Wall Street Prep

Best Real Estate Books for Breaking into Real Estate Investing

Best Real Estate Books

As a real estate private equity professional, I have certain “must-read” books on my bookshelf.  Below is a list of those books, broken down by book types. Please note that we do not get paid by publishers for these reviews.

Best Real Estate Investing Books

Real Estate Investing Books are easy to read and digest and are must-reads for anyone who want to understand the fundamentals behind real estate investment strategies. Below are two books every aspiring real estate investor must read:

  1. The Real Estate Game by William Poorvu
  2. What Every Real Estate Investor Needs to Know About Cash Flow…And 36 Other Key Financial Measures by Frank Gallinelli

The Real Estate Game is legendary. Even though it was published in 1999, the majority of its lessons and concepts still ring true today. Dr. Poorvu, a professor emeritus at Harvard Business School, frames commercial real estate investing as a board game in which the “deck of cards” (variables) consist of properties, capital markets, players, and the external environment. Your current or future boss has probably read this book.

What Every Real Estate Investor Needs to Know About Cash Flow is simply referred to as Cash Flow in the real estate investment world.  Cash Flow is a cheat code for preparing for technical real estate interviews. It is exclusively about the metrics used in commercial real estate analysis: cash flow, cap rates, IRR, NPV, Cash-on-Cash, and dozens more. Gallinelli also walks readers through a cash flow pro forma (aka Annual Property Operating Document) and how to perform each analysis using Excel. While the book can be self-promoting at times (Gallinelli repeatedly directs readers to his software company, RealData), the insight is invaluable.

Real Estate Books for Beginners

If you’re not quite ready for full on investing books, start with accessible, glamorized stories of historical events.  The two must reads in this category are:

  1. Vicky Ward’s The Liar’s Ball – Liar’s Ball is a great telling of the scandalous account of Harry Macklowe’s acquisition of the iconic GM building
  2. Michael Lewis’ The Big Short – is probably the most popular real estate book, providing an in-depth analysis of the real estate crash that triggered the Great Recession.

Reading stories like this makes real estate more memorable and will help you identify patterns. Some say that real estate investors have 5-year memories in a world of 10-year cycles, and case studies will help you see the big picture. Better yet, you will be able to impress your boss when they ask you obscure questions about topics like the S&L crisis.

Best Real Estate Textbooks

No one reads textbooks for fun, which is exactly why reading one will set you apart. Concepts like Cap Rates, NOI, and IRR are often thrown around in discussions and presentations without clear explanations, and if you don’t understand these terms, your learning process will be slowed down dramatically. In addition to building your real estate lexicon, you will start to understand whether or not you want to pursue a career in the industry at all.

The Top 3 Real Estate Textbooks

  1. Linneman and Kirsch’s Real Estate Finance and Investments: Risks and Opportunities (REFAI)
  2. Gelter and Miller’s Commercial Real Estate: Analysis & Investments
  3. Fisher and Brueggeman’s Real Estate Finance and Investments. While all three are great, each provides a different perspective on the industry.

REFAI is often referred to as the “Blue Bible of Real Estate.” It is based on Dr. Linneman’s course notes from his teaching years at Wharton and has been updated to include chapters about modern financial modeling strategies. The textbook does a great job balancing academic theory and professional reality – Dr. Linneman slips in personal and professional advice throughout the book and shares great anecdotes about the eternal conflict between fear and greed. Because of its accessibility and clear writing, it is a staple in many real estate classrooms and offices across the country.

The Biographies of Titans

If you’ve ever had trouble answering the interview question “Why Real Estate? ”, you should check out a biography or autobiography of a real estate investor. These books are a great complement to textbooks and quasi-textbooks because they put abstract concepts into context and make it much easier to remember cool investment stories and snippets of real estate history. That being said, I wouldn’t consider these a great substitute for textbooks – even if a biography provides a high-level description of an investment or financial concept, they rarely break down these concepts into beginner’s terms, making it harder to digest.

These stories are insightful and make real estate exciting. Even though some of these accounts follow an almost formulaic blueprint (humble beginnings to Wall Street followed by moderate success followed by great failure followed by redemption), they are worth reading. The personal and professional advice shared in these books are thought-provoking and powerful, and if taken to heart, can definitely change your perspective on investing, career paths, and life.

Biographies and autobiographies don’t have to be limited to purely real estate investors. Exploring the stories of different types of investors can be helpful for assessing whether or not you want to go into real estate as a profession. I would start off with the autobiographies of Stephen Schwarzman, Sam Zell, and Ray Dalio.

What It Takes by Steve Schwarzman

If you are interested in working for Blackstone, you should read What It Takes . Simple as that. Schwarzman’s high school and college stories prove that it’s never too early to accomplish something great, and his honest account of his early career confusion can resonate with anyone. The book is peppered with both personal and professional advice and is a quick read.

Am I Being Too Subtle? by Sam Zell

Few people have had more of an impact on the commercial real estate industry than Sam Zell. He is legendary for his candor and ability to take on challenges, and his personal story is awe-inspiring, starting with his parents’ escape from Poland at the outset of World War II. Am I Being Too Subtle? provides insight into how Zell thinks about risk and reward, and after reading this book, you’ll want nothing more than one of his automated holiday toys.

Principles by Ray Dalio

Ray Dalio’s Principles will change your life. He is not a real estate investor, but his meticulous analysis of principles for success is second to none. The book is thick, so if you are on the fence about reading it, you can start with this 30-minute animated short series.

Putting It All Together

A little bit of reading goes a long way. Students without experience and connections are often eager to network and interview, but without proper preparation, they are destined for a difficult journey.

Breaking into real estate private equity, real estate investing, or the real estate industry more broadly can be tricky. Unlike the transparent, structured, and consistent recruitment processes found in the investment banking and consulting industries, the recruitment process for many commercial real estate companies can be opaque and highly variable.

Fortunately, you can find success in this process by performing three simple activities:

  1. Reading the best real estate investment books
  2. Taking real estate financial modeling courses
  3. Talking to industry professionals.

Reading is the first step. When paired with additional technical training programs and informational interviews, reading will help students start their careers on the right track.

 

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