Fixer Jay’s Mom & Pop Millionaire Blog

Finding the right properties with good potential for profits and cash flow is the first step for developing a successful investment plan. As you might guess – it’s important to break away from traditional thinking and the average investor crowd. Serious money is made by those who study the marketplace and have the ability to spot bargains that others simply don’t see. You don’t need to buy slaughterhouses in the slums, but you do need to develop good investment eyes. Quite often you’ll find the biggest rewards are off the! Beaten pathway.

Multiple oddball configurations are the kind of properties that many brand new investors won’t touch with a ten-foot pole. These are mostly older non-conforming type real estate. For example; “cluster houses” like my Haywood and Cherry Creek properties. I call them “leper properties”, meaning most investors don’t want to touch them. I own many properties with various building combinations such as a three-unit apartment building, surrounded by 4 cottages and a duplex. My Oregon Street property was an older 4 bedroom family house and a large 2-story duplex with a garage. The property was easy to convert to 5 rental units by making the garage into a 1-bedroom apartment and splitting off a bedroom and bath from the 4-bedroom house. A rear door entrance made the house conversion fairly inexpensive and of course created 5 separate rental units!

Obviously, my basic idea was to purchase three rental units at the regular 3-unit price, knowing all along I would be able to modify them and quickly start earning 5 units worth of income. Oregon Street was an extra special money-maker because the property was rundown and rents were abnormally low when I acquired it. With the conversion to 5 units _ plus my fix-up work, I was able to increase rents from $1000 monthly to $1900. The total job took me just over a year to complete. A short time later I sold the property for more than double the price I had paid.

Combination properties, like the kind I’m telling you about, all have several things in common. First of all, you won’t find them in newer subdivisions – even those built in the last 40 years. Leper properties can be found in the older sections of town or just outside the city limit sign. Today’s complex zoning la~ would obviously prohibit such construction. However, what’s already there today is “grand fathered” in, regardless of current zoning laws, so long as the buildings remain standing. By the way, age is not important so long as buildings are properly repaired and maintained. Many homes in Virginia and Georgia are 250 years old and they cost more today than brand new ones. On the other hand, I’ve seen eleven year old housing projects in Chicago condemned and torn down by the city. Only 11 years old and unfit for occupancy. They say! Believe me, age has very little to do with the condition of housing – or its value.

MY FIRST REQUIREMENT FOR INCOME PROPERTY IS INCOME

From an income standpoint, which I care most about, oddball units command the same rents as newer apartments, sometimes more because they generally offer more privacy. Another very important common attraction is that most older leper units have long been paid for! They have no commercial mortgages to mess with. More often than not. owners can finance the sale. That means, no credit applications, tax forms, loan fees, appraisals and variable rate bank loans. In summary, lower purchase prices, less competition and long-term owner financing are commonplace with these types of properties. If cash flow turns you on, my advice is start looking for leper properties today.

Tags: Good Deals Created by You by FixerJay
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Seller financing happens when a property owner sells his property and agrees to carry back or finance the amount of the sale – less the amount received for a down payment. Say for example — The selling price is $100,000 and the down payment is $10,000. In this case the seller would agree to finance the balance of the sale price, which equals $90,000. In other words, the seller substitutes himself in the place of a bank or some other institutional lender.

When you develop the skills to negotiate and purchase properties using this type of financing, you’ll be setting the stage for some very lucrative profits that the average investor don’t even know about. Not only will you place yourself in a position to earn future profits, but you’ll also enjoy a much safer investment strategy without any personal risk. We’ll discuss this safety feature a little bit later, but J can assure you it’s very important and could very well save your bacon someday!

BANKS ARE VERY SHY ABOUT TAKING RISK

When you borrow money from banks to finance real estate, you’ll quickly discover rental houses and small apartments, especially those with more than four units are a whole different kettle of fish than financing the home you live in! Mortgage money for investment properties is generally classified as commercial lending and most always comes at a much higher cost than residential loans. The reason is because bankers feel commercial loans are much more risky than a homeowner’s personal residence.

The theory, of course, is that one would be much more willing to walk away from investment property before surrendering his own personal nest! Personally, I think exactly the opposite way! Parting with my personal residence would come much easier than giving up income-producing assets that put money in my bank account every month! After all, it was my investment properties that earned me the cash to purchase my personal residence in the first place! Obviously, they can do the same thing again if I keep them.

HOMEMADE LOANS ARE ALWAYS AVAILABLE

Bank financing is not always available when you need it, whereas seller financing is! During the Jimmy Carter presidency, commercial loans were nowhere to be found for investors like me. Yet, I survived those years ‘very nicely because I negotiated all my deals creating mortgages between myself and the sellers! My kind of seller had to finance his sale because no one else would! It was seller financing or no deal at all!

Sellers who wish to sell rundown houses or problem real estate are in a very weak position to negotiate because 95% of all potential buyers don’t want their problems! When 95% of my competition drops out of the bidding, it puts me in a very strong position 10 have my own way with the seller. This is the way to start making money in real estate, Eliminate the competition so you can start dictating the terms — See how easy this is!

Besides being always available, there’s no set of rules or bank regulations you must follow! You can design the mortgage and the repayment schedule to fit your situation.
You can amortize the loan, pay interest only at whatever rate you can negotiate or even make once a year payments on the balance. There’s no loan committee waiting to approve it. You and the seller are the only committee!

BUILT-IN SAFETY FEATURE OF SELLER FINANCING

Earlier I told you that seller financing was a much safer strategy than a regular bank mortgage! That’s because seller financing is not really a loan! It’s called a purchase money mortgage —And unlike regular loans, not one penny of cash money is actually disbursed. It’s really an extension of credit granted by the seller to facilitate his sale!

Should something go haywire and you find yourself unable to make the payments – and you default the seller (lender) can take his property back, but that’s all! He cannot take other assets you own to satisfy the unpaid balance or deficiency. Most bank lenders can come after everything you own to satisfy their mortgage debt because you are personally liable until it’s paid in full.

Tags: Success Secrets by FixerJay
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Sure, I’d love to own more houses and apartments and have the extra income and appreciation—-I already know it would reduce my taxes – but here’s my problem: I just hate messin’ with tenants and having all the hassles like some of my landlord friends. That’s the reason I’ve flipped my own properties.

If you feel this way about managing real estate and trying to get tenants to play by your rules, you’ve got lots of company out there – believe me! What you don’t have is my excellent method for handling a bunch of tenants with at least 90% less effort than your friends. I won’t say it’s magic – but you might think so after you start using my memo’s!

I call it “MANAGING YOUR TENANTS BY MAIL” and 90% less hassle is not an exaggeration – believe me! There’s no good reason to have personal confrontation, even telephone calls and especially those unpleasant visits to your tenant’s house begging for your own rents! You can forget that kind of nonsense!
It’s a simple concept — I’ll teach you how to manage without nasty arguments and without those emotional outbursts that take away all the joys of counting your money. You don’t need to listen to lame excuses when you provide good quality service. After all, it’s your property! You shouldn’t have to chase the money your tenants owe you.

Think about it! There is absolutely no way on this earth I could have ever handled 300 screaming tenants and still enjoy any privacy for myself. I wouldn’t have enough hours in the week to counsel my tenants. Not only that, there’s no good reason to allow this to happen. Just the thought of it makes me start thinking about a morning drink! My memo by mail method handles almost all my tenant problems quite nicely — AND WITHOUT THE EMOTIONS, WHICH ARE ALMOST ALWAYS PRESENT WITH PERSONAL ONE-ON-ONE CONTACTS. Believe me when I tell you – there’s no good reason to manage properties with your emotions! The fact is, emotional confrontations are the number one reason why shortsighted investors sell out before they ever get rich, you can do much better — And my memos will prove it to you!

Here’s my promise to you — Try my method for a while and if you don’t like it, go back to your old way and I’ll refund all your MISERY. So far, no one’s ever asked me for a refund yet, so I feel pretty confident. Handling tenants my mail might sound kinda cold and impersonal – but it’s much more business-like, and a lot more professional! It’s also a marvelous record-keeping system. Try it, I know you’ll love it — But the real value comes from making your management job so much easier on yourself.

Tags: Landlording Success by FixerJay
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There are many good reasons why fixers are the perfect properties to begin a real estate investor career. However, leading the list is CASH FLOW. Fixer houses by far offer the best opportunities for small-time investors, without, much cash to spend, to acquire real estate with minimum down payments and still achieve cash flow quickly. No other kind of real estate I know of will do it!

CASH FLOW QUICKLY

It is reasonable to expect – after paying an average of 10% down that one can create a positive cash flow property within a relatively short period of time after the purchase. Obviously, the time it takes will depend on many factors, such as how long does the fix-up take – how much market value is added to the property and most certainly, the skills and aggressiveness of the investor-fixer.

I have learned from experience – cash flow is much easier to achieve buying small multiple residential properties, such as 2 or 3 houses on a single lot, several duplexes with a house or two, or any combination of these cluster type properties. I own many properties with 5 to 8 living units each. They are excellent cash flow producers a year or so after fix-up. My timetable for a complete turn around is 18 to 24 months.

LESS COMPETITION

Anytime there are fewer buyers who want something in a particular market, your odds for success are greatly increased. Competition is what drives up prices. Conversely, the lack of competition keeps prices down. It’s nearly impossible to purchase prime real estate at a discount – or expect to get any sort of a break on the terms. The reason: Too many buyers are willing to pay the asking price. Why would the seller need to discount?

There are basically only 2 methods to buy real estate at bargain prices:

Method #1

Situations where you are the only potential buyer who knows about the deal (no competition), and   the seller is willing to accept your offer and terms without seeking outside bids (offers) from anyone else.

Method #2

Where the public knows about a property that’s available but cannot visualize its potential value – like after it’s all fixed up. They are therefore not buyers – only lookers.

Most students who seek my advice are not yet sophisticated enough to be in the information loop where they can benefit from Method # I. Two of the most common ways Method # 1 is used is by licensed real estate agents who buy their own listings – and by friends of probate attorneys who get a secret telephone call when an asset (real estate) needs to be disposed of quickly. In both cases, the public never finds out about the deal. Private deals avoid competition – therefore, the selling price don’t get bid up!

Method #2 is how most of my students will buy real estate. We shall focus in a market where properties are for sale. They are even advertised and certainly known to many potential buyers. However, 95% of all the potential buyers (the competition) see ugly rundown houses as junk- ~~ poor investment not even worth the asking price. Most will never make an offer and those who do will likely alienate sellers by insulting them with “low ball” offers. With 95% of the competition out of the game, the playing field is definitely tilted in our direction.

Tags: Fixing For Money by FixerJay
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