1. To increase the monthly rental income on my larger more expensive houses (25-30%).

2. To secure a good paying tenant for 3 years.

3. Rent to a tenant who thinks more like an owner and will likely take much better care of my larger, more expensive houses.

4. Provides excellent selling profit – plus interest income.

I’m looking for a renter with adequate, verifiable income who for various reasons cannot qualify to finance a home! Likely credit problems – or lack of a down payment – often both.
My lease/option plan solves the two biggest problems facing most lease/option candidates – namely coming up with a down payment, and secondly, qualifying for a new mortgage to exercise the option.
My 36 month plan offers the lessee rent credits equal to the full amount of the down payment required. After the full lease period (36 months), I offer my tenant 2 different choices to finance the option sale with me. I’ll be the banker.

The worst part is always breaking the ice – introducing yourself to complete strangers who you think might be able to help you. There’s no way to short¬cut this procedure, so it’s best to simply charge ahead and do it! When you eventually find an agent who can appreciate your goals and is willing to spend time helping you achieve them, you’ll suddenly realize you’ve added a powerful new tool to your “wealth builder’s” kit.

Real estate agents are the eyes and ears of the real estate business! 96% of all sales and trades involve licensed sales persons and their brokers. It would be very foolish indeed to harbor any serious notions about excluding them from your investment plans. The best thing you can do for yourself is to diligently begin searching for a good one.

Naturally I’m happy to earn a high rate of interest on my money – say 4 or 5 times what banks pay — Still I don’t wish to become a permanent “couch potato”. I still like action – furthermore, I like this kind of action which causes hard money lends to throw-up on the couch – namely, a default or fore¬closure on their loan!

Should the property owner (borrower) have the audacity to not send in his mortgage payments to me or any of the other lien holders – whoa be unto him! I’m off my couch and ready for action! I only have 2 lending rules:

1. Would I like to own the property? My answer must be yes.

2. My loan, plus all other loans must not exceed 60% of what I judge the property to be worth (no appraisal needed). See how simple this is!!

My 90/10 plan works exactly like hamburger-helper, only better! As you can already guess you can leap tall buildings in a single bound when someone else puts up 90% of the cash needed. Your 10% contribution takes on maximum leverage - and what’s really nifty, you earn 50% of profits for such a paltry amount!

As most mature adults already know, something that sounds this good is bound to have a catch, so what is it? The catch is you! You must know what you’re doing! The investor who shells out 90% for any deal will do so only if you have a reputation for turning out successful projects. It works slick, but you must be able to present your plan and write up a proper agreement.

I harp on this subject quite often it seems – but everyday I still see people spending countless sums of money installing lovely new carpets, kitchen fans, new cabinets and attractive wallpaper. At the same time, an old dark blue station wagon is still stripped down – just sittin’ in the driveway. You can see the motor dangling on a rope, tied off to the fruitless mulberry tree. The corner post on the patio is still busted where the former tenant kept his well-mannered pit-bull tied up. Take my advice; please fix up the outside first!

Investors who intend to make any serious money fixing up rundown houses must constantly police themselves against “over-fixing” – or fixing stuff that don’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 as pie to fall into the over-fixing trap and it’s about the quickest path I know of going to the investor’s poorhouse.

Successful house fixers must learn to concentrate their time and money on things that clearly have some proven pay-back value. Improvements made on the basis of personal taste are generally not worthwhile. You must never forget – It’s your customers (tenants or buyers) you’ll need to satisfy!

Fiddling around with the walls and room sizes can throw a house out of balance! For example: Changing a two bedroom house to three bedrooms likely means more people will Jive there. You might need more heat, cooling and electrical circuits. The bathroom and kitchen may be too small for larger families. Just one change could have a ripple effect. If you need more power and more heat – those things could easily cost more than any benefits you’ll gain.

The big reward for house fixers who learn to solve ugly house problems is seller conces­sions. Sellers who have problems are highly motivated to make deals. It’s these deals that earn big money. There is no way to make “cash flow deals” with folks who might sell with enough persuasion. Terms such as seller financing and discount prices don’t come from sellers who are still proud of what they’re selling. For every “barn burner” transaction I’ve made there has always been a seller who has very few options to bargain with.

Allow me to clear the air about fixing houses for money. First, lots of people can fix up houses, but the majority come up short on the money part. They don’t earn much money for all their time and effort. People get paid for their skills. You won’t make a killing in the fix-up business from painting a house or hanging shutters. The house will look better, but your bank account won’t.

Following is a list of the top five conditions that create the biggest purchase discounts, the best buying terms and ultimately the biggest profit potential for us house fixers.

1. Ugliness: pigsty looks, tons of junk -discount range 30-50%.

2. People problems: unruly deadbeats, non paying-discount range 30-40%.

3. Older: junk, deferred maintenance -discount range 25-35%.

4. Rundown: out-of-state owners, tenant manager-discount range 20-30%.

5. Cosmetic fixer: needs paint, minor tune-up-discount range 10-15%.

Fixing run-down houses for profits is not the same thing as remodeling houses. If it were, lots of custom builders and remodeling contractors would end up rich and handy­man-types like me would be working for them. Fixing houses the way I do has a lot more to do with budgets and accounting than with hammers and wallpaper. Fixing is my goal, but only if there’s a profit to be made.

You need to understand that “leverage fix-up” is the kind of fix-up that adds money to your pension plan. If it costs $20,000 to fix up a $70,000 rental house you bought for $50,000, you’re better off waiting for social security. There’s just not enough fun spend­ing a ton of money not knowing if you’ll ever get it back, even without a profit.

This is what many small-time re-modelers do. And of course it’s the reason that a large number of them end up 25 years down the road with nothing to show for their skills but a used Chevy pickup, a box of worn-out tools and no health insurance. It’s not because they don’t know what they’re doing. It’s because what they’re doing doesn’t earn them enough profits. I’m trying to show you a way that you can earn 10 times more money than journeyman re-modelers, with 10 times less remodeling skills. I call this maximum leverage of your personal efforts and its much more fun and lots more profitable.

The most frequent questions I’m asked about fix-up are: What is your dollar limit and where do you draw the line and simply walk away? Dollar limits are a matter of writing out my fix-up cost estimate and then adding that to the amount I’m willing to pay for the property. If those two numbers are higher than 80 percent of the fixed-up market value, I generally back away, especially on lowered properties.

For example, let’s take a house that I figure will have a $65,000 market value after my fix-up work is done. I’m willing to spend $52,000 total to acquire the property and do the fixing: $43,000 purchase price and $9,000 for fix-up work. If my fixing estimate is on target, I’ll end up with $13,000 equity when I’m done.

You must develop discipline if you intend to say within your budget and be profitable! Lots of folks can fix up houses if the money supply is unlimited – but it’s a whole different ball game if you insist on making money for doing it!

When you don’t have a lot of money – and you need cash flow rather quickly, you must invest in the kind of real estate that will produce it. Single houses can produce it someday – but not until the mortgages are paid! If I was lucky enough to earn $100 per house, not likely with a mortgage – I’d need more houses than I could ever afford just to earn pauper’s pay. Fortunately, there’s a faster, better way!

The better way is to start with fixer-uppers first – and concentrate on cash flow. With fixer properties, you can force the value up with sweat equity (yours or somebody else’s). With fixer properties, you won’t get stuck in a holding pattern, waiting for appreciation or a turn-around economy. This is very important, if your goal is to create wealth during your lifetime so you can enjoy it yourself!