I was recently asked by Vanessa Warwick to submit my top 5 essential property books to the Property Tribes Forum. Today’s post elaborates on the selection a bit further…
I guess the most obvious thing that strikes when looking at my top 5 is that none of them is directly about property. Possibly the closest we get is with Rich Dad, Poor Dad, as Robert Kiyosaki speaks of developing income through businesses and investing the proceeds into assets. Assets of course would include property but are not exclusively so. Property for me is a business also, so that’s two for the price of one there!
There must be more behind my selection therefore than 'how to' books in property as valuable and necessary as they are too...
Indeed, there is more...
Whilst I became a landlord in the mid-nineties, I really had no clue what I had in the palm of my hands back then. I was what you might call an ‘accidental landlord’, having relocated for work reasons and I just thought why not rent our home out instead of selling it, having been tenants ourselves before we bought our first house. Just six months later after an expensive water tank replacement and following the notice to quit served by my so-called long-term tenants, I decided to cash in my chips and sell the property. I even made a decent profit on the sale and felt good about it at the time. I didn't know it at the time but this was my single, biggest mistake in property investing. Had I held on and pushed through, then I would have a property today worth around £250k that I paid £58k for back then! This is not to mention the rental income along the way...regrets; only one and this is it! The subject of pushing through gets another mention later as you will see.
Having dipped my toe in the water and found it a little cold to dive in I sat out the next ten years as far as property investing was concerned. I bought my second, first investment in the mid-noughties but I still did not know it even then..., as this was a family home at the time. It was only after my then wife and I separated, going our separate ways, that this became a rental property some three years later. It was in negative equity at the time if you are wondering how I managed to get the house out of the divorce settlement.
My 'Eureka moment' in property came one summer's eve, whilst sat in a beer garden sipping a pint. I was 'freewheeling' as I think it is called...or maybe just doodling...when I started to apply the law of compound growth on a scrap of paper. Yes, I know I must have been enthralling company around that time! I worked in financial services and so I understand this principle but from the lender's perspective...interest added to interest and all that. But this time was different...I started to understand what actually happened with my first investment property and what if I applied a similar logic could happen if I bought some more? I had it - the key to financial success and in particular, to plug a massive hole in my pension that had arisen for a variety of reasons.
Aside from a giant hole in my pension, I was going through the marriage break up, which left me with no home of my own, in debt, with expenses higher than my income, no savings and not a lot of hope financially or otherwise.
I also didn't know what I didn't know as far as being a property investor is concerned but more than that I had no clue where to start due to my dire financial situation.
I should explain why none of the books listed are specifically about property. Well, for me property is merely a means to an end...an asset to invest in that is capable of generating both capital growth and income returns. As beautiful as it is in being able to achieve this, it is not unique. What I had to understand before really achieving anything in investing, property or elsewhere, was that it relies on two main ingredients:
1) sound investing principles
2) the right mindset and approach.
With this knowledge, perhaps it is more understandable that my book choices were more generic than specific to property. With the knowledge from these books (among others), it would also be possible to achieve financial independence and wealth through other vehicles aside from property there is no doubt. Personally, I love property for one fantastic reason: leverage - but that's a whole other topic.
I had read The 7 Habits of Highly Effective People several years before and it had genuinely helped me as far as applying the principles in my working career at the time. I recalled the habits some fifteen years later and applied them to my current situation, starting with ...First Things First. I had to make a plan for my future and it started with getting out of date and ordering my finances. I won't bore you with that story here but as it happens I did write about this subject only yesterday on my blog
Covey's 7 Habits have fared me well, as they are an easy to remember guide to self-improvement and interaction with other people. This book had such an impact on me out of the many personal development books that I have read.
The post I linked to above mentions another book on the list...the little known How to Get Rich, Not Quick by Norb Janis. This is a budgeting guide...there are others but perhaps the only one that I am aware of that includes such detailed and yet simple principles at the same time. The best part is that the author offers to send you his own spreadsheets if you e-mail him, which I did and found very, very helpful. If you did read my blog post, you will see that it worked, if you didn’t...it worked!
Next, a book about a concentration camp survivor may seem like an odd choice at first glance and many would be put off reading past the first couple of chapters if they were to start...but don't do that, push through it. I first read Man's Search For Meaning as a student too many years ago to recall and even writing this now, I am close to tears, as I recall how I felt back then. It is about purpose and meaning in life, despite the worst kind of suffering and living conditions that you could possibly imagine - inside a concentration camp. It is also about gratitude or contentment as I prefer to call it - I adopted contentment as one of my life values after reading this book. I had a purpose even back then...it's just taken me a couple of decades to get over myself and truly start applying myself to it! I read this book again in the last few years, which helped me to do so. I have to admit that I had to push through it again but that in itself is a lesson in life...sometimes you just have to push through it to get the prize that awaits.
Rich Dad, Poor Dad has featured highly on many people's list and for good reason. Robert Kiyosaki tells a story of a young boy with two Dad's - his real one (poor Dad) and his friend's Dad, a mentor to him (Rich Dad). I have to admire how the story unfolds to reveal the simple principles to sustainable wealth creation - earning through a business (and so leveraging other people's time, knowledge and skills) and investing the proceeds in passive income-generating assets. That's it really. This realisation has made me far more aware of the value of investing in assets, including but not limited to property and also of generating an income through corporations as they are referred to.
Finally, another story or parable book: The Richest Man in Babylon. I was discussing several things with my very smart eighteen-year-old nephew recently – genetics, physical well-being and going to Uni…his chosen subjects! When I mentioned the principles of wealth creation...as you do...he started talking about economics and getting a mortgage. I raised the subject as wealth principles are not taught in schools and I think they should be. Put simply, if every student in year 12-13 were given this book and underwent just one or two lessons to discuss and understand it, then we would probably rid the next generations of the cycle of a reliance on debt, a lack of savings provision and an over-dependence of being a wage-slave for the rest of their lives. OK, so perhaps this is a grand and idealistic view but it may also have got your attention...
There you go...the long version that tells a little bit about my story and how these books played a part in it. There are links to these and other book references on the Resources page on this site.
[…] I was recently asked by Vanessa Warwick to submit my top 5 essential property books to the Property Tribes Forum. Today’s post elaborates on the selection a bit further… I guess the most obvious thing that strikes when looking at my top 5 is that none of them is directly about property. Possibly the closest we get is with Rich Dad, Poor Dad, as Robert Kiyosaki speaks of developing income through businesses and investing the proceeds into assets. Assets of course would include property but are not exclusively so. Property for me is a business also, so that’s two for the price of one there! There must be more behind my selection therefore than 'how to' books in property as valuable and necessary as they are too… Indeed, there is more… […]