Book Review: The Millionaire Real Estate Investor

Book Review: The Millionaire Real Estate Investor, by Gary Keller

Republished 4/12/2021

I just recently read The Millionaire Real Estate Investor, but it has quickly become the real estate book I will recommend more than any other.  The book does an excellent job of explaining the fundamentals and core strategies of successful real estate investing.

I can’t go back in time, but this is the type of book that I would choose as a primary guide if I had to start my real estate career over.  As a beginner, I certainly learned a lot of the principles and strategies taught in the book, but I also had large knowledge gaps. If I had used this book as my core model, I think I would have been light years ahead of where I am now.

In one sentence, the book is all about teaching you successful models used by millionaire real estate investors.  The book’s author, Gary Keller, did the work of distilling and organizing core principles and practical strategies that you can easily apply for yourself.

The book has useful content for beginners, intermediate, and more advanced investors.

In the rest of this article, I’ll share my favorite big ideas from the book, but just know that I left out dozens of others. I highly recommend you get the book for yourself.

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Success Models

Luck. Blind luck, dumb luck, Lady Luck. No matter what you call it, many people believe that luck is one of the essential ingredients in real estate investing … [T]he best investors, the tried and true champs, don’t count on good luck showing up. Through the use of proven strategies and time-tested models, they make luck unnecessary – they take it out of the game.”

Gary Keller, The Millionaire Real Estate Investor

Luck is certainly part of the success equation. People do get lucky. But you can’t control luck. And it swings both ways.

Instead, successful practitioners of anything, including real estate investing, rely on models. And they learn these models by observing and studying past success of others.

Gary Keller defines a model as “a method or system used to produce desirable, repeatable results.”

In gardening a model could be a certain method to prepare the soil, plant seeds, water, and deal with pests.  In baseball a model for hitting a ball could be a certain way to stand, place your feet, hold your bat, watch the ball, and swing.  In baking a cake, a model could be a certain way to pick and mix ingredients, prepare the baking pan, and then to bake the cake.

The common theme is that following one method leads to one result, and following a different method leads to a different result. In other words, the PROCESS, or the model you use increases (or decreases) your odds of success. A successful model reduces the effect of luck on your end result.

Many times in life you have to build a model by yourself by learning from your mistakes. But the main point of success models is that almost any worthwhile result you want in life has a model that can be learned from others. Or as Gary Keller put it:

To move forward in life , everyone has to learn from mistakes. The only question is whose: yours or those of the great achievers who lived before you.”

Everyone starts as a beginner. But not everyone progresses the same from there. If you want to make much faster and smarter progress, start seeking out, learning, and applying success models.

The point of this book is to share success models specifically in the arena of real estate investing, which is my next big idea.

The Five Models of Millionaire Real Estate Investors

These five models represent the ‘best practices’ of our Millionaire Real Estate Investors … We took the best wisdom we could find in our research and built our models around the idea of a collective Millionaire Real Estate Investor who represents the best of them all.”

Gary Keller, The Millionaire Real Estate Investor

The meat of this book was built around these five models of millionaire real estate investors.  Look at these as five separate collections of best practices that you can learn and master in order to become a millionaire real estate investor yourself.

But the models I describe below are not separate businesses. They affect and complement one another. You must work to master them all so that you build a cohesive, well-run real estate investing business.

1. The Net Worth Model

The net worth model focuses upon the importance of prioritizing, tracking, and setting goals to increase your net worth.

Many investors, myself included, talk much more about cash flow than net worth in real estate investing. While cash flow is certainly important, Gary Keller makes a very important point that the origin of cash flow is capital, or your net worth.

It’s very similar to the story of the Goose and the Golden Eggs.  Cash flow is the golden egg, but the goose is the equity we own in real estate that produces the cash flow. If we increase our true net worth and maintain a safe balance of debt, we increase our ability to produce cash flow.

Once you begin prioritizing net worth, it becomes natural to learn the processes taught in the book like:

  • The path of money (i.e. how and where money flows in your life)
  • Budgeting expenses and increasing savings
  • Tracking net worth on a balance sheet

2. The Financial Model

The financial model of the millionaire real estate investor is about the two primary ways to build wealth with real estate:

  1. Equity Buildup – the difference between what you owe and the value of the property
  2. Cash Flow Growth – the difference between your income and your cash outflows

It may sound simple, but those really are the two engines of growth. When you know this, you can build your real estate investing activities to best harness their power.

Each of the two engines of the Financial Model have their own important factors.

Equity Buildup typically results from two sources:

  1. Debt pay down
  2. Price appreciation

Cash flow growth also typically results from two sources:

  1. Rent appreciation
  2. Payoff of a loan (because there is no more loan payment)

This section of the book contains some of the most fascinating information I read. It includes graphs and charts that display exactly how the 100+ millionaire real estate investors interviewed for this book accumulated their wealth over time.

3. The Network Model

The Network Model acknowledges the power of using the time, talent, and skills of people around you.  There is no such thing as a self-made man or woman.  We all achieve success with teams.

Like the other models, Gary Keller encourages us to learn and apply processes.  Networking especially seems to be something that is done, if at all, in a random fashion.  When it’s done right, you expand your knowledge, competence, and skill beyond yourself into a true mastermind.

The Network Model details the three circles of your work network:

  1. Inner Circle – personal relationships like mentors, partners, consultants
  2. Support Circle – fiduciary relationships like property managers, attorneys, lenders, accountants, and real estate agents.
  3. Service Circle – functional relationships like title companies, inspectors, electricians, and plumbers.

The details of the Network Model teach you how to build, maintain, and engage your entire network so that you and they both benefit.

4. The Lead Generation Model

Your entire real estate investing business should flow like water through a pipe.  But one thing tends to clog up real estate investors’ “pipes” more than any other – generating leads to buy good deals.

Systematically generating opportunities to buy the right properties is what the Lead Generation Model is all about.

It’s important to distinguish between two concepts:

  1. Leads (aka opportunities)
  2. Deals

This model will bring leads to you.  But the next model, The Acquisitions Model, filters and converts those leads into true deals that make you money.

This is a thick section of the book with many juicy nuggets, but it’s basically organized into the following four categories:

  1. What – the clear criteria you create for property you want to invest in
  2. Who – the people who can connect you to the properties that meet your criteria
  3. How – the systems you run to bring the right people and properties to you (aka marketing channels)
  4. Which – a process to separate suspects from your true prospects

If you’re someone who has trouble finding good deals, this section of the book alone will be worth your time and money.

5. The Acquisition Model

Have you heard the saying “you make your money when you buy?”  In real estate investing, it’s absolutely true. The Acquisition Model is basically the system to make sure you buy right, whether you are flipping or renting properties.

The Acquisition Model goes into detail with two different purposes for real estate deals:

  1. Cash Chunks
  2. Cash Flow & Equity

Cash chunks come from referring, assigning, or quickly reselling properties.  Cash flow & equity come from lease optioning or buying to hold rental properties.

Each strategy has its own rules, formulas, and criteria which are discussed in-depth in this section of the book.

Criteria, Terms, Network (CTN): The Dynamic Trio of Investing

Focus is the key to great success, more than effort, experience, or even natural ability … What we discovered is that these investors [the high achievers] focus on three simple but incredibly dynamic forces at the heart of real estate investing … Criteria, Terms, and Network. We’ve come to refer to them simply as CTN … the ‘Dynamic Trio of Investing.”

Gary Keller, The Millionaire Real Estate Investor

Have you ever found yourself overwhelmed within your real estate investing? I know I have.

The concept of Criteria, Terms, and Network is a valuable mental tool to help you focus daily on the things that really matter in your business.  The Dynamic Trio answers the questions of:

  • what you’ll buy
  • how you’ll buy it
  • who will help you

The first focus, criteria, acts like an opportunity filter. When you know exactly the locations, types of properties, price ranges, and features you’re looking for, you begin to quickly recognize good value in real estate. You also begin to ignore all of the bad opportunities not worth your time.

The second focus, terms, includes the financing and the purchase contract terms like price.  Warren Buffett keeps a list of companies that meet his investing criteria, but only when the terms (especially the price) meet his standards will he buy it.  Even great companies or properties might be a bad deal at the wrong price or terms.

The third focus, your network, includes the people who help you achieve your goals within real estate. Real estate investing is not really about buildings or numbers in a bank account. It’s really about people. That’s why your network is part of the Dynamic Trio.

Applying the C.T.N. principle could be as simple as writing them as a reminder on a piece of paper and taping them on your computer or somewhere you’ll see them often. But whatever you do, figure out a way to keep all three at the front of your mind during your real estate investing.

Think BIG

People who set out to test the slopes of Mount Everest don’t do so on a whim. It’s a big goal, and it requires big thinking. They study, plan, and think strategically. Months, even years, of preparation are involved because there’s a lot at stake … There is just as much at stake in your financial life …”

Gary Keller, The Millionaire Real Estate Investor

No one climbs large mountains without big thoughts. The most essential preparation for climbing begins in the mind of the climber.

A journey towards financial independence is no different. The goal is audacious. Most people only dream about it. But few do the hard thinking required to visualize and plan actually achieving the goal.

Napoleon Hill’s classic book Think and Grow Rich was essentially about the power of thinking big.  He said,

You are the master of your destiny. You can influence, direct and control your own environment. You can make your life what you want it to be.”

Napoleon Hill made famous the idea that thoughts are things.  They are like seeds which we plant in the fertile soil of our minds.

If we plant the right seeds and nurture them, they will bloom and produce abundant fruit in our lives.  But if we let our minds become overrun with the weeds of harmful thoughts, we will never realize our true potential.

This is why I am very careful about the types of media and people I let into my life. Repeated toxic thoughts, ideas, news, or forms of communication truly can ruin the garden of your mind. You have to be the gate-keeper who says yes or no.

But imagining something big is not enough.  Henry David Thoreau reminds us that we have to build foundations under our big desires.

If you have built castles in the air, your work need not be lost; that is where they should be. Now put the foundations under them.”

These foundations are all about plans and strategies. That’s really what The Millionaire Real Estate Investor is all about.

Once you realize what is possible (the castles in the air), you then start thinking about HOW to make it happen.  The mental models you learn will then guide your actions, your habits, and ultimately your successful results.

Ralph Waldo Emerson eloquently described this beautiful process:

Sow a thought and you reap an action; sow an act and you reap a habit; sow a habit and you reap a character; sow a character and you reap a destiny.”

Your destiny hangs in the balance of your thoughts. If that doesn’t motivate you, I don’t know what will!

Conclusion

I hope you’ve been encouraged by some of the big ideas from this great book, The Millionaire Real Estate Investor.  I know I have.

On the cover of the book the author, Gary Keller, includes the following challenge:

Anyone can do it … Not everyone will … will you?

He is essentially saying, “I have given you the blueprint, now it’s your turn.”

It always comes back to our own next actions. These ideas may be helpful or inspiring, but they are only as useful as the actions they lead to in your life.

So I want to do my part to help you move forward. I encourage you to do the this quick exercise.

Write down 3 actions that you could do today or this week that will lead you towards becoming a millionaire (or multimillionaire) real estate investor.

  1. ______________________
  2. ______________________
  3. ______________________

I did this exercise, and mine were:

  1. Prepare a better spreadsheet to track my net worth
  2. Write down the criteria for my target investment properties
  3. Share my criteria with 3 people who may bring me leads

I wish you much success in your journey to success with real estate investing!

______________

Did you like the big ideas from the book? Have you read The Millionaire Real Estate Investor and found it helpful? What were your top 3 next actions that will help you move forward? I’d love to hear from you in the comments section below.

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9 Comments

  1. Excellent book review – I’ll have to read it myself. On the Think Big idea, if you haven’t read it already Chad, I highly recommend The Magic of Thinking Big by David Schwartz. Now, on to write down my three actions of the week.

    1. Thanks Charles! I have not read The Magic of Thinking Big, but I’ve had it recommended before. So that’s on MY list now:) Thanks for recommending and for commenting.

  2. Hey Coach! I’ve listened to several of your podcasts and this one has to be my favorite thus far. I can easily focus on the finances and not the process of getting to that point of financial freedom, and I eventually become discouraged because I’m not there yet. However, this podcast helped me to switch my focus and look at it as steps, rather than the money I’ll have. Thanks Coach! 🤙

    1. What a valuable insight! I’m really glad you took that from this podcast episode, and I appreciate the feedback Anthony. Best of luck with those next steps!

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