Customer Reviews

The Complete Guide to Investing in Rental Properties

5 star:		(4)
4 star:		(0)
3 star:		(1)
2 star:		(2)
1 star:		(2)

 

 

I have read all of the real estate investing books by Steve Berges, in addition to many others by other authors. I have found that Mr. Berges is by far the best author on real estate investment, period. If you haven't read "The Complete Guide to Buying and Selling Apartment Buildings," then you are doing it wrong.

Mr. Berges' basic approach is to teach you what to look for, and how to analyze property before you buy it. With this approach you will know how much money you will make in the end, before you have even made the down payment. Berges explains this approach very thoroughly and effectively, with an informal, anecdotal style that makes you feel like you are discussing real estate methods with your rich uncle.

"The Complete Guide to Investing in Rental Properties" is Berges' newest book. Having read all of his previous books, I found this one to be a little redundant. The first half of the book is a review of infomation found in more detail in his other books, and even includes excerpts from his other work. But that allows the book to stand on its own. The rest of the book is all new, and pure gold. Mr. Berges discusses his techniques for managing property and tenants, increasing property value and reducing expenses.

If you were only allowed to read one book on real estate investing, "The Complete Guide to Investing in Rental Properties" would be it. However, then you would be missing out on all of Steve Berges' other books. On the other hand, were you to have read the others, in my opinion you would not only have all the information needed to begin a successful real estate venture, you would also have a significant advantage over all those investors out there who have not read his work.

Given that this has been such a raving review, I feel I should head off assumptions that I work for Steve Berges, or the publisher, or even know him. I do not. I have only read many books on real estate investing, and I have come to recognize Mr. Berges' books to be the champions of them all. You just have to read one to know what I am talking about.

****UPDATE! November 2008****

Ten Stars! This is an update to my original review of this book on February 11, 2005. Since then, this book seems to have taken a beating from other reviewers, so I feel compelled to chime in. If you are looking for Shakespearean writing, check the classic literature section. Is basic arithmetic part of your dismissive notion of "math" that you asked your 7th grade algebra teacher why you needed to learn it, since you were never going to use it anyway? If so, then you should avoid this book, and investing in general. If, however, you are interested in smart real estate investment then this is the place.

Using what I learned from this and Steve Berges' other book, "The Complete Guide to Buying and Selling Apartment Buildings," I have recently acquired over $1 million worth of apartment buildings (heavily mortgaged, of course). Both books showed me exactly how to find the best deals in town. Early in 2008 I cashed in all my mutual funds and IRAs, paid the early withdrawal penalties, and passed up on the company's 401K program so I could put all that money into purchasing apartments. My co-workers were certain that I was an absolute idiot back then, but now I look like a genius. Currently my apartments are professionally managed so they run themselves, and they also generate a 9.5% annual rate of return after all expenses. That is not much, but the real profit will come when I sell them in a few years. Also, 9.5% is significantly above the negative 50% return that the average mutual fund investor is seeing these days.

If you are reading this and looking to make money in real estate, then you have already figured out the most important step. Four years ago I knew nothing about real estate, having never even purchased a home. I turned to Amazon.com and read hundreds of reviews for real estate books. This powerful tool enabled me to weed out the 98% of real estate investment books that are completely worthless. I eventually bought and read about 24 of them, including all of the books written by Mr. Berges. Since I was new to the business, the rest of the books were on related subjects that I knew I needed to understand before getting started: mortgages, home inspection, HVAC, lawyers, insurance, what a closing is, etc. If there is something in real estate that is a mystery to you, just read a good book about it. The people who waste thousands of dollars on a weekend real estate seminar only learn a fraction of what you can learn yourself from a $20 book. In fact, all my real estate agents, building inspectors and loan officers have been blown away by how astute my understanding and insight has been, even before they know how new I am to investing.

I never read the non-investment related chapters at the end of Steve Berges' books. I am also familiar enough with Microsoft Excel that I make my own spreadsheets for analysis of properties, so I have never bothered with the software that he sells. There are books about using Excel, too. There may be investment books out there that are better than those by Steve Berges, but I have not found any yet.

As a professional and licensed real estate broker specializing in property management, I'm only going to address the parts of the book dealing with managing the rental property. His advice omits requirements of American with Disabilities Act (ADA), HUD, and state requirements for rental properties. Some of the advice given will get the property owner sued by the tenant and possibly a government agency. He does not recognize that many states have landlord-tenant laws that govern private owners as well as professional management companies actions when dealing with tenants, entry into occupied properties, trust accounts, what repairs can be done by owners (some repairs require special licenses when a property is tenant occupied, owner occupied and tenant occupied properties are governed by different laws) and elements of a lease. He never reveals that private owners are subject to the requirements of HUD, an agency which is very serious about going after landlords who violate their policies. His information on obtaining tenants is severely outdated. Newspapers are the most expensive and least productive method of obtaining tenants.

This book is a good idea, and presents relatively useful information in a straightforward fashion. BUT: the book as a whole suffers from some elements that make this a mediocre choice. A strong candidate in a long tradition of making business and finance texts unreadable, ruining the subject for millions.

1. Poor prose: the writing is mediocre and after a while gets tedious and annoying. As an example, on pg. 91, a paragraph leads off saying (paraphrased and condensed) 'there are three important additional factors, x, y and z. X must be considered so that (blah blah blah). It is equally important to understand Y. Finally, it is important to be aware of Z.' In other words, these things are important, and you know this, because you have been told they are important through the technique of repetition of the word important. This is just plain poor writing.

There are also pompous quotes at the end of each chapter, which have little relation to the text and no effect save to annoy the reader. They seem to repeat the theme of liberty; now, liberty is a Good Thing, but the connection to a real estate text is somewhat tenuous - and more to the point, it's obnoxious. (Example: at the end of Chapter 3, "Eight Ways to Locate Rental Houses for the Smart Investor", John Quincy Adams is quoted as saying "Posterity - you will never know how much it has cost my generation to preserve your freedom. I hope you will make good use of it." Wha'?)

2. Narrowness and facts/opinions: pg. 27, "The type of location best suited for rental houses is typically in a neighorhood that is between 10 and 35 years old." Ummm, would this hold true in, say, Boston? New York? New Orleans? Paris? (Okay, it's a book for a U.S. audience, but still). In general, the "suggested approaches" seem targeted at those considering investing in rental properties in mid-sized cities with massive urban sprawl. In particular, there is a strong and clear bias to investing in single-family dwellings, a bias that is both potentially dangerous and certainly open to debate. (Granted, the author does point out that this is a generalization, but this qualification is not very convincing.)

3. Errors: while the errors I have found are not serious, they worry me when I read a business/finance text. For example, on pg. 75, Berges explains the debt servicing ratio and states that "a value of 1.0 percent means that there is exactly enough cash to make the loan payment." Actually, 1.0 percent means that there is 1/100th of the cash needed to make the loan payment - a typo, to be sure, but that's why texts are edited prior to publication. The box on the same page breaking down the formula is also simply wrong.

I should note that the entire section in the Chapter "Financial Analysis of Rental Properties" makes use of an almost unreadable print-out of an Excel worksheet (that I have not found available on the web, although I admit I could eventually read no more). Since some of the text following this is based on the worksheet, it makes it harder to get through this section and the subject just does not come alive.

4. Nothing new: there are other texts that explain finance and real estate much better, and put them in context, with clearer examples and less painful writing.

Keep looking.

This book is a guide to investing in real estate for the long term. It is not about flipping properties, but about buying, holding, and maintaining them. If you are interested in flipping, I would suggest the author's other book The Complete Guide to Flipping Properties. I find this author very knowledgeable on the subject of real estate investing and he communicates his knowledge in a very simple and understandable manner.

In this book you will learn how to find, analyze, buy, and sell properties, but for me the best section was on how to find good tenants. I think that many investors get tired of real estate because they get tired of tenants and their problems. This section is helpful because if you find the right tenants, your life becomes a lot easier, and since your rental income depends on the rents paid by your tenants, it makes it even more important. In the end, people who rent from you are your clients, and they deserve a certain amount of customer service, just like you demand it from other service providers.

- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market

In the Section 1 - 'Real Estate for the Smart Investor' the author describes the book to be 'intended for people already considered to be smart in investing in real estate'. While this book has good information, it is intended for people who are NEW to investing in real estate. Anyone who considers themselves 'smart' already knows 95% of what is in the book. The book re-inforces some commom sense business practices so it is not useless to someone 'smart' in their approach ot investing in real estate, but very disappointing for anyone who has experience with real estate.

If you are comfortable with the basic mechanics and operations real estate investing (what I would consider 'smart'), but looking to increase your knowledge of the business this book is not for you. Only get this book if you need to learn what is involved in a sales contract, basic negociation, or the golden rule.

Another interesting bit from the book was the author's belief that he was 'more convinced than ever that there is no real estate bubble.'

I originally took this book out from my library. After finishing the book I decided to purchase a copy from Amazon. They have chapters on lease agreements, financial,ways to increase rent, and much more.

I can only imagine that this book was written for the sole purpose of making money off of poor schmucks, like myself, who bought it thinking it might have some useful information. It doesn't, save your money and look elsewhere on the given subject. Example information conveyed in the book includes, in essence, such helpful hints as don't buy rental homes next to slums or trash-dumps.

This book was not as easy for a me to understand as other books I have read. He goes really into detail on showing how to make sure your cash flow and the property is one you want to buy, but he doesn't do much to show or tell you how to buy homes as I had hoped.

I'm surprised at the lackluster reviews of this book. I found it outstanding and learned a great deal about how to acquire the best properties and make them as profitable s possible.