top of page

The Book on Rental Property Investing by Brandon Turner

Easy to read book on real estate investing. I recommend as a good introductory book but it mostly focused on getting started and giving the reading introductions on different ways to get started, what to look out for, and a lot of terms to know like lien, title, etc. The best idea I think he has is for real estate investors to not do this as a hobby because this is something to take serious. Real estate investing should be done as a business and taken seriously.

Businesses have systems, employees, teams, and ways of doing things to streamline the process and take the uncertainty and frustration out of things. For example, the author recommends that as soon as a tenant is late on payment for a month's rent, a legal letter should be issued to the tenant right away. Other things I liked about the book is that it tells the reader of things to be aware of. Some things I remember are: that you should always fix up an apartment before renting out because if you rent out the apartment before fixing it up then you will only attract bad tenants; be aware of all the expenses, including the ones that aren't obvious at first, like sewer, water, gas, HOA, garbage removal, lawn care, and some others; house hacking is buying a duplex or triplex and renting out the other parts of the house so their rent pays the mortgage; and include property management in your analysis because if you're going to do this seriously as a business you will be thankful that you have a property manager.

The author also walks the reader through different types of deals which is very helpful. There is a chart of estimated lifetime and costs for capital expenditures like structure, windows, appliances, etc. This estimate came out to about $183 a month so when buying, rental property investors should factor in an extra $183 a month as a cost because at some point the rental property is going to require cap ex on these items which are an actual cost that need to be funded.


I recommend that instead, investors view appreciation as icing on the cake, a bonus that will assist in the investment but is not the basis of that investment. Investing in locations where appreciation is likely is a wise move, but I don’t recommend investing in a bad or marginal deal in hopes that appreciation will bail you out. This is known as “speculating,” and it isn’t much better than getting in your car, driving to Vegas, and betting all your money at the poker table.

I have no problem with people who want to use 100% cash for their real estate purchases, completely avoiding any kind of loan. I am a big fan of the personal finance advice of Dave Ramsey, who is a staunch advocate for always paying 100% cash for any investment property. However, I also recognize that for many people, including me, waiting to invest until all the cash needed has been saved up would require decades of sitting on the sidelines. If you decide to invest using all cash, I would encourage you to pretend that you are not doing so when you are shopping for deals. Having excess money on hand when you’re shopping is dangerous, whether you are at Nordstrom, the supermarket, or looking for rental properties. Being able to pay al cash allows people to be “soft” on the math and pay too much for a property because writing a check is much easier than finding a great deal. Know your numbers, scrutinize each property carefully, and be sure the property you’re targeting will provide a solid return on investment. Remember, price does not equal value.

The fact is, when investing in rental properties, things are going to go wrong. You’ll have good months, bad months, and average months – you’ll never know which one you will get…. Buying a rental property and being forced in the first month to evict a tenant and invest thousands of dollars in repairs would be terrible, but this kind of thing could in fact happen.

I believe one of the greatest reasons investors fail is that they don’t treat their business like a business. 1. They never develop systems to help them as they grow. 2. They treat their tenants like friends. 3. They don’t create clear policies for finding good tenants. 4. They simply approach investing like a church picnic, and it shows.

Your plan is not your business plan... The goal of a plan is to get you thinking, learning, and strategizing… Begin your plan with the end in mind… Just as a road trip begins with a destination in mind, so should your investment plan.

House hacking is the idea of combining your investment property with your personal residence. Although it is possible to do with just a single-family house (by doing a “live-in flip”), the phrase is more often use to describe the practice of buying a small multifamily property (duplex, triplex, or fourplex), living in one unit, and renting the other units out. My first rental property was a small duplex that I bought for $89,000. The property needed some “sweat equity,” which my wife and I spent a few weeks doing, and then we rented the property out. Although we had stumbled across this “house hacking” strategy accidentally, we quickly realized the power of this method when the mortgage payment of approximately $630 per month was fully paid by the tenants in the other unit who were paying $650 for rent. In other words, the tenants were allowing my wife and I to live for free before operating expenses.

I generally advise that people include property management in their analysis, because they won’t always be able to manager their property themselves.

Perhaps the most important member of your team is your very own spouse (or serious romantic partner). It doesn’t even matter whether or not they care about real estate: your spouse/significant other has a huge impact on your mental state, ambitions, free time, money, future, and every other aspect of your life.

When you invest in real estate, it’s not a matter of “if” you get sued but “when.” The more wealth you build, the more properties you own, the larger your footprint on earth is, the great change you have of someone trying to take some of it away from you!

The key to calculating income is knowing the fair market rent. The fair market rent is the price someone is willing to pay to use your property for a set period of time. Fair market rent is determined by the market and what the local average is for certain characteristics of the property, such as the following: location of the property; number of bedrooms and bathrooms; amenities such as air conditioning, parking, and appliances; and size of the property.

When your unit goes vacant, try to bump up the rent. See if the market will bear the increased price. If you do not get any takers in a week or so, start easing down on the price until the unit rents. You will eventually find the market rate.

Have too many applicants? Raise the rent. Conversely, if you have multiple applicants on the first day of availability, your rent is likely too low. Renters flock to a deal. Bac up, do a little research, and set the price higher.

If there is one thing that causes landlords to lose money each month and eventually go bankrupt, it’s this: they underestimate expenses. On paper, their deal might look pretty good, but in reality, expenses add up very quickly. The low margins of profit to be made on rental properties can easily be cannibalized by unexpected expenses. Therefore, having a firm grasp on what those expenses might be is vital to your success.

Here are some expenses that can be forgotten about when analyzing the cash flow of a deal: taxes, insurance, floor insurance (if needed), vacancy, repairs, capital expenditures, water, sewer, garbage, gas, electricity, HOA fees (if applicable), snow removal, lawn care, and property management. To get an estimate for these expenses: call your local country or look online at the county assessor’s page for taxes, call your insurance salesman and ask for a quote for insurance, call your local water department for water, call your local sewer department for sewer, call your local trash provider for trash, call your local gas company for gas, call your local electricity company for electricity, call the HOA president or hotline for HOA fees, ask local landlords what they pay or call a snow removal company for snow removal, and ask local landlords what they pay or call a lawn care company for a quote for lawn care.

Capital expenditure replacement cost estimates lifespan cost per year cost per month
Roof - 5,000 25 200 16.67

Water heater 6,00 10 60 5

All appliances 1,000 10 100 8.33

Driveway/parking lot 5,000 50 100 8.33

Hvac 3,000 20 150 12.5

Flooring 2,000 6 333 27.75

Plumbing 3,000 30 100 8.33

Windows 5,000 50 100 8.33

Paint 2,500 5 500 41.67

Cabinets/counters 3,000 20 150 12.50

Structure (foundation) 10,000 50 200 16.67

Components(garage door) 1,000 10 100 8.33

Landscaping 1,000 10 100 8.33

Total 41,100 2,193 182.75

C.C. in New York is buying brownstone townhouses near New York City to craft his financial independence in a market that most people consider “too expensive.” Real estate investing is possible in any market and in any location. However, understanding the location you are investing in is key to being successful with that investment. Each of the stories I just mentioned demonstrate a different style of real estate investing, crafted out of the location each investor found themselves in.

It’s hard to get long-term tenants in a one or two bedroom house. Tenants who are single tend to choose a one-bedroom but quickly hook up with that cute guy/girl from work and then need a larger place. They move into a two-bedroom and soon start having kids and again find they need more space. Therefore, in my experience, three or four-bedroom houses tend to make the best rentals because they attract long-term tenants, which cuts down your vacancy expenses….Single-bedroom and studio apartments are also common, but they tend to attract a more transient tenant, so expect more turnover in that style.

When looking for single family homes, look for ones for which all utilities (including water, sewer, garbage, electricity, and heat) can be paid directly by the tenant. When shopping for multifamily, at least look for ones where heat and electricity can be paid by the tenant, and if you can find properties that can be converted to a “master metered” system to allow tenants to pay for their own water, you’ve potentially struck gold.

In most of the deals I’ve offered on, the original offer has not been accepted; the same will likely be true for you. And that’s not a bad thing! I argue that if your initial offer is accepted, you probably offered too much!

Your goal when buying real estate is to only buy properties that have a “clear title.” This means a title that has been researched and found to be complete and free of liens or other issues.

The landlord in that story approached his business like a hobby, a side project, something he does when he finds time. He’s deep inside his business and can’t seem to get out. He’s fighting a losing battle with his tenants and losing ground every day. But if there is one silver lining to this story, it’s this: when this landlord goes bankrupt, and he most likely will, you and I will be there to get a great deal on his property, turn it around, and start managing it like a business. We’ll create office hours, have a system in place for parking, collect rent automatically, issue legal notices the day after a tenant is late, kick out bad tenants, move in great ones, raise the rent, hire the right people to do maintenance jobs, and work far less but make far more money.

Owning a business means creating a policy of how things are done – and sticking to that policy, owning a business means having rules – and enforcing those rules, owning a business means setting boundaries – and making sure others abide by those boundaries, owning a business means continually finding ways to become more efficient and profitable, owning a business means outsourcing the things you aren't good at or don’t enjoy, owning a business means being productive and maximizing every second, and owning a business means working on your rental business, not in your rental business.

If you start showing properties before they’re fixed up and ready to go, you’ll likely only attract tenants who are highly motivated to move in because of an eviction or some other less-than-positive reason. I once bought a vacant, incredibly ugly, purple triplex in the month of December, but because of the rainy winter weather, I couldn’t paint it until spring. So I decided to rent the property out, as it was, and paint it later. Huge mistake! I ended up evicting two of the first three tenants despite their solid applications and a great tenant screening. The simple fact is this: bad tenants are the only ones attracted to bad properties.

A common mistake with new landlords is to place just anyone in a unit…. You actually need to find the right tenant, not just any tenant.

bottom of page