Fixer Jay’s Mom & Pop Millionaire Blog

“Call me when you find a good deal and I will buy it.” This is what I used to tell real estate agents when I began to invest in real estate.  I cannot say that my phone rang off the hook.  Most real estate transactions are listed and sold at retail prices.  Most financing for these sales is from traditional lending institutions.  So where did I expect to get these “good deals”?  Sometimes, a property is under priced.  In that case it is usually snapped up quickly by either the agent or their investor friends (try to be that investor friend).  Maybe you find a place that is in need of simple cosmetic fix up.  In that case, you can offer a little less and maybe get it,  but there are lots of other competing investors doing the same thing.

So, why weren’t all my new real estate agent friends calling me with the good deals?  Why was my phone so quiet?  The answer is that good deals usually are not handed to you. YOU NEED TO CREATE THE GOOD DEALS FOR YOURSELF.  No one else is going to do this for you.  It is not your agent’s job to do it for you.

FIND A PROPERTY OR A SITUATION THAT IS OUT OF THE ORDINARY

This may buy you a little time to get a jump on your competition.  Instead of looking for the same simple, little house that everyone else in the marketplace also wants, try to find a property or a seller that stands out from the rest.  You want to focus on properties that that YOU CAN INJECT YOURSELF INTO TO CREATE VALUE.

These unusual situations could include any number of different types of properties or sellers.  You may find a seller with several (or many) separate houses to sell; a property with a group of individual cottages on it;  an unfinished house and a separate unit;  a house and a separate building that could be converted to another unit; a seller that is having financial difficulties;  a seller that is determined to get his high asking price but may be flexible on the terms;  a seller, that because of tax consequences, does not want all cash out of the deal;  a property that has houses with obsolete old wood foundations; a seller that is overwhelmed with bad tenants and management headaches; or multiple owners of a property that dislike each other (divorce or a bad partnership); or a seller that just can’t sell his property because of some major physical flaw.

In a slow market, these types of properties may be on the market longer than usual.  In a hot market, they may be on the market a LITTLE LONGER than everything else that is selling quickly.  YOU WANT SOME BREATHING ROOM TO MAKE THE DEAL HAPPEN. You want to look for a property that your competition may not want or, because of the unusual aspect of the seller or property, the buyers take too long to analyze, thus giving you a jump on them.

Tags: The Right Ingredients by FixerJay
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You need to define what you want to do. Do you want to buy one or two fixers and sell them for cash or are you going to buy, fix up and keep them for longer-term profits? Don’t just make this a goal you will do SOMEDAY. If you focus on getting a few houses and devote some effort, you will do far better than just dreaming of buying them SOMEDAY. Have you ever noticed that if you want to know the time, you will see clocks; if you are hungry you will see places to eat? The same is true if you are focused on buying houses, you will find them.

Plot out how much money you want to make this year, next year and in 5 years. When I decided to go full time, I started buying houses one at a time and realized that this approach was taking too long. I needed to speed things up if I was going to make my living as a full time investor.  So I changed my focus to buying groups of little houses and cottages.  Again, you will see, that when you change your focus you will start to fine what you are focusing on, just like seeing the clock when you are looking for the time.
Why did I try to buy groups of houses on one parcel?  I discovered the price per house in a group was almost always cheaper than the price of an individual house, and they rented for the same amount as a house on its own lot.  I also found that some of these groups of older houses were not real easy to finance through traditional lenders. Now you ask yourself, how would I buy them if! Can’t get them financed? The answer is that you can always find the financing for a deal, but maybe this financing has to come from the seller.   If I can’t get financing from a bank, and I don’t have a huge bag of money to pay all cash to the seller, and there is not a line of people waiting to buy the property,  the seller may be forced to carry the financing.  This can be good for you because maybe you can get flexible terms or interest rates, and good for the seller because he can sell his property quickly and not have the delays and headaches of waiting for appraisals, approvals, inspections, etc.

WHAT SEEDS DO YOU HAVE TO PLANT

Take an inventory of the talents and resources that you have.  Do you have any money to buy some houses now or do you have nothing? Do you have equity in your home that you may borrow on, a savings plan at work you may tap, or maybe an IRA you want to use?  Now, I am not telling you to invest your retirement savings into real estate. I am just suggesting that you at least take an inventory of what you have.

When I bought a group of 24 houses on Boulder Way in  Sacramento,  California, I used my IRA.  I paid the 10% penalty and just incorporated the amount of the penalty into the purchase price of the houses. The property expenses offset the tax on the proceeds.  The cash flow from the houses paid a whole lot more than the interest that I was getting in the IRA account.  Also, it did not take a very long time for me to clean up the property, put in better tenants, raise the rents and increase the value of the property many times more than the amount of IRA money that I originally invested.

Tags: Success Secrets by FixerJay
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One of the best ways to sell single-family houses anywhere and almost anytime is with lease options. My special lease option works in good times or bad, regardless of an up and down economy. You’ll find my lease option is different than most selling options because I’ve eliminated the two biggest reasons why most lease options fall apart. Naturally, my lease option agreement is designed to fit my own special needs, but there are excellent benefits for both sides. Options designed with my plan can be a good solid money-maker – plus, they provide an excellent opportunity for weak buyers to become property owners.

As with all my real estate transaction- it’s the benefits that make the deal work. Benefits for both parties must be attractive and desirable, otherwise – who wants to deal? Selling with a lease option the way I do is not dependent on a good economy and works regardless of whether banks are making mortgages or not! Here again, as with most of my real estate transactions - I will control all the moving parts! Once the parties agree, there will be no surprises later on caused by events that I can’t control.

My typical transaction involves a house with a market value of $250,000 that generally rents for $900 per month in my town. The rent to value ratio is only .0036 per month – or 4.32% annual return (12 months x .36 = 32%). Obviously, from a cash flow standpoint, there’s no contest when it comes to renting cheap inexpensive houses versus larger homes with acres) 0f carpet. Quite often people say to me — Cash flow is not everything, ya know! I agree – but it’s still a long ways ahead of whatever’s in second place! Remember I told you - cash flow is my primary motivation, but here are other benefits for me as well. Here are the most important to me

     1. CASH FLOW – HIGHER RENTS – 25-30% RANGE

     2. TOP SELLING PRICE – SOMETIMES 110%

     3. LONGER TERM TENANT – 3 YEAR MINIMUM

    4. BETTER PROPERTY UPKEEP – MAINTENANCE

    5. INTEREST INCOME, LONG-TERM CARRYBACK MORTGAGE

My lease options are designed for a period of three years. Tenants must lease my house for the full 36 months – then make their choice either to buy the property or terminate the lease. I do not extend my leases since there is no reason why my tenant cannot follow through and complete the purchase. The reason for 36 months is because that’s how long it will take my leasing customers to accumulate the down payment from the monthly rent credits I allow him for that purpose.

Tags: Success Secrets by FixerJay
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During my 45 years investing, I’ve struggled through 4 economic downturns at various hurricane levels, but this one is shaping up to be the best ever! Up till now, the Jimmy Carter presidency has always been my all-time favorite because Jimmy and his crew made me a $1,000,000 overnight. When folks ask me exactly how he did it, I’m still a bit in awe, but what I can tell you - having my name on the deeds to a bunch of duplexes was pretty much all I had to do. Jimmy’s runaway inflation did the rest. My property values doubled in hardly. no time at all.

WILL HISTORY REPEAT ITSELF?

Home sales have slowed to a trickle where I live. My state (California) has risen to the leader in foreclosures! Bankers are scratching their heads wondering why they wrote so many “liar loans” (no docs) for deadbeats and of course by now, everyone knows lenders Freddie Mac and half sister Fannie Mae are in the “dumper”. Meanwhile, the Wall Street bunch is mopping around totally baffled. They thought the problem was four-dollar gas.

 Once again, the inflation sharks are circling faster than anytime since 1981. New construction (home building) is at a 17 year low and mortgage defaults are growing by the day. Of course, there’s some bad news too! Interest rates are still comparatively low – which means Jimmy’s record remains unbeaten for now – still, we’re hearing awful bad vibes on the street. The unemployment fund is nearly broke, major retailers are filing bankruptcies and there’s big problems still ahead for oil. When the interest rates finally bust loose – you can kiss 01′ Jimmy’s record goodbye!

WHAT’S A POOR INVESTOR TO DO, YOU ASK?

My quick answer is get yourself in position to become rich! After all, how many Jimmy Carter’s are out there? You can’t expect them to help you all the time! If you miss the boat this time, you’ve got no one but yourself to blame. You can’t get rich sittin’ at the intersection when the light turns green! This get rich formula hasn’t changed in over a hundred years. You must acquire income-producing (assets) real estate before the inflation dam bursts. You must have the vision to see the leaks now, and be prepared to act quickly!

It’s important that you seek out and acquire the kind of properties that will rise with the tide! If you’ll purchase investment properties that are already earning income today; they’ll automatically rise with inflation- quite similar to a toilet after you flush! The added value (appreciation) which accompanies inflation is the easiest money you’ll ever earn and it’s all tax-free when you keep the property. Imagine if you can, acquiring an income property where inflation automatically drives up the value and the income, while your mortgage payments stay the same. That’s exactly what Jimmy’s term in the White House did for me. It was the perfect storm then – and it’s about to make an encore.

Tags: Fixing For Money, Vision of Opportunity by FixerJay
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One of the biggest joys that comes from providing seminars is meeting folks who share the same interest in real estate investing that I have.  What is even more heartwarming to me is seeing the increasing numbers of family investors who pitch-in and work together as a: team on their income properties.  Dad will often negotiate the deals, while Mom is charged with the bookkeeping, records and accounting.  Teenagers must cut the grass, mend the fences and keep the family investment in good operating condition to make sure the income keeps rolling in every month.

One question that always arises — Can small-time operators actually earn enough money in real estate to make investing worthwhile? Many critics will claim that when you do something on a part-time basis, it generally ends up a lot more like a hobby instead of a profit-making venture!  Amateur investors can’t possibly expect to compete with the many thousands of real estate professionals, they reason.

THE HORTON FAMILY INVESTMENT TEAM

My good friends and long-time subscribers to my newsletter are perfect examples of what family investors can achieve working together as a team.  I first met Craig and Jane some years ago at a Southern Oregon rental housing convention.  Both were very much involved with their local housing association, which was hosting the event.  I mention  this because the Horton family are doers!  They don’t stand around on the sidelines,  waiting for things to happen.  The Horton’s make things happen, and obviously that’s why they’re successful family investors today.

Larry was just a teenager when we met and he was busy winning all kinds of awards at, the local St. Mary’s High School track team.  While Larry was running and jumping at the track, Mom and Dad were busy running around town looking at fixer-upper houses and foreclosed properties owned by the local bank.  Knowing Mama and Papa Horton like I do, I’d be willing to bet that no matter how many trophies,  Larry won for his prowess on the track, he still never ran fast enough to out-run clean-up chores at the family rental properties.  I’d also be willing to make a small wager that some of the rental income from the Horton properties found its way out to the University of Missouri, where young Larry received his higher education.

WATCHING THE HORTONS IS A RECIPE FOR SUCCESS

I began observing the Horton family investment team shortly after they attended my seminar in Sacramento, California many years ago — And I must tell you, they haven’t stood in one place very long!  The Horton’s are either buying more properties or learning better ways to do it.  In just a single year, they acquired seven properties, which included several HUD repos.  I’m also aware that they’ve continuously attended educational seminars.  And if that’s not enough, they still find time to take family vacations too!  Although I can’t prove it, I don’t believe the Horton’s ever sleep!

It wasn’t too long after I met the Horton family that it became obvious to me that nothing short of lightening striking them down would ever stop them from achieving the goals they had set for themselves. For one thing, AND HOW VERY IMPORTANT IT IS, they both had very positive attitudes!  Attitude controls everything we do. Most folks must train themselves to stay positive, but the good news is — Almost anyone who wants to, can do it! You can always pick out the winners by how well they handle their daily problems.  Problems, big and small, are reduced to nothing more than routine stuff when you keep your attitude in a positive mode.

The Horton family are do’ers, not just talkers and procrastinators!  Nothing in the world makes better fertilizer for growing a money tree than the owner’s shadow!  Even though Craig and Jane continue to attend seminars to improve themselves, they don’t believe in just sitting around waiting till they know everything.  The truth is, a good part of an investor’s education can best be acquired while working in the trenches,

Tags: Fixing For Money by FixerJay
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