Fixer Jay’s Mom & Pop Millionaire Blog

Investors who intend to make any serious money fixing-up rundown houses must police themselves against “over-fixing” and fixing stuff that doesn’t count for much! For example: Don’t waste time changing the wallpaper or redesigning the hallway. It’s not cost effective! It’s easy to fall Into the over-fixing trap and it’s the easiest path I know of to the investor’s poorhouse

 

 Fixers must learn to concentrate their time and money on things that clearly have proven pay-back value. Improvements made on the basis of personal taste are generally not worthwhile. Don t ever forget it’s your customers (tenants or buyers) you’ll need to satisfy!

 

A difficult lesson for many investors to learn is it’s unwise to provide too much house for the money! You’ll soon go broke if you keep trying! Many tenants can afford to pay $450 rent, but that’s their limit! Your goal, as a profit-motivated Investor servicing these tenants, should be to provide the very best $450 rental house you possibly can and still earn a profit, of course!

Cheap foo-foo frills can raise rents.

If you over-improve and spend too much money fixing the property, chances are the deal won’t be profitable!

 

 It’s my policy to give my tenants every­thing they can pay for with as many frills as I can. When I rent out my $450 houses I want them to be the very best $450 houses available. Obviously, they won’t be as good as my $600 houses-and they shouldn’t be!

 

Important: what you see first is what you fix first. The quickest and most impressive changes you can make to an ugly property is to clean up and fix up the outside. First impressions mean everything. Don’t even go inside until you clean up the yard and paint the house. Start watering the lawn to revive it and change the ugly image of the property. Where appropriate, I like to add inexpensive trees and shrubs. Get the kind with red berries and sticky thorns so the kids don’t pull them up. I also like plastic shutters that clip on the front windows. The dollar returns are highest outside.

 

The only rule I have concerning frills is they must be “cheap frills.” I generally install economy drapes and traverse rods on my street side windows for appearance. I don’t like to look at wrinkled sheets, Indian blankets and confederate flags when I drive by. In the other rooms I use “K-Mart” grade or equiva­lent curtains or miniblinds. Attractive window coverings allow me to charge about $20-30 more per month rent. My total cost recovery requires less than six months. Another “Foo­Foo” frill I use is inexpensive ceiling fans with multiple light fixtures. I always provide fresh shower curtains with every change of tenant.

 

“My total cost recovery requires less than six months.”

Fixing rundown houses is about 90 percent common sense and 1 0 percent skill. The basic “how to” skills you’ll need can be easily learned. One method is to spend some time asking questions and watching free video slides at your local “Toilets Are Us” supermarket. Giant handyman stores are in competition to sell you fixtures and building supplies. They are happy to show you what materials to use and how to use them. If you forget the instructions on the way home, you can look at the pictures on the back of the box. Learning to do fix-up today with ready-made replacement parts and all the help available is much easier than it was 20 years ago.

 

Fences will generally bring in $20-$40 more per month in rents than comparable houses without them. Secondly, they are fairly-rapid pay-back improvements. As a rule the entire cost of rear-yard fencing will be returned from higher rents in a period of 24 to 30 months. These numbers are based on average size yards, requiring 120 lineal feet of standard board and post construction. When you consider the quick payback and the fact that fences are almost maintenance ­free for ten years or so, it’s obvious they are well worth spending money on.

Tags: Success Secrets by FixerJay
No Comments »

 

 

Not every property that looks run-down, ugly and distressed is a gold mine in dis­guise. In fact, if you were to purchase many of the so-called “fixer-uppers” chances are very good that you’ll end up with only the shaft. I’m not trying to slow down your ef­forts to buy diamonds in the rough. What I am trying to do is help you understand that there is more to it if you intend to make any serious money doing this stuff.

 

In my own efforts to find fixer properties that fit my investment criteria, I’m constantly looking for specific problems or condi­tions. I want to acquire properties that I can transform into positive money-makers. This transformation can be the property’s physical appearance or it can be a restructuring of its financial condition. Also quite common for me is changing (removing) the people who occupy the property. More often than not I’m doing all three types of transformations at the same time.

 

“You don’t get big paydays simply because you own real estate. “

You don’t get big paydays simply because you own real estate. You earn big paydays from doing something that increases the value of real estate. A value increase doesn’t neces­sarily have to be a big change in the present market value. Even if a property doesn’t go up a nickel in market value but is made to produce more net income from rents, you’ve created some additional value.

 

As you search for investment properties, you must make your decision to pursue a deal or pass it up based on your knowledge of what you can do if you own the property. Many folks pass over solid money-makers because they don’t understand the various ways they can profit.

 

One of the most common examples I can offer is the case for buying only those houses without concrete perimeter foundations. That’s good sound advice as a general rule. However, there are some exceptions. I just happen to own quite a number of them. They produce the highest cash flow of all my houses. The reason is simple. I only paid about 50 percent of what equivalent houses with pe­rimeter foundations cost. As a result, the mortgage payments are only half as much.

However, the rents are about the same as ~y regular foundation houses. It’s the same Idea as buying mobile homes for rentals. You can buy them cheap and rent them for markups of two or three times higher than standard foundation houses.

 

I’m always concerned with location. I want good location for a specific plan I have in mind. However, all my plans are not the same. They all have the same objective – to make profit – but the way I do it can vary with different properties.

 

. Some houses are excellent long-term Investments. But don’t try to outguess the future. Don’t bet the ranch on your long­ term (10 years or more) predictions. It’s still Just a guess. With long-term investments in top locations, you can expect to pay more to acquire them. Even if the property looks terrible the competition will keep the price higher because of location.

 

On the down-side, higher acquisition costs and bigger mortgage payments can cost you a lot more money and take longer before you realize any profits or cash flow. This is important because mom and pop in­vestors need cash flow first and long term profits later on.

 

I like to think about locations as “A” “B” and “C”. “A” locations are the best. “B’: will be the local average and “C” is a stone’s throw from the county dump. With some study and driving around, you can easily determine these locations in your own in­vestment area. Investing in “A” locations is fine, but it generally takes more cash. My choice is “B” locations, but I always look at a “c” to make sure I don’t miss anything exciting. I stay away from HUD projects, high crime areas and places where I don’t feel safe being there.

Tags: Houses with Highest Profit Potential by FixerJay
No Comments »

When my eyesight was just a little bit sharper than it is today, I could shoot a fairly respectable game of billiards. If you know anything about shooting billiards or pool, then you probably already know that position is what makes a winning pool player.

 

Getting Good Position

Each time you shoot a ball in the pocket, you must concern yourself with where the cue ball (the one you shoot) ends up so you’ll have a clear unobstructed shot at the next ball. That’s called getting good position. When you don’t have good position, chances are you won’t make your next shot. If you don’t, then you lose your turn as the shooter to your opponent.

 

Why settle for one shot deals?

Obviously, when you miss your shot, you’re no longer in control of the game.

 

Real estate investing is a lot like playing billiards. You can settle for buying properties with very limited potential (one shot deals) or you can position yourself to earn bigger prof­its by acquiring the kind of real estate that pays off in several different ways. Obviously, your chances of being a winner are greatly increased when you can make money a vari­ety of different ways with the same real estate.

 

Under-Performers

Buying rundown properties or “under­performers” is the quickest way to build CASH FLOW and EQUITY. The main reasons are: you can purchase at discount prices, and rundown properties are generally rented out for less than their fixed-up potential. Often this allows for a fast round of rent increases. There is generally visible evidence of why properties are under-performing.

 

Solve Problems

As a buyer you can reap big benefits if you are willing and able to help solve distressed seller’s problems. In the process, you can build large equities quickly that might other- wise take years to develop with non-fixer real estate. This technique is known as “adding value” and it’s especially suited for new inves­tors without much money to start with.

 

The Kind of Properties You Should look For

The kind of properties you should look for will generally fall into one of the following categories:

 

1. Rundown and Ugly: No maintenance being done.

2. Bad Tenants: Junk cars, motorcycles and lots of Visitors.

3. Half-empty Properties: Tall weeds, garbage on grounds, unsightly.

4. Financial Problems: Foreclosure, bankruptcy and bank repos,

5. Partially Completed Buildings: Activity stopped lack of funds.

 

The reason you are looking for ugly, dis­tressed and financially-bust type properties is that they represent serious problems for their owners. The idea is to use your time and your personal efforts to fix these problems in lieu of regular cash down payments.

Corrected problems have cash values. Often the price to correct a problem will amount to a much higher dollar value than the normal cash down payment might have been. The point is, your Willingness and personal ability to fix problems for others can create a very profitable opportunity for you. Many investors, including myself, have used this wealth-building technique to quickly develop large real estate portfolios. It is the perfect solution for anyone without down payment cash – which includes most of us when we’re just starting out.

 

What Kind of Sellers Own Rundown Properties?

The following list will give you some idea of sellers most likely to own distressed real estate and who are willing to sell.

 

A.     Out-of town owners

B.     Owners with financial problems

C.    Family problems (divorce, death, life-style changes)

D.    For sale by owners ads (all newspapers)

E.     Owners who have lost jobs

F.     Elderly or disabled

G.    Inherited property owners

H.     Owners who advertise lease options or even houses for rent

I.         Job transfers – owner moved, now has two house payments

Tags: Vision of Opportunity by FixerJay
No Comments »

 

I always begin my fix-up projects in the front yard. I’ve seen professional appraiser’s value identical houses as much as $10,000 lower because of plain old filth and junk on the property. In other words, a clean house is worth $10,000 more simply because the owner hauls away the trash and keeps the house looking nice. That’s  lot of money for ordinary clean-up skills. Suppose it takes a whole week (40 hours) to haul away garbage and clean up a property. That’s $250 an hour, or nearly  as

much as brain surgeon earns on his days off.

 

 

” … if you do it right, it will pay better than anything I know of.”

Most improvements should be justified on the basis of paying for themselves. Does it really need doing? I expect the payments to come from higher rents or bigger profits as my reward for doing the work. Fixing or changing things around purely on the basis of personal likes and dislikes will seldom provide a justifiable mark-Up. This happens to investors who charge forward without a plan. It also happens to folks who fall in love with an investment property. I advise you to be very careful and avoid these common pitfalls. Remember, fixing up dumpy, dirty houses is not glamorous work. But, if you do it right, it will pay you better than anything I know of.

 

General clean-up and fresh new paint will return an owner’s fix-up money about as fast as any improvement. It’s also the most important job in terms of what new owner investors should plan on doing first. The reason is simple. The general public (most people) associate value with looks. There­fore, an ugly property always looks worth­less. The very same property cleaned up with sparkling new paint suddenly looks like it has much greater value. If you truly understand this concept and if you learn to apply the profit-making strategies discussed here, then you’re ready to start out today and become a very successful fix-up investor in a few short years.

 

There is no limit to the financial rewards that can be yours if you’ll develop and apply this practical economic advice. Creating “good looks” is the life blood of my personal fix-up strategy.

 

Since almost every problem can be patched-up, repaired or replaced by skilled mechanics, it becomes necessary to further qualify fix-up work in terms of the economics. Decide how much work is too much and when it’s best to simply pass over the deal and move along to the next one. The fix-up investor must be concerned with fixing for profits, not just fixing. The two worst mistakes for beginning fix-up investors are over-fixing and fixing the wrong things.

 

Many fix-up jobs return their costs quickly. Leading the list of “quick returners” are painting (inside and out), general cleaning, yard and landscape work, fencing, carpets, window coverings, modern faucet~, light fixtures and Formica counter tops In kitchens and baths. It’s not uncommon to get three or four dollars back for each fix-up dollar you spend. When you do, it will make you very rich.

 

Creating good looks is the life blood of my fix-up strategy.

Fixing for dollars primarily refers to sizzle items such as white picket fences, fresh paint, window coverings, ceiling fans, wall paper, new counter tops, floor coverings, planters, decorative porches or entrance doors, trees and shrubs, green lawns, new faucets, modern toilets and new shower enclosures.

 

I call these sizzle items because they are attractive and useful. They seldom have anything to do with code problems. These items have lots of customer appeal.

There is no inexpensive way to turn older houses into new houses. Herein lays the most important difference between what I do and what remodelers and renovators do. It is a very expensive difference.

 

Remodelers will replace entire plumbing or electrical systems. They tear out old flooring and replace floor joists and girders. They replace wood windows with new metal frames. Some will even jack a house up to level it which means fixing all the cracks and often redoing the stucco exterior. Don’t do fix-up this way. You’ll lose your shirt!

One quick word about location: don’t buy property where you’ll need an armored vehicle to drive through the neighborhood. You can find plenty of fixers in decent areas. Bad areas are simply not worth all the hassle. Save your energy for painting.

Tags: Jay's FooFoo Fix-up Strategy by FixerJay
No Comments »