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Real Estate Investing for Dummies

Welcome to my Real Estate Investing for Dummies book summary!

During the summer of 2024, while preparing to purchase my first real estate investment in the USA, I read a series of books, all summarized here. Those books were:

One-Sentence-Summary: Thorough book for beginner home buyers with information taking you well out of that stage.

I’m currently reading Real Estate Investing for Dummies by Eric Tyson, MBA and Robert S. Griswold, CRE. Current page: 234

booboo real-time book rating: ★★★★★ (percentage of books with this rating: 34%)

This blog will contain both my summary and review of the book Real Estate Investing for Dummies.

Real Estate Agent

I cannot think of the value a real estate agent brings to the table. They are asking things from there buyer’s agent. Why can’t I just do that?

Are they going to help you understand the market values? No. You better figure that out on yourself. They’re incentives to make a sale.

Are they going to help you out with the contract? Yes, but you probably want a RE attorney anyways, so why not just hire one of them?

Ok, the RE agent will help you negotiate? No way. Not a chance. In fact, I think here is where they do buyer’s damage. Negotiating is subtleties, it’s when and how you present an offer. It’s how, not just why the offer was rejected. It’s noticing word choice. It’s what you say and don’t say. A RE agent is not some great negotatior. In fact, I think they probably don’t communicate what you want communicate because they feel awkward doing so.

They going to help with due diligence or contacts? Not really. You better do your own due diligence and be cautious of any recommendations you’re getting from them as there’s likely a deal making process in effect behidn-the-scenes.

The title? No. Lawyer does that. Get an attorney with a real estate license.

I hear market experience a lot, but yet to read a valid-sounding argument to back up those words.

Now, if you’re totally inexperienced, the RE agent can help you through the process. Also, if you’re buying out of state, then having another contact is probably a good idea.

A RE agent may be familiar with issues that arise in escrow.

I think one Redditer put it the best: “An expert realtor is a huge benefit. The problem is that expert realtors are extremely rare and hard to find.”

If youget a RE agent, they should be doing this full time. One tip I read is that you should hire one of the top grossing agents. In theory this sounds nice, and it’s worth a try, but that might mean less personal care due to their popularity. Another tip was to find an agent running a team which might mean they had so much success, they needed to hire out a team.

Also, be careful reading real estate books and tips for RE agents. Check to see if the author is a RE agent, oftentimes the answer is yes.

Mortgages

  • Once you get pre-approved, learn the terms of the loan and ask the lender what will be required to finalize the loan. You want to avoid overly tedious processes, especially if your credit is good. Time is your most valuable asset.
  • Ask what the seasoning period is which is minimum time until you can refinance

Pre-Offer/Inspections

  • Many states have disclosure requirements that you should request which will tell you about anything wrong with the property

Earnest Money

  • Is not due until after the due diligence period

Contingencies

  • Approval of the preliminary title report (see Atorney below) by the buyer
  • No items on physical inspection
  • Home is up to current building codes and without any safety hazards

Purchase Agreement

  • Set a 24-72 hour time limit for response.
  • Can ask to speak with the seller face-to-face or virtually
  • A shoeter due diligence period is more attractive to the seller
  • You could say something like anything with a cost below $10k and sum of $25k I will not be renegotiating the contract to communicate that the back-and-forth will not be happening.
  • Right to extend the escrow
  • Contact info for cleaner, property manager, and all service workers/contractors
  • “As Is” sales are most attractive to seller’s, but this means your pre-purchase due diligence (the seller still needs to disclose all known or easily could have been known material issues with the property)
  • Unfettered access to inspect regardless of tenants
  • Include significant daily monetary damages in the purchase contract for any unauthorised holdover usage by the seller upon closing.
  • Make sure contact specifies that funds to the seller can be in the form of cash, cashier’s check, or wire.

Escrow

  • Remember, they’re a human. Give them a call to let them know they can contact you if they need anything. This relationship may come in handy if things don’t go smoothly.

Attorney Needs/LLC

  • Have them review the preliminary title report
  • Question: when forming entity, can the contract be with me, as property manager with a set monthly fee plus a bonus based on essentially any extra profit in the company
  • Forming an LLC for liability protection comes with a filing fee plus a possible annual filing fee

Title Company

  • They check the owner history, ensuring no one else has a claim to the property.
  • You can purchase title insurance through them to ensure against errors and future claims
  • An LLC is the most common type. Remember to declare itself as a joint venture.
    • You need an attorney to prepare articles of organization and an operating agreement which are usually filed with the Secretary of State.

Title Insurance

Property Insurance

  • Liability – for both property and company
  • Fire and hazard
  • Sewer/septic backup insurance
  • Peronsla property coverage (contents)
  • Loss-of-income
  • Worker’s compensation
  • Umbrella
  • Flood insurance
  • National Association of Inurance Commissioners at www.naic.org

Due Diligence/Inspections

  • Copies of every service agreement or contract
  • List of all personal property items included in the purchase
  • Copies of the latest utility billing
  • Copy of the seller’s current insurance policy and the loss history
  • How much will property tax increase?
    • You can get property tax information from the county tax assessor
    • Can be higher than amounts stated publicly due to additional assessments that everyone is paying for.
  • Inspections (when choosing, ensure they will review the findings with you; ensure they are fulltime with at least 100 inspections annually and carries errors and commissions insurance; ideally they are a member of ASHI; they should have general contactors license and certification as a property inspector but also see what specialized training and sublicenses in areas such a roofing, electrical, or plumbing they have; you can request a sample of one of the recent inspections reports prepared form a comparable property – this might weed out manny inspectors; provide the names and numbers of at least ten people who used the company’s services in the past 6 months ). Ask them to tell you which items need fixing immediately and which items will need to be fixed within 5 years.
    • Physical or structural inspection
      • You can also have an architect go in to suggest changes to modernize or better use the space
    • Pest Control and Property Damage
    • Environmental Issues
      • Usually for commercial and residential with 5+ units

Deed Recording

  • You are not the owner until the deed is recorded

Testing for Environmental Issues

  • Lead-based paint (banned in 1978)
  • Asbestos (buildings before 1981 are presumed to have asbestos)
  • Radon – invisible, odorless, radioactive gas known to cause cancer. Tests are cheap and simple to do.
  • Mold

Contractors

  • Natioanl Apartment Association (NAA), the Institude of Real Estate Managemnt (IREM), or the Building and Owners Managers Association (BOMA) have lists of recommended service companies
  • Ensure they have the proper licenses and insurance before they start working

Closing Day

  • If you’re not in town, a notary can come to you

Checklist:

  1. Attorney approval of offer
  2. Earnest money deposit sent
  3. Closing scheduled
  4. Insurnaces
    • Property
    • liability
    • title
  5. Transferring all utilities into your name
    • Gas
    • Electricity
      • Electrical inspection if turned off for > 1 year
    • Water/Sewer
  6. Setting up a legal entity
    • once this happens open a bank account and get a credit card in the name of the entity
  7. get quotes, walkthroughs and time frames from contractors
  8. Start STR permitting process
  9. Take before pictures and video
  10. keep a copy of the closing statement

As I read the book, you will find my in-progress Real Estate Investing for Dummies review and book summary notes below.

You are reading my book review and summary by Eric Tyson, MBA and Robert S. Griswold, CRE. Be sure to check out my digital bookshelf for 100+ book summaries.

Did you know I’m an author? I wrote four books on real estate investing, travel, and language learning.

Thanks for visiting and thanks to Eric Tyson, MBA and Robert S. G

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