My First Real Estate Book Part 1

Hello again to every one who is reading this. As I've said in my first post I am going to share my learning process of the real estate world. To begin my journey I decided to put some cash in to it and purchased (for a very small fee) the audio book "How To Invest In Real Estate?" by Joshua Dorkin and Brandon Turner. Why audio? Well first I'm not so good at reading books. It takes me a lot of time and I get distracted very easily. Secondly its a better use of my time because I can listen to it while I work at a grocery store organizing bottles on shelves (covid-19 has got us doing some crazy things). Although it was read to me I will still be using the verb "to read" in this post cause it sound better. 

In this blog I'm going to brake down the things that I've read in the book. I would like to share my thoughts, interpretation and fears that rose while reading the book. Before I dive in I want to start with a few disclaimers. The main one is, of course, I'm not going to give a detailed summery on the book or give quotes out of it, only the messages and conclusions I took from it. If you want to know more about something I mention you will need to go buy the book or search online, which brings me to my second point. I truly encourage new investors to read this book, for me it made some sense about some basic subjects and terms and helped me to start picturing the actions I need to make to reach my goal, one of them being starting this blog.

Chapter One

In the first chapter we are presented with 9 frequently asked questions by newbies. All are important but there were 3 that really concerned me and I felt that they were floating in my head all this time.

1. Can I invest in real estate if I have no money?

I'm planing on starting my first project while I'm getting my bachelor's degree. This poses an even greater problem than not having money saved up, I'll probably not be making money either. I am starting to plan the 17 months that I have from now to when I start my degree in order to be able to save as much as I can, with a trip to south america in the middle (I know that these two kind of contradict each other). I am hoping to have about 20K$ but I know that wont be enough to flip a house. I know what you must be thinking, maybe you can get a mortgage. Well unfortunately I'm not a US citizen and I live in Israel so I probably wont be able to get one in neither of the countries. I will dig in to this in a few chapters.

2. What if my market is too expensive?

This is a very relevant question for me. The real estate market in Israel is very expensive, even homes in the more remote places are not super cheap unless they are really in places where there is no way to make a profit of it, which isn't what I'm aiming for... This is why I chose to turn to US real estate. It's not uncommon for Israelis to invest over seas, even in European countries, but I went with America because I have decent English and I think going to a market that speaks a language I don't know will be a big waste. The thing that does pose a problem with this decision is of course the fact that I don't really know the USA all that well. I'll need to do a thorough search before choosing a market. Another problem, naturally, is the distance and the fact that going to visit my properties wont be an easy or cheap thing to do. But considering the fact that there is a significant amount of people doing it, puts my mind to ease and I believe I'll be able to do it as well.

3. Do I need some kind of LLC to invest?

For me this is a short one, yes. Again because I'm an over seas investor I can't really buy property in the US under my own name. What this question did get me thinking about is what king of legal entity. I new about LLCs but in the book I found out about S-corporations which might be better for a house flipping business regarding taxes and some more things. So at least now I know what I need to research before opening my entity.   

Chapter Two

This chapter focuses on your personal financing. It talks about how to try and save money, how to make more money and in general the impotence of financial knowledge and planning. I consider myself as someone with good financial planning and being someone that isn't prone to spending on unnecessary thing, but regardless there were still a few thing I took from this chapter.

One of the important thing is to make a map of where you're standing financially, Income, expenses, saving, etc. This is something I know can be very beneficial but I never really took the time to do it properly.

In this chapter they also talk about the priorities you should spend your money one. What I wasn't expecting is for savings and investments to be number one on the list. As, I'm guessing, most people would think, I don't really know how to change my mind set into putting aside money for the future before paying for utilities. Although I don't understand yet how to bring myself to do so, I do see the importance of that and its definitely something I'm going to try to use in my life. They recommend the book "The Richest Man In Babylon" by Goerge S. Clason which relates to this topic, so I'll be sure to add it to my list.

Chapter Three

Chapter three includes actions one should take before they start investing. The one thing I really paid close attention to is forming a team. I have it easier in a way and harder in another way.
Because I don't live in the United States, there are a lot of things that I can't, even if I really wanted to, do by myself. Naturally that's a down side because I rely on other people and it narrows the possibilities I'll have for cutting expenses. The bright side is that hiring someone else to do most jobs might keep me from making mistakes I would have made if I did have the option of doing them myself and putting too much on me. My team will probably include:

Realtor- most of the ways of finding deals include being physically in my market or having good connections. Connections is something ill have an easier time doing so I'll start with a realtor that will hopefully find me good deals and might also help me with networking. In addition I'll absolutely try to do my best with what i can from a far.

Real estate attorney- Because I'll have some kind of legal entity and I'm very uninformed in US law, this is a must for me. I'm hoping to find one that gets paid based on deals closed, that way I don't need to spend a lot of money unless I"m making some.

Title company- Probably my attorney will help with that but even if I was living in my market I would have to get one.

Tax accountant- similar to the attorney, this is a must because I'm very ignorant when it comes to this subject. Plus I hope he'll be able to help me with keeping the tax payments to a minimum (all in legal ways of course) and make sure I don't pay taxes in both countries.

Insurance agent- this is one thing I might do on my own. I think I'll be able to get good results by doing a search in the forums and if a time will come and Ill need to put it to use my attorney will be able to help me with the lawsuit.

Constructor- as I've heard many times this is one of the most important character on my team. I will get a general one because starting to look for a specific one for every job and making sure that each one is doing his job in the proper way will cost me more time and headaches and might make me lose money because I wont be able to do a good job in finding good and trustful ones.

when I build my team I'll put a lot of time and effort in order to choose people who are as suitable and as reliable as can be. I will make sure I have enough recommendations and do a thorough background check because meeting them face to face wont be an option unfortunately.  

Chapter Four

In chapter four the focus is around types of real estate that you can invest in, they refer to it as niches. I don't have a lot to add on the subject so I will only talk about what I think my goals regarding these niches are.
My final goal is to invest in large apartment complexes. I want this because I think managing one or two big ones, from which I get all the cash-flow I need, will be less time consuming than having a bunch of smaller properties. Of course in order to get there I'll need to scale up and start from small. Starting from single family houses ill expand to small apartment complexes in order to build my wealth in order to buy bigger ones and to improve my knowledge and experience in home owning and renting units.

To Be Continued...

There are five more chapters in the book but this post is starting to get too long' so what I'll do is divide the book in to two blogs. I'm very sorry to have to keep you waiting in order to finish my trail of thought but good things come to those who wait...
Next week I'll be talking about my real estate strategy,what methods of finding great deals I believe I'll use, ways I thing I could finance my deals and more.

I'll be sure to continue sharing, stay tuned...

The Book: 

https://www.biggerpockets.com/store/how-to-invest-in-real-estate-ultimate