Top Real Estate Book, According to Financially Independent Investor
- Real estate investor James Berkley has read over 30 real-estate-related books.
- His favorite is, “How I Turned $1,000 into Three Million in Real Estate in My Spare Time.”
- The author, William Nickerson, started buying real estate in 1936 and ultimately made millions.
James Berkley made a lot of mistakes in his way to achieving financial independence via real estate investing.
“It was a lot of learning by doing,” the 34-year-old told Insider. But he also spent a lot of time self-educating: “I’ve read over 30 real estate books, easily.”
His favorite happens to be one by William Nickerson, who started buying real estate in 1936 and ultimately made millions of dollars from his investments.
Nickerson wrote five real-estate-specific books, the first of which came out in 1959 and was titled: “How I Turned $1,000 Into a Million in Real Estate in My Spare Time.”
The one Berkley read was a later edition: “How I Turned $1,000 into Three Million in Real Estate in My Spare Time.” (In the latest edition, the return became $5 million.)
He read it early in his real estate investing journey, which started as a side project when he was working full-time on Wall Street in the 2010s. It validated his belief that real estate could be a path to wealth.
“I’m reading it, and the author is talking about how he bought a three-family for $30,000 and is collecting $300 a month in rent from it,” said Berkley. “And I’m like, wait a second, that’s the same thing I’m doing, except multiply everything by 10. I’m buying something for $300,000 and I’m collecting $3,000 a month in rent.
“It was really relatable, and also a proven point that prices go up. Inflation is real. There’s always inflation, not deflation, except for maybe one or two years out of 100.”
That means it’s always going to take more dollars to buy the same products in the future.
“For example, a Big Mac, a can of coke, a loaf of bread — they’re always going to go up in price over the long run,” said Berkley. In the same regard, “a house is always going to go up in price because labor is going to go up in price.”
The book also inspired Berkley to shift his investing strategy.
When he first read it, he owned a brand new three-family building in Worcester, Massachusetts. He’d bought it in 2014, filled it with tenants, and was earning about $700 a month in rental income (after all of his expenses, including the mortgage, were accounted for). It was by no means a bad investment, but Nickerson introduced him to a different strategy that could result in better cash flow.
“This book made me realize that I should be fixing places up,” rather than buying brand new, he said. “There are four ways you can make money in real estate: you can make money off the cash flow, which is rent minus expenses; you can make money off appreciation if it goes up in value; you can make money off debt pay down; and then the last piece is by adding value. I was doing the first three but I wasn’t doing the last one.”
Berkley wasn’t adding value because he couldn’t. His investment property was brand new and didn’t need renovations or upgrades to make it more attractive.
Nickerson, on the other hand, “would buy a building for $30,000, put $5,000 into it, and then sell it for $45,000,” explained Berkley. “That would be like me buying a building for $300,000, putting $50,000 into it, and selling it for $450,000.”
That’s exactly what Berkley started doing: buying properties with room for improvement and adding value to them through upgrades.
“If you want to build wealth, you have to add value to other people’s lives,” said Berkley. “The way I did that was by buying three-family homes and fixing them up to make them a nicer place for people to live.”