dollars

4. Eviction Records

5. BiggerPockets Marketplace

6. Craigslist

7. Wholesalers

8. Passion

Conclusion

CHAPTER 10 - WHICH PROPERTIES MAKE THE BEST RENTALS?

Eight Problems I Look for When Shopping for Rental Properties

3 Problems I Avoid When Shopping for a Rental Property

Wrapping It Up

CHAPTER 11 - SUBMITTING YOUR OFFER

How to Make an Offer

The Earnest Money Deposit

What Should the Offer Include?

How Much Should You Offer?

16 Tips for Getting Your Offer Accepted

Wrapping It Up

CHAPTER 12 - REAL ESTATE NEGOTIATION

The Negotiation Process

When to Negotiate

13 Tips for Successful Negotiation

Conclusion

CHAPTER 13 - FINANCING YOUR RENTAL PROPERTY

All Cash

Conventional Loans

Portfolio Lenders

Other Creative Methods

Conclusion

CHAPTER 14 - HOW TO GET A LOAN APPROVED, GUARANTEED

Understanding How a Loan Works

The 12-Digit Code You Need to Get Your Loan Approved

Make Your Lenders Job Easier to Get Your Loan Approved

Moving On

CHAPTER 15 - THE DUE DILIGENCE PROCESS

What Is Due Diligence?

Conclusion

CHAPTER 16 - GETTING READY TO CLOSE

Order Insurance

Do I Need an LLC?

Final Walk-Through of the Property

Plan the Rehab

Sign the Docs

Wrapping It Up

CHAPTER 17 - MANAGING YOUR RENTALS (PART I)

Self-Management Versus Property Management

Business or Hobby: Getting in the Right Mindset

Getting a Property Ready to Rent

Five Ways to Find Great Tenants

Accepting Phone Calls

Showing the Property to Tenants

The Application Process

Wrapping It Up

CHAPTER 18 - MANAGING YOUR RENTALS (PART II)

Maintenance and Repairs

Landlord Versus Tenant Responsibilities

Annual Preventative Maintenance

Dealing with Difficult Tenants

Training Your Tenants

1. Late Rent

2. Neighbor Conflicts

3. Moving in Unapproved Pets or People

4. Breaking a Lease

5. Drugs

If You Are Unhappy, Your System Is Broken

CHAPTER 19 - EXIT STRATEGIES AND 1031 EXCHANGES

Hold Forever

Seller Financing

Cash Out

The 1031 Exchange

Wrapping it Up

CHAPTER 20 - FINAL THOUGHTS

The Five Success Principles of Rental Ownership

Will You Take Action?

ABOUT THE AUTHOR