By Marc W. Andersen
Sphinx Legal, 2007
Who doesn’t want to retire R-I-C-H? I mean the “I don’t have to worry about anything having to do with money ever again” kind of rich. Has author Marc Andersen found the secret?
In the introduction, he claims that 97 percent of self-made millionaires made their fortunes by investing in real estate. That sounds promising, as does a later statistic that real estate outpaced the consumer price index by 1.5 percent per annum. Of course, today’s realities may be worse or better.
The author is an experienced investor, and he shares interesting “war stories,” regarding types of investments and types of renters. The book starts slowly, taking us through the basic aspects of real estate that any good finance class should have already taught us. Cash flow is important. Leverage is a wonderful thing in an up market. Taxes are a bad thing and real estate will help us avoid them if we are not subject to passive-loss rules that limit losses, in some cases to zero. The author adequately discusses those rules on page 190.
Anderson frequently cites the Property Owners and Managers Survey to support his suggestions. That survey collected information from 16,000 owners and managers of privately held real estate in short, people like us. Those owners and managers share a great deal about how to buy and rent property, and about subjects such as maintenance costs.
But, will this book allow us to “retire rich from real estate?” No. However, it does provide background that will help some readers avoid the mistakes new real estate investors often make. Others may make those mistakes in the first year of real estate investment, with or without this book, because they may not believe that Andersen’s lessons apply to them. Based on my investing history, such pride can be expensive.
This book is intended for people with little or no background in real estate. For that audience, this book is a good read, but for readers who are more advanced real estate investors, the book probably offers few new insights.