Fixer Jay’s Mom & Pop Millionaire Blog

Every so often I like to mosey in to a motel and listen to those free 90- minute “Get Rich with Real Estate” pitches being offered by several so-called national education groups. A full page advertisement in the Sacramento newspaper said the founder had accepted a challenge to create 1000 new millionaires in the next twelve (12) months. The paper said you could do this with no money down, no experience and even if you had lousy credit. I fully expected my tenants might show up since most of them fit this description.

The seminar leader apparently had not read the full page million dollar challenge ad because he started right out telling all of us how we could earn three million dollars in the next 12 months. Naturally we’d need some specialized training, he said – then the lights went dim. Suddenly, by remote control, appeared giant color slides showing the state capital building and the projected housing appreciation numbers for the entire Sacramento area. I must admit, the numbers were quite impressive, but what really sold the deal was a smiling photo of our “Girlie-Man” Governor beneath this giant headline which read — “‘WE’RE BACK AND WE’RE NUMBER ONE”. Obviously I did learn something new since I hadn’t realized we’d been anywhere! Education, don’t get much better than this!

Being a fast learner, 15 minutes was all the education I needed! I ducked out just before the slide show started up again. I have never figured out how those folks operate so fast – but before I could even drive back to my hometown, only 160 miles away – there was already three separate messages waiting on my answering machine. They all said about the same thing. I could still attend a $7500 specialized training camp in El Paso, Texas, for only $4900 full price. It occurred to me – why do I need to go to El Paso to learn about buying California real estate? Worse yet, what would my Governor think!

One of the most powerful pieces of advice I can give any investor in the early stages (that means starting out) IS to, choose your teacher and/or mentor with the same due-diligence you would use in searching a heart surgeon for yourself or a family member. Folks often ask me — How can I find a good teacher when I’m just getting started? Exactly the same way you find a heart surgeon when you first start having chest pains. You start calling around, and you ask people. Make a list of the names you hear and keep cross-checking them with everyone you talk to. Certain names will begin to appear more often as you collect various opinions! You are searching for a teacher who invests in real estate – and is successful doing it. As one old man of Babylon instructed — If you would desire to know the truth about sheep, go directly to the herdsman. As for real estate investing, there can be no substitute for a successful investor teacher who does the same things he teaches.

Fixer Jay's Telephone Mentoring

Tags: Success Secrets by FixerJay
No Comments »

In order for me to have cash flow after paying only 10% down, I need weak mortgage terms. WEAK MEANS GOOD TERMS FOR ME! For example, let’s say I propose to purchase a rundown property for $100,000 and pay$10,000 cash down payment. That leaves $90,000 left to pay and the seller agrees to carry the financing! Typically sellers will ask for 01% per month of the loan balance as the monthly mortgage payment. That equals $900 and it’s way too much because the property income is only $1,200 per month.

I do not wish my debt service to exceed 50% of the total monthly income; therefore I propose payments of $598.78 per month, including 07% interest, amortized over 30 years. I can tell you right now, my 61-year-old seller don’t like it, but he’ll probably accept the deal anyway! Why you ask? Because his property is rundown and filled with deadbeat tenants and I’m the only buyer to make an offer! Naturally a straight mortgage note at 07% interest for 30 years — Secured by a rundown property is only possible with seller financing. Any self-respecting banker would have thrown me out of his office if I made such a request.

SELLER FINANCING SETS STAGE FOR SUPER PROFITS

This is the part about seller financing you’re gonna love once you get the hang of how it works — And believe me, it works very well indeed! To begin with, you need to understand that most sellers want more cash when they sell! Sellers with “top of the line” properties can generally get more cash because their properties are in demand. Many buyers are interested, which of course means they all must compete with each other — The seller is in control!

Just the opposite is true for sellers with rundown, problem properties. That’s why my weak offer was acceptable in the example above. No 61-year-old seller would accept a 30 year mortgage with weak payments ($598.78 per month) and a low interest rate if he didn’t have to! The reason he accepts the deal is because his property is in scumbag condition and I’m the only offer he has. There is absolutely no question in my mind that he’ll be looking for his money much quicker than 30 years worth of payments. My plan is to buy the mortgage back in the next several years for an amount far less than the note balance. Just how is that possible, you may be wondering!

PRESENT VALUE OF A LONG-TERM DEBT IS MUCH LESS

it’s quite likely my seller will take his $90,000 mortgage note to a licensed mortgage buyer hoping to sell it for cash. When he finds out what the note is really worth or what the mortgage buyer will pay, chances are he’ll stomp out his office so mad at the price he’s quoted, he’ll never talk to the guy again.

Naturally the mortgage buyer will explain the reasons, but the seller probably won’t hang around long enough to listen! If he does, the conversation will go something like this –It’s that long 30-year term with low monthly payments at only 07% interest, he’ll be told! Also, with just a 10% down payment, there’s not enough margin of security in case the mortgage defaults and the property is taken back! Another thing he’ll be told — Who ever drew this mortgage up didn’t include a due-on-sale provision or acceleration clause! There’s not even a late payment fee either! That makes for a very weak mortgage when you try to sell it.

At the price he’s offered, there’s hardly any danger he’ll sell. After checking with several other mortgage buyers and hearing the same old story, his next stop will be my house to offer me the opportunity! Imagine that, I’m the guy who drew the mortgage up to begin with – with all those weak terms they’re talking about — And now I’ll get a chance to buy it back. What a stroke of luck, wouldn’t you say?

Tags: Success Secrets by FixerJay
No Comments »

A friend of mine makes $3400 extra every month from his rental houses. I’m talking cash money here — The kind that’s left to spend after all the expenses are paid. That even includes the monthly payments on Ricky’s new Chevy truck. Ricky is the oldest boy. He does all the maintenance work on the family’s rental properties.

My friend started buying and fixing rental houses 16 years ago. Ricky was twelve years old then. By the time his sixteenth birthday rolled around, Ricky could paint bedrooms in his sleep. “Painting has never been my favorite past-time”, he says — “But my paintbrush paid for my college.  Besides that, I’m part-owner of every room I’ve ever painted.”

Surprising as it may sound, most people who start out investing in fixer-type properties earn a profit. Often it’s not much to begin. But the good news is you earn while you learn. Soon you’ll discover as I have, each new property you acquire will consistently earn a bigger profit. Making big money in real estate can be accomplished much faster by using the copycat method — Copy someone who is already successful. That way you can avoid the learning mistakes most investors make.

FIXING RUNDOWN HOUSES is a perfect strategy for do-it-yourself investors who want to ‘build wealth right now – TODAY. There are several good reasons, but what’s most important — It don’t take a ton of money to get started. Cash down payments are always much less and private financing is generally acceptable. Sometimes you can even substitute fix-up labor in lieu of cash down payment. Fix-up costs will average about 10% of the purchase price. Obviously, you’ll need a few dollars to buy materials — But don’t forget that 70% of all fix-up costs are labor. That means you’ll save 70% when you learn exactly what to fix yourself!
Dirty houses are depressing except for the money they make you. That’s the reason few people actually fix them, although many talk about it. It’s also the reason fix-up opportunities are better today than ever before. Houses that need fix-up far out-number the investors who choose to fix them. This dilemma creates even bigger profit opportunities for those who are willing to do what most others won’t.

Whether you buy to fix and sell — Or purchase houses to rent out; you must learn the secret of multiplying your dollars quickly! Otherwise, you won’t live long enough to accumulate much wealth. Consider how rich you would be if you had $10,000 in the bank earning regular passbook interest! Even if they paid you 25% — Which, of course, they don’t, you would still have less than $300,000 – 15 years from now. I agree, that’s not bad for savings — But, it certainly won’t make you rich anytime soon.
SEVEN REASONS WHY YOU SHOULD CONSIDER BUYING HOUSES TODAY

1. Extra family income to supplement your job.

2. Career changing — How to become your own boss.

3. Send the kids to college from the rental house fund.

4. Building wealth — Acquire assets to produce future income stream.

5. Tax benefits — $25,000 write-off against regular wages.

6. Develop a guaranteed income in order to quit working sooner.

7. Build a retirement nest egg.

Tags: Building a Cash Foundation by FixerJay
No Comments »

1.    First, develop a total investment plan from start to finish. I recommend specializing to begin with. Let’s say your plan is to buy 4 rental fix-up properties each year for the next 5 years. Each one must produce $100 monthly cash flow. That’s a very reasonable plan.

2.    Learn your local real estate market. Know what properties should cost and what they will reasonably sell for. Learn how much rent you can charge. Do this step before you buy – not afterwards.

3.    Develop a business sense – think like a retailer. That will help you to pay wholesale prices when you buy. Buying at retail prices and selling for retail prices simply won’t work.

4.    Learn to spot or identify hidden bargains quickly – then act fast to acquire them once you do. Remember, the competition is keen. You must develop a sixth sense for “sniffing out” hidden money-makers - then act quickly.

5.    Learn landlording firsthand – from doing it. Manage your own customers (tenants). Many inexperienced investors farm this function out to professional property managers. I consider this a serious mistake for new investors. It may be okay later on, but owners should know the job inside and out to begin with!

6.    Invest – don’t speculate. Investing is a plan to make money. You must be able to identify exactly how you will do it. That’s why step one is necessary. Speculators are simply guessing without a plan, which makes buying properties very risky.

7.    Learn to live on tax-free or tax sheltered income. Rents you collect should be largely tax sheltered. Rehab loans, like Title Ones, are tax-free, same as borrowing on equity or refinancing. When you collect $100 rent your goal is to keep $100. When you earn $100 in wages – you keep only $65 or $70. Income taxes will eat up the rest.

8.    Learn how to do deals where you have 100% control or nearly so. Basically, this means seller financing and you doing your own management. Avoid short payback notes and variable rate mortgages offered by the institutional bankers and hard money lenders.

9.    Establish local trade accounts. Most building supply stores will give you 10% discounts. It’s not automatic – you must ask for it. Besides saving money, you are building a solid credit history. Another benefit – you don’t need to carry a pocket full of money around. Paying monthly statements is much easier and creates better bookkeeping.

10.    Once you have developed a plan that works well and consistently makes you money, stick with it until it quits working. Most investors suffer a common weakness. We’re all suckers for a better mousetrap. Avoid the “too good to be true temptation” – you ‘ll find it generally is.

FIXER JAY INSIGHTS

Tags: Success Secrets by FixerJay
No Comments »