Before Kenny Simpson and Krystle Moore met in late 2008, both had previously harbored separate real estate investing ambitions. So it seems only natural that when the two finally joined forces in 2012 to buy their first property together, it was just the beginning of a wildly successful journey — one that’s led them to where they are today, owning a 47-unit portfolio worth $19 million, according to official documents verified by Insider.
Today, the 42-year-old Simpson and 38-year-old Moore reside with their two daughters in San Diego. Collectively, the two share 35 years of experience working in real estate, and estimate that their property investments now net them over $360,000 in annual cash flow.
For any aspiring investors, the first piece of advice Simpson and Moore share is to get educated before even venturing into real estate. “You have to know about the thing that you’re investing in, especially if you want to protect your investment,” Moore told Insider in a recent interview.
Here are four of the couple’s favorite books that helped them get to where they are today.
This is Simpson’s biggest book recommendation — one he’s already read four times, he told Insider — and “the easiest book to read,” according to Moore. While the book is not a tactical how-to investing guide, Simpson said its importance comes from comparing how the average person thinks about money versus how investors think about wealth creation. In this way, the book teaches readers about shifting into the mindset of investing.
“We’re taught to go to school, buy a house, get married, put your money in a 401k, retire, that’s it. Kiyosaki’s like, ‘no, no, no.’ There’s this whole other thing about building wealth,” said Simpson. “If you’re thinking about getting into real estate, you need to read ‘Rich Dad Poor Dad.'”
“This book may be a bit more advanced, but it really goes over strategies around buying real estate and how this can save you millions in taxes over time. The author, Tom Wheelwright, is a CPA for some very well known real estate investors,” said Simpson, who also recommends that investors check out Wheelwright’s “The WealthAbility Show” podcast.
Understanding different real estate tax strategies hits close to home for Simpson and Moore, who raced against time to get married in March 2014 to take advantage of a tax benefit before the sale of their first property closed.
The US Taxpayer Relief Act of 1997, which reduces capital gains taxes on the sale of a personal residence, exempts only $250,000 of capital gains for single homeowners, while married couples can exclude $500,000. Thanks to this law, Simpson and Moore’s half-million profit from the sale of their first property was entirely tax-free.
According to 27-year-old lawyer and real estate investor James Walker III — who owns a $1 million real estate portfolio, verified by Insider — understanding specific tax strategies can be instrumental in deciding whether to follow cash flow or capital gains investing strategies. Depending on certain factors like state laws and length of ownership, capital gains can be taxed at a higher rate than passive cash flow income.
By doing their research, investors can use these tax laws to their advantage, including by offsetting property depreciation, repair, and utility costs against taxes to reduce overall taxable income. It’s even possible for investors to offset a capital gain against a passive loss so they no longer owe any outstanding tax liabilities, said Walker.
This book provides a lot of overview into real estate investing and is especially great for beginners, particularly due to author Ken McElroy’s experience and success in real estate investing, said Simpson, who also listed McElroy’s “Real Estate Strategies Podcast” as one of his favorites.
“Ken McElroy is great; he’s like the magician behind Robert Kiyosaki. Ken’s the one that really took the money and built a massive portfolio,” said Simpson, pointing to McElroy’s experience in managing real estate, buying and owning syndications, and building properties.
“Love him or hate him, the man is an excellent negotiator,” said Simpson. “This is a good read for negotiating and how deals come together.”
Learning the best practices for negotiating and deal making are especially important because real estate is also a relationship-based business, said Moore, and it’s essential to establish a network to source good deals.
“The typical thing is that most people have great relationships with brokers. If you’re a good buyer, easy to work with, and you have a name or reputation — that helps. That’s pretty much how we buy most of our deals,” said Simpson.
Investors also oftentimes have to work with other parties to succeed, especially if they’re low on cash or want to team up to scale their investments, whether it be within a syndicate or with private money loan providers.
Simpson and Moore also recommended a handful of podcasts, including “BiggerPockets” for its large community of beginning to advanced investors; Grant Cardone’s “Cardone Zone Podcast;” the “Old Capital Podcast” to learn about loans and syndications; and their own podcast, “Get in the Cashflow Game with K&K.”
Additionally, they also suggested aspiring investors read old interviews with real estate legends Sam Zell and Barry Sternlicht. “They’ve been doing it for 50 years, and sometimes you’re like, ‘What are they doing in a market like this? Are they pulling back? Are they going in?’ It’s good to get everybody’s perspectives,” said Simpson.
But according to the couple, the best way to learn is through trial and error. “Books and podcasts are good, but you will never learn more than buying and managing a property,” said Simpson.
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