Fixer Jay’s Mom & Pop Millionaire Blog

When I began buying investment properties, there was no question in my mind whatsoever about where I might find some extra money if my properties didn’t provide enough cash flow. The answer was clear to me the day I started — I couldn’t! Even though my cash down payments were quite small, it was all the money I had. I knew very well there was nothing left in my bank account to make up for monthly cash flow shortages. The only funds I would have to pay my mortgages and expenses would be the money I took in each month from my renters. Obviously, buying properties this close to the belt is both challenging and exciting. There is little room for buying errors as you might well imagine. You definitely need your cash flow plan worked out before you sign the deal!

What I’m suggesting here — For most of us, it makes more sense to buy cash flow properties with uncertain futures than to acquire high potential properties without enough cash flow to operate them today. Future potential is great — Don’t get me wrong, but it’s still “Pie in the Sky”! In my view, the top three reasons for owning and operating income properties are INCOME, INCOME and INCOME — Everything else must fall in behind.

Almost every investor I know has paid too much for income property. It happens more frequently when we first start out. There is almost no defense against paying “too much” at least once or twice. I’ve done it more times than I care to admit. However, in my case, buying multiple units fix-up properties allowed me to add value and improve the income stream more quickly than if I had overpaid for non-fixer type properties. By fixing up properties I was able to recover from my buying errors much faster because I could raise rents. The best education in the world for understanding real values and what the true expenses are – is learned very quickly buying and operating you own properties. I’m not talking about a single house here. That’s not quite enough action for me. I’ve found that multiple fixer-uppers often don’t require any higher down payments than a single house – yet the cash flow potential is many times greater. Often they come with seller financing to boot!

Tags: Building a Cash Foundation by FixerJay
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Often when I counsel students I’ll ask —_Why is you chose to invest in real  estate? The most common answer is: To make more money and build personal wealth! Next I’ll ask: How do you propose to do it? What is your investment plan or strategy? Are you using it now and how long will it take?

Most people have great difficulty trying to explain their investment strategy to someone else. I think this is one of the major reasons why investors get themselves in a financial pickle! The biggest problem is not enough planning is done before the deal is closed. That’s a big mistake which often leads to overpaying. Most often, overpaying means no cash flow or negative flow.

At my FIXER CAMPS I teach students the value of cash flow first. Students must understand where the money comes from, how long will it take – and how much does it cost for fix-up. To me this is very basic stuff, yet you’d be surprised how many students are learning the answers for the first time – and some are already investing. I have found that once students understand the basics, success can follow quickly.

One of the major parts of my personal investment strategy, which has paid big dividends over the years, has been to acquire lower end (affordable) rental units. These properties provide me with “eating money” or cash flow. They are my biggest source of income today. Inexpensive rental units provide a much bigger (return) or “bang for the investor’s buck”. They’ve always been my number one cash flow providers. Obviously, these properties won’t normally sell as rapidly as higher grade rentals or single family houses. However, I’m a firm believer in first things first!

Stated another way — Investors like myself who begin without much money in their wallets need a clear vision of who they are (a poor investor) and what their buying capacity is (not very much). Once you can clearly visualize where you stand as an investor – and assuming you’re just an ordinary-everyday person like me, it should come as no surprise — Cash flow must be your top priority if you intend to stay an investor very long.

Tags: Develop a Business Plan First by FixerJay
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Investing in real estate, the way I suggest does not require perfection. There is adequate room for mistakes. They are easy to overcome as you learn! What’s important is that you learn to do better on each new transaction. Mistakes are natural and provide valuable lessons on the path to success. When you read the autobiographies of successful people, you’ll find none have become successful without making their share of mistakes along the way.

If you read about successful people, as I like to do, you’ll find that downturns in the economy or rough times at the bank have very little to do with their success. In fact, most don’t even mention the economy or banks when they discuss what’s needed to be successful. Reading autobiographies of successful entrepreneurs will give you an inside look about what it really takes to make it. I would strongly suggest you read success stories because they help you to mentally rise above the “ho-hum” of everyday problems.

There’s a popular myth we’ve all heard — “It takes money to make money”. William Nickerson, author of the most widely read do-it-yourself real estate book: “HOW I TURNED $1000 INTO A MILLION DOLLARS”, Simon and Schuster (1959), started investing with only $1000 saved from his telephone sales job. Nickerson calculated back in 1980, using an inflation adjustment formula, it would take about $2500 to start out like he did.

Today, 25 years later, Nickerson’s calculation may need to be doubled or tripled again; however, Nickerson was always quick to tell anyone who would listen: It doesn’t have to be your money, nor does it even need to be cash! Knowing what to do – and how to invest wisely is far more important than having the money to invest.

Tags: Success Secrets by FixerJay
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It’s my firm belief that do-it-yourself investors should learn everything they can about many different ways to make profits with real estate. I don’t believe you can reach your maximum potential as an investor until you learn to do many things well. These include buying single family houses, foreclosure properties, rundown apartments, options; wrap installment selling, landlording and buying discount paper. In case I missed anything, just toss it in with the rest because you’ll need to learn them all! It may seem like a large task at first glance. However, all these things I’ve mentioned are related. All the pieces will tie together to make you a “complete investor”.

Before I unintentionally mislead anyone, allow me to say that I also feel very strongly that successful investors must have a specialty. I define specialty as something you learn to do better than everyone else in your investment area. Your “ace in the hole” investment strategy, we might call it! Something you can always count on to make you money when everything else quits working. For example; I specialize in fixing rundown properties. It always works for me — I can count on making money doing fix-up!

TAKE ADVICE FROM DO’ERS

In 1961, millionaire investor, author, Robert W. Kent, wrote a popular “How To” book about his own investment experiences, HOW TO GET RICH IN REAL ESTATE, Prentice Hall, Inc., Englewood Cliffs, NJ. In the very first chapter, Kent writes about do-it-yourself investing – and in particular, investing in the older multiple type income-producing properties that can be purchased much cheaper per unit! “It is feasible, he says, for any sincere man or woman who is steadfast in purpose, and is free of the three cardinal faults; timidity, negativeness and laziness to learn how to invest and do it well.” Those words written nearly 50 years ago have not lost their value today. Kent goes on to say – sometimes the hardest thing to convince people of is the truth. .

Tags: Fixing For Money, Vision of Opportunity by FixerJay
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For do-it-yourself investors like me, assuming you’ve reached a point in your career where you’d just as soon pay a few taxes, rather than keep kickin’ the tenants around – you might consider making small hard money loans on the kind of properties that brought you here! Imagine having nothing to do except watch “Days of Our Lives” and still earn decent money while you’re snoozin’!

The key to tapping this kind of business is to not make loans outside your comfort zone – like loaning money on bare ground which is only good to hold the earth together. There’s nothing safer than loaning on small multiple units, where the equity is sufficient. If they stiff me on payments, I’ll take the property! I’m delighted pink either way.

TRADE SECRET subscribers were told exactly how to set this up and get it working in the June and July (2010) issues. Earning 12-15% interest, watchin’ others do the work is kinda fun! I’ll admit, the big bucks come from owning Colony Houses – but 12-15% works for the “over the hill” gang! If you wish to check out TRADE SECRETS – call Kathy @ 1-800­722-2550 before she shreds the old issues. She loves the sound of that new machine!

Tags: Fixing For Money by FixerJay
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