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I’m working on an educational program that suggests you find emerging markets elsewhere (assuming that your local market is in the slump that’s generally considered to be nationwide, if not global). This involves a lot of research, like finding demographic information from the local Chamber of Commerce, planning commission, Board of Realtors, and numerous other sources. We need to find out whether there is job growth or shrinkage, people moving in or moving out, moving into what neighborhoods, city improvement projects, and on and on. This is not a new idea. Marc Stephan Garrison and Paula Tripp-Garrison write, “Ever since 1986, [we] have [identified] real estate target markets.”
I had been working on an area that’s not too far away – the Bridgeport-Stamford area of Connecticut. After days of scratching my way through reports about new initiatives, population projections, and projects developed to attract new businesses, I realized that most of the webpages I was using hadn’t been updated since 2007. It appears (to me, and please remember I am an utter novice at this task) that Bridgeport was an emerging market, but that the general recession seems to have dampened it considerably.
On a list of cities that were good places to start a new business, I found Seattle, Charlotte, Raleigh, Orlando, and others. The idea of looking for a place so far away (I’m in Massachusetts) in which to hunt for large commercial (multifamily) real estate is absolutely daunting. And haven’t Charlotte and Raleigh been considered the favorite spots for real estate investors and developers for months or years now? I suppose my uneasy intuition ought to take a back seat to green-space development, incentives for job creation, and the lot, but this isn’t going to be an easy leap to take.
There’s so much hype in the community of real estate investment education. You find it in the books about investing: you don’t even have to look inside, it’s right on the cover! We all know that the web gives us ample examples of hype in the courses, ebooks, seminars, and “boot camps” that you can spend any money you might have been saving for a down payment. “No problem! No money down! Hard money lenders! Private investors!”
I thought perhaps that real estate investor associations would be rational, no-nonsense places where the everyday realities of real estate investment would be discussed. Not really. Some of these same gurus make the rounds of the REIAs, financial multi-level marketing schemes are touted, and the hype goes on.
I yearn to believe in these programs, these teachers, these methods. I want to believe that there is “no competition” in probate property. And that this “unique approach” will distinguish me from the dozens or hundreds of would-be investors sending postcards to homeowners in pre-foreclosure. That buying this course with 400-page manual, 8 CDs, and 6 DVDs will teach me the way to reach bank-owned homes before they are listed on the MLS.
The promises of wealth and ease are astonishing, but very well-crafted. Well, many of them are well-crafted. I am not personally left drooling at the photos of mansions, boats, and expensive cars that are temptingly inserted in the ads for these educational programs. But I am drawn in when they offer enough information to sound credible, even when they minimize the work and greatly exaggerate the rewards.
While I don’t have enough sense to resist some of these temptations, I do know enough to save the boxes and the bubble wrap, and some of these courses have gone back to their publishers.
Do you have to go to expensive seminars or spend hundreds on “home study courses?” The advertising is very convincing! If you are new and not sure if this is for you, start by investing in some used books, from your local used bookstore, or paperbacks from the chain bookstore, or used books from Amazon.com. How do you sort the wheat from the chaff? There is a considerable amount of chaff in this genre! I started with the books of Gary Eldred, on the advice from people on the early retirement discussion forums associated with a fine retirement calculator, in addition to a great philosophy about early retirement. Eldred’s books are basic and quite helpful. Not quite for the beginner, but lacking completely in charm and chaff, are the books of John Reed (johntreed.com), who also has a lovely curmudgeonly “review” page, offering his opinions on many of the real estate “gurus” publishing today.
I think you can tell by the titles of many books whether they’re going to be useful or not. Unfortunately, though, some really good information can be found in books with lurid names! Confessions of a Real Estate Entrepreneur: What it Takes to Win in High-Stakes Commercial Real Estate by James Randel, is one such book. Nevertheless, the titles, as well as the cover designs, are usually good indicators. What’s your guess about Weekend Millionaire Mindset: How Ordinary People Can Achieve Extraordinary Success by Mike Summey and Roger Dawson, or Are You Dumb Enough to be Rich? by G. William Barnett II? If I decide I need to read one of this type of book, I try to leaf through it at the bookstore or find it used on Amazon.com. Many successful real estate investors swear by Kiosaki’s books (the Rich Dad, Poor Dad series) but they are not my style. Long on what you might call “philosophy” and very short on how-to details, I never found them very useful.
In contrast, I can wholeheartedly recommend Jeffrey Taylor’s The Landlord’s Survival Guide: How to Successfully Manage Rental Property as a New or Part-time Real Estate Investor, Leigh Robinson’s Landlording, Mike Butler’s Landlording on Autopilot: A Simple, No-Brainer System for Higher Profits and Fewer Headaches, and Nolo Press’s most recent edition of Every Landlord’s Legal Guide, which includes a CD with leases and other forms appropriate for each state! Recent useful purchases have included Thomas Lucier’s How to Make Money with Real Estate Options, David Lindhal’s Commercial Real Estate Investing 101: How Small Investors Can Get Started and Make it Big (part of the Trump University series). Very useful when you need to start understanding the math of investment: Frank Gallinelli’s Mastering Real Estate Investment. This book gives more examples and elaborates on the formulas in his earlier book, What Every Real Estate Investor Needs to Know about Cash Flow. . . and 36 Other Key Financial Measures. I recommend the second book; it’s less intimidating and more helpful to those of us for whom the last math course was many, many years ago!
Learning about market cycles, one of Lindahl’s areas of expertise, is covered well in Unlimited Real Estate Profits: Creating Wealth and Build a Financial Fortress with Today’s Real Estate Investing by Mark Stephan Garrison and Paula Tripp-Garrison. The title sounds a little over-the-top but the information is good.
I’m a reader, and reading lots of books about a subject makes me feel ready to step in to the process. Others learn better from listening to speakers and talking with more experienced investors. The place to do this is your local Real Estate Investment Association. There’s a directory here: REIA Directory on Bigger Pockets. Everyone interested in real estate investment should join the local REIA and attend regularly. Those connections, the network that you develop over time, forms one of the most important parts of your foundation as an investor.
Some other people’s lists of recommended real estate investment books: Recommended Real Estate Books, or Best Book Buys.
In another post I’ll discuss internet resources: the good, the bad, and the ugly!
