People have been making money building lasting wealth through real estate for hundreds of years. Other people have also had their asses kicked with real estate as well. This book along with some personal insight will help you maneuver those obstacles. I have been fortunate to make a couple of bucks in real estate and have had my share of butt chaffing's along the way. I will share each with you today.
Why is this important to me? In creating these video summaries, I always try to think from your point of view and the last thing I want to do is waste your time. This book is important if you want to escape the rat race and build a solid financial foundation for you and your family. One aspect of the book talks about building the right team. This is very critical. The easiest way to compound wealth is through your associations and team members. The mindset here is to be the small fish in the ocean. If you can tap into multi-millionaires and billionaires and garner lessons then that is a good thing. Likewise it makes sense to study inversion. Like the billionaire Charlie Munger says, Invert, Invert, and Invert. For those of you that don't know, he is Warren Buffet's partner. The wrong partnership can kill everything much faster than the right partnership. Fortunately or unfortunately, I have some experience here. I partnered with a very talented builder. It seemed like a good fit. I had the financial need to place some money in real estate and he had the sweat equity talent to build. The goal was to flip and roll into bigger projects. If the flip did not happen then you rent to attain positive cash flow. This is a pretty basic understanding. Timing is everything. Tomorrow is promised to know one. This partner of mine was very talented but had one problem. He could get 90 percent of the work done in no time and the last 10 percent took years. In real estate, this is a huge problem because you cannot spit off money until you have a C of O (Certificate of Occupancy). This was so bad that we went through a real estate boom and bust with unfinished houses. The money and time wasted was about as pleasurable as ED with a playboy model. Needless to say, it was bad.
This book is a great "how to" for residential real estate. Dolf touches on other types of real estate as well but the main focus is residential. There is a ton of information in here and I will focus on a few key points. 1. Leverage - Leverage is a double edged sword that needs to be respected. The cool thing about real estate is that you can leverage OPM, OPE, OPT and OPW - Other people's money, expertise, time and work. You want to be careful about leveraging too much debt. Dolf and Diane have some great analysis tools in the book to analyze properties. You want to be safe when investing and you need to plan for vacancy if you are a cash flow investor. Use leverage wisely. Very smart people like Dave Ramsey were millionaires on paper and lost it all because of too much debt. Be careful.
2. Residential vs. Commercial - This is not a big part of this book but I want to touch on it. If you are business owner then one thing you can absolutely do is convert your rent to ownership. Banks like dealing with user occupied commercial real estate. I was lucky because our business needed more space. We were able to buy a commercial building where the space was 4 times the size and the mortgage was less than the rent. We did not need 4 times the size so the tenants pay for the building. This one transaction is the equivalent of 20 rental houses. Better yet, we are not dealing with individuals paying rent but contracts with larger companies. What is cool about this strategy is that we are simply a monthly check run for the rent each month with these companies who pay us rent. As you can probably tell, I like commercial real estate much better than residential. This does not mean it is better. What this means is that I am a horrible land lord. This is my weakness which needs to be remedied. 3. Deal of the Decade happens once a week 100-30-1: Dolf has a great system that will allow you to become very good at residential real estate. It is the 100-30-1 method. Basically it means look at 100 properties, put offers on 30 properties and buy 1. This seems like a lot of work and it is, remember that one real estate deal can easily replace your annual income. This book was written during the real estate boom. Thus you had to scour the planet for good deals. Today there are tons of good deals and if you use this diligent method then you will be successful.
Dolf and Diane do a great job at outlining how to be successful and in real estate. Diane also provides ways to save money on taxes and structure deals to protect your assets. These two have worked with some very wealthy and successful real estate investors and their knowledge shows in this book. The book dives into much more detail so if you are serious about being successful in real estate then I suggest you pick up this book.
I hope you have found this short summary useful. The key to any new idea is to work it into your daily routine until it becomes habit. Habits form in as little as 21 days. One thing you can take away from this book is leverage. When you leverage other peoples time, expertise, money and work, you will magnify your success. One easy way to do this is to schedule 15 minutes of your time per day and learn from the best. This can be watching YouTube videos or some other learning method. The key is to start learning and get it scheduled on your calendar.
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