Fixer Jay’s Mom & Pop Millionaire Blog

Sticking to basics means buying pro­perties that I know will return me a profit of some kind. I determine this by studying all the dollar numbers plotted in year by year. What I want to see clearly is how much money I will invest in the deal to start, how much more for fix-up and what my monthly fixed costs of operations will be when I’m done. After that, I plot in the expected income, month by month-usually for five to ten years or perhaps to a future sale date.

My yellow pad studies are purposely simple. I’m only interested in cash returns. The two questions I ask myself are: will I make profits on this deal if I spend x number of dollars and when do I get to have those profits in my hand? That’s what every day ordinary investors need to know.

Too many people get all tangled up with complicated strategies. They seem to have the same mind set as runners who insist that without pain there can be no gain. If you want pain, I suggest you buy a $100,000 house with $850 mortgage payments and rent it out for $600 a month. For those who need higher levels of pain, buy a motel or small business opportunity. If you over­complicate your wealth building plan, quite often you’ll become distracted by information you don’t really need to make money.

For example, a friend of mine is a computer buff. He has drawers full of houses. He figures out his rents per square foot, how much paint he’ll use in the next 20 years and the number of qualified renters in the county. Still, he has one serious problem. His computer shows his net worth at nearly $500,000, but he’s paying out $2,100 every month in hard cash so he can stay in the rental housing business. He has a good paying sales job, but I figure if he buys a couple more rental properties using his current strategy, he’ll soon be broke.

Tags: Building a Cash Foundation by FixerJay
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One of the major benefits in this business is that it’s very stable and almost 1.00 percent predictable. You can expect to enjoy a nice long career and a very rosy future if you invest in basic housing. Do not allow yourself to get side-tracked. .

A few words of caution are appropriate here. Do not get side-tracked. Y?U must constantly stay on guard against the “slicksters” who expound on softer, easier and faster methods that will make you rich, I have discovered this vulnerability in myself. I suspect there is a close relationship between a housing entrepreneur (which I am) and a “make it quick” speculator which I ain’t. I’m just a sucker for slick sounding get rich schemes.

After many years investing and with much self-discipline, I have learned to listen politely, nod my head and finally say no thank you. I’m in the housing business and that’s all I can handle at this time …..

I shall always be grateful to those people who sold me on the proposition that investing in income producing real estate was truly a solid and proven pathway that leads to financial independence. I also discovered it’s the same path that leads to a genuine personal freedom. Real estate investing has given me the opportunity to control my own life and all my affairs.

People often ask me, “What do you enjoy most about being your own boss? Is it making more money or is it the freedom to spend your time doing the things you really want to do?” The answer is both. The way I see it, life would be very dull indeed if I had to spend all my waking hours stacking my real estate earnings in a room and guarding it. On the other hand, without cash flow or profits, I wouldn’t be able to do all the things I like to do even with my freedom.

That was my problem working at the phone company. When I finally got enough seniority to take a five week vacation, I could never accumulate more than two weeks of extra money to enjoy it.

Tags: Growth, Risk and Longevity by FixerJay
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SMART INVESTORS LEARN LANDLORDING

Many small Mom and Pop type investors give up the opportunity to make money and have a wonderful free “come and go” life style simply because they never see the Importance of learning to be a skilled landlord. You don’t become a skilled landlord when you acquire houses. You become the owner-that’s all. Skilled landlording will take some education.

Basically there are just two ways to learn landlording. You can learn from people like me or other good teachers or you can learn from the tenants. I can tell you if you pay me 10 times more than I charge to teach you, it’s still cheaper than learning this job from your tenants.

Every landlord should know and under­stand landlord-tenant laws in his own area. Once you know the laws, your fear of renters or of being intimidated will vanish.

An overwhelming number of property owners incorrectly assume these laws favor deadbeat tenants. This is not the case. Laws are mostly about equity. There are unscrupulous landlords the same as naughty tenants.

Landlords often find themselves in serious hot water with tenants because they try to inject too much logic and common sense into tenant management. Logic and common sense have their place, but they seldom count for much where legal issues are concerned. For example, it is nearly impossible to effectively force your personal living standards and ideals on our tenants – a common mistake for many new landlords. Think seriously about what I’m telling you here, because it has a lot to do with sanity your sanity. What good would it do you to make a million dollars from your rental properties if your tenants drive you crazy?

Tags: Managing Tenants and Toilets by FixerJay
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Investing in real estate has always been my first love, but it could quickly lose that ranking if it ever quit earning handsome profits. Much has already been written about the fact that real estate profits are made at the time you acquire the property as opposed to when you sell it. Most certainly I’ll agree, that’s an important part of the equation, but you need to understand it’s not the only part-profits are also tied to the terms and conditions you’re able to negotiate.

For example, if you purchase a property for what you consider a reasonably dis­counted price, but agree to a mortgage with lots of restrictive terms and perhaps a variable rate of interest to boot, it’s very easy to lose much of your potential profits.

You may argue that a new buyer can always refinance and payoff your existing mortgage with a new one. That might be possible, but it will cut into your selling profits. You’ll pay loan fees, escrow charges, and a new appraisal and perhaps the lender’s inspection might even require some termite work. All of these add-on charges will reduce the size of your check at the settlement table.

I like to work my deals backwards just before I make a purchase. I pretend it’s five or ten years down the road and now it’s time to sell. How will I market the property for maximum profits? It’s most important for me to know how I can finance the deal for a buyer. Will the buyer have to cash me out? Can he assume my existing mortgage with­out jumping through all kinds of hoops? Can I provide the financing and profit even greater earning all the interest with carry back paper? You must think these things through before you buy the property! They have everything to do with your future profitability.

Tags: Vision of Opportunity by FixerJay
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