You might not be aware, but I’m somewhat of a night owl. It’s been quite helpful for working on the third shift; naturally being awake when most other people are asleep makes it that much easier to stay awake during the night. But it has downsides, as well; on my nights off, there was virtually nothing to do. By three or four in the morning, all the stores and bars are closed, so there was nothing to do but blog and watch late night infomercials.
It was on these infomercials that I first encountered Dean Graziosi and his book, Be a Real Estate Millionaire. For those of you who haven’t encountered him, either because you never stay up that late or have better things to do when you are awake at three in the morning, he is a real estate guru. That phrase alone probably sends up some red alerts for you, as it did for me, but when I saw his book in the store, I decided to pick it up and give him a chance. Is there anything worthwhile in his message? Let’s see.
The book is broken up into three different sections. The first, modestly titled ‘Making a Fortune in Real Estate’, starts with a chapter about why real estate investing is a good idea (emphasis is put on being able to use leverage and borrow money). The second chapter provides a brief overview of the different types of real estate markets, as well as why Graziosi favors residential real estate.
The next three chapters cover different factors to consider in the national and local real estate markets, to determine where you are in the real estate cycle. Chapter three is an overview of national factors, like interest rates and inflation that can affect the real estate market nation-wide. Chapter four goes into local factors for real estate markets, such as supply, demand, job growth and construction. Chapter five shows how to apply these factors to your real estate market.
The last chapter in this section goes over how to find, buy, and sell real estate. There are sections on what to look for in a property, how to pay for the real estate (mainly referencing future chapters in the third section), and people you should contact in order to buy and sell property. The chapter end with a section on different strategies for making money from real estate, from buying and renting it out to flipping it.
The second section of the book is called ‘Building a Foundation for Success’. The first chapter in this section covers getting your finances in order. It’s full of good suggestions (most which can be found elsewhere on this very blog, for that matter), from building up your credit to tracking your spending. Most of the suggestions in this chapter are pretty solid, even if you aren’t planning to invest in real estate.
The next two chapters cover how to remove mental blocks to success and overcome your fear of failure; the book starts to sound more like a self-help pamphlet than an investing guide at this point. Chapter ten covers the basics of time management, so you have time available for real estate investing. Chapter eleven finishes off this section by providing help with setting goals and then achieving them.
The third part of the book, ‘Creating Real Estate Wealth, finally gets to the meat of real estate investing. Chapter twelve outlines the various types of (residential) real estate that are available, from single family homes to apartments, to give the reader an idea of what is out there. Chapter thirteen covers various types of loans, deeds of trust, and mortgages, the various ways you can get funding for real estate investing. It continues to go over the various sources you can consider tapping for loans, from banks to private investors, before covering the array of mortgage types available.
Chapter 14 covers buying real estate with no money down, covering a range of ways to purchase property without having any money on hand (although several, like using credit card advances or pulling equity from whole life insurance, are really alternative methods of getting money). Chapter 15 covers lease options, where you lease a house with the option to buy it after a period of a year or two (with part of the lease money being applied to the purchase price). Chapter 16 covers foreclosures, investing in property that has been seized by either a bank (if the previous owner failed to pay their mortgage) or a government agency (if the previous owner failed to pay their taxes).
The next two chapters chapters expand on some of the techniques in Chapter 16. Chapter 17 covers how to purchase a home that is about to go into foreclosure, REOs (Real Estate Owned properties; those that have been seized by a bank) and short sales, where the home is sold for less than the present owner owes on their mortgage. Chapter 18 covers tax liens (when the government requires that back taxes be paid or the owner evicted) and tax sales (when seized properties are sold to cover back taxes owed).
Chapter 19 covers some of the basics of managing a rental property, from finding good tenants to advice on collecting the rent. He provides some basic advice on how to budget for repairs and improvements to your property, as well as how to deal with bad tenants. The chapter ends with some advice on finding good property managers. The final chapter is a short list of suggestions for how to get started investing, from creating an financial worksheet to see where your finances stand to finding advisers to help you invest. The book ends with a short glossary of some of the terms used throughout.
-Optimistic: This book is nothing if not upbeat. Grazisoi is, by all appearances, a very happy person, and that happiness comes across throughout the book. Almost every chapter includes a ‘Real-Life Story’ about how he (or more often, one of his students) applied the suggestions in that particular chapter to successfully invest. It seems both realistic and doable for the average person.
-Aimed at Novices: The book is not filled with jargon or designed to make real estate seem unfathomable. All the terms used are defined when first introduced, and most also appear in the glossary at the end of the book. It’s pretty easy to follow what Graziosi is saying, and to learn what he is trying to teach.
-Covers a Lot of Ground…: In the course of the book, you’ll get an introduction to just about every method of real estate you’ve ever encountered (and probably many you haven’t). Further, it also covers a number of related topics, from money and time management to studying the national real estate market. It’s hard to think of an area of real estate investing that is not at least touched upon in this book.
-…But Not Very Deeply: There’s an expression, ‘a mile wide and a foot deep,’ to describe something that attempts to cover too broad a topic and can just skim the surface. That’s the way this book feels; by trying to cover everything about real estate investing (as well as several not quite vital subjects in part two) in a single book, the amount of space devoted to each method or other subject ends up being rather limited (even with the smaller than usual type used in the book).
-Some Odd Priorities: As mentioned above, there’s quite a bit of material included in the book that doesn’t directly relate to real estate investing (such as the chapter on overcoming your fear). There’s also areas where the book seems to be lacking; only a single chapter is included on managing the property and filling it with tenants, and there’s nothing specific about selling your property. A slightly different mix of material covered would make the book seem less like a self-help book and more like a real estate investment guide.
-Not Enough Caution: While there’s nothing wrong with optimism, it should be tempered with a proper amount of caution. Graziosi makes the occasional passing comment about how something went wrong with one of his investments (such as the problems he had with a property management company one time), but a ‘Real-Life Story’ or two about how investments can go wrong, a section of each chapter telling how the methods described can go awry, or even a chapter or two on failed real estate investments would go a long way toward tempering the tone of the book. It also wouldn’t hurt to give potential investors a better idea of what pitfalls to avoid.
Be a Real Estate Millionaire is a good introduction to investing in real estate investing, in all its many forms and possibilities. If you are inclined to invest in real estate, this book makes a good place to get started. Two caveats: first, it’s worth getting other books that go more in depth on the particular investment method you decide to use; a single chapter isn’t really enough to thoroughly understand the real estate method you choose to use. Second, take the success stories and optimistic tone of the book with a grain or two of salt; you CAN, in fact, mess up while investing in real estate. The precautions in the book will help you to avoid these problems, but well, sometimes things happen that you can’t foresee. Follow these caveats, and Dean Graziosi should be a good guide to starting your investment career in real estate.