Investing in real estate for beginners – lazy man and money

Today’s article was originally going to be an economic overview of Trump’s first year. In light of what’s going on in Minneapolis, it doesn’t feel right to analyze his handling of the economy. I feel like I’m trying to divert the conversation away from immigration. People’s safety is at the top of the economy.

Luckily, an old college friend called and she inspired this pivot. I hadn’t spoken to her in months. We talked about all kinds of topics, but of course I wouldn’t be writing this if we hadn’t discussed personal finance.

She complained that she and her husband didn’t really have the savings she expected. They are 46 and still work ridiculously hard. For some doctors* I can imagine there is some disappointment. She analyzed it during the phone call: she doesn’t like taking risks. The man sounds like he’s always been willing to take more risks. So they are looking for a change.

She mentioned two avenues they are considering. One of them is opening your own practice. I don’t know much about that, but the startup costs for equipment must be a lot. The other invested in real estate. She didn’t know we had owned rental properties for 20 years. When she heard that, she was curious to know more: “How did it work?” My short answer is that we made a fair amount of equity, about $800,000. However, it is work and we currently have a building that has been vacant for about 10 months. We put $35,000 into fixing it up and haven’t been able to collect the $20,000 in rent we would normally pay if we could have someone in it. (Some of the 10 months were renovation. The rest may be due to Newport as RI is EXTREMELY seasonal.)

I told her I would send her some resources to get started. (Yes, I’m reusing a lot of that email as a blog post. Score me a stack of Lazy aura points!**)

Real estate investing for beginners

I decided to go for a multimodal approach and focused on three areas:

Best Real Estate Investing Book for Beginners (and Support)

A nice beginner’s book is: How to Invest in Real Estate: The Ultimate Beginner’s Guide to Getting Started by the Bigger Pockets duo Brandon Turner and Joshua Dorkin. All the Bigger Pockets books are great, but this is literally the “Beginner’s Guide.” Of course, I couldn’t mention Bigger Pockets without the incredible community forum on their website. (The book is an affiliate link. I might make a few bucks if you sign up.)

Best Beginner Real Estate Course

Financial guru Paula Pant also has a well-known course, Your first rental property. I still remember her introducing herself to me at the first FinCon and explaining that her website Afford Anything does not mean Afford Everything. Fast forward 15 years, and now she’s huge – she even has her own Netflix show. I talked to her at that conference every year for several years, and she always had the coolest story to tell about some adventure she had. I warned her that the course is not cheap. However, I think she’s been in business for ten years now, and considering the lifetime membership is a good value. But if you go into something with the idea of ​​making hundreds of thousands of dollars, that’s a drop in the bucket – as long as you use it.

(Note: that is not an affiliate link. I will not earn anything if you purchase the program.)

Best tool for real estate investing

Maybe this isn’t the best, but this is my favorite. If you know of a better one, please leave it in the comments.

The best way I’ve found to know if it’s a good time to buy is to check the NAHB/Wells Fargo Index. Just scroll down to the chart and you’ll see that the price fell before the 2007-2008 housing crisis and rose before the run-up around 2020. The average is 50. I’d like to buy if it’s 30 and consider selling if it’s 70. That’s an oversimplification, and buying and selling real estate isn’t just a few clicks on a website like your real estate agent’s.

Real estate is of course local. The national average is fine, but they also have regional figures. The link just below the chart will download an Excel spreadsheet with those numbers. I’m sure there are other great tools out there, but I never see people talking about this one.

Final thoughts

I ended the email to my friend by saying that I can provide similar information about investing in the stock market. That wasn’t an area she had mentioned. Furthermore, my stock market indicators, unlike those of the real estate sector, say this is the worst time to buy stocks in the last hundred years. Indicators can be wrong, and have been for about a year. I was happy to avoid that topic completely for the time being.

*They are not doctors, but physicians, such as a dentist or pharmacist. I’m trying to keep it a bit vague to maintain anonymity.

**I practice my Gen Z lingo so I can convey all the coolness in the way my kids talk. This roughly means that I am very lazy, which is ‘on brand’.

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