Fixer Jay’s Mom & Pop Millionaire Blog

I discovered there is no inexpensive method to turn older houses into new houses. Many amateur fixers try to accomplish this task only to find their bank account disappears faster than the house changes. Herein lays the most important difference between what I do and what remodelers and renovators do. Believe me, it’s a very expensive difference.

Often remodelers will replace entire plumbing systems. Sometimes they have the entire house rewired. They tear out old flooring and replace floor joists and girders. They replace wood windows with new metal frame styles. Some will even jack a house up to level it. That means they must also fix all the cracks and often redo the stucco exterior. Don’t do fix up this way. Unless money is not the object, you’ll lose your shirt.

Since older houses are not the same as newer ones, don’t try to make them so. Instead, try to capitalize on the marketable features not found in the modern day construction. Older houses quite often radiate charm. High ceilings, wood.. Work, large porches, yard space, old windows (dressed up), evaporative cooling with separate heating, storage’ sheds. Separate garages, and mature shrubs and trees. Add a freshly painted white-picket fence after everything else is cleaned and spruced up and you’ll have lots of customers: renters or buyers, depending on your investment plan.

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Jobs are scarce for everyone, but for young folks – especially the soon-to-be graduates, it’s like a giant Easter egg hunt with very few eggs to be found! For the 50 and older bunch; laid off or simply can’t find another job, it’s almost impossible to “pick up” and start again. Many traditional or the so-called “bread ‘n butter” jobs have either been transferred overseas or they’ve simply disappeared into thin air!

Today’s job seekers, both young and old, find themselves in most troubling times. It’s not the way it used to be – nor is it likely to ever return the way we all remember! It’s like we’ve come to a giant fork in the road! You can either remain dependent on the whims of an employer – or chart a brand new course and appoint yourself as captain!

When you invest in income-producing real estate that earns you spendin’ money every month – you’re no longer at the mercy of an unsympathetic employer, or a topsy-turvy economy – you’ve joined the other side! Your personal labor is no longer a trade-off for income. It’s now your assets that will bring home the bacon! And like other changes in your life – the hardest part is always at the beginning when you’re laming a new set of
skills. Successful investors will never need to job hunt again.

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There are those who incorrectly believe that fixing houses is a job that only experi¬enced carpenters or contractors can do. Nothing could be further from the truth. Almost anyone can do this job. In the final analysis, it matters very little who performs the physical “fix-up” work, so long as the right things get done.

Owners doing their own fix-up work will only enjoy a money-saving advantage, if they fix the right things at the right time. Both are important. Knowledge is what makes the big money. Swinging a hammer or swishing paint brushes will merely earn you average wages or save a few bucks in the short run.

As a general rule, no licenses are required by owners who fix up houses for themselves. However, if you do it for someone else, e.g. as an employee or independent contractor, it’s very likely you will need a license.

Having fix-up skills can certainly be an advantage because it’s one less thing you’ll need to learn about. But, big paydays do not come from fix-up skills; they come from real estate skills and specialized “how to” knowledge.

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If you’re willing to do some serious investing during the next several years that most people won’t do – you can end up being able to do many things for the rest of your life that most people can’t do. I’m speaking financially – plus, having the personal time to do it! Sounds easy enough; doesn’t it? But here’s the problem.

Most people lack the discipline and necessary commitment to accomplish the things they wish they could do. Without discipline and commitment, goals, dreams and life-long desires will only be a wish. Everyone who attends my seminars and training wants to become successful. Part of my teaching is about discipline in your life – otherwise my training won’t help you very much!

A student and good friend of mine reads educational real estate books for an hour every morning. Claims he never skips a day! When I ask him why – this is what he said: “I stay mad at myself all day long if 1 skip my reading. I’ve conditioned myself to read!” It just so happens he’s a very successful investor too! He’s got ‘em both – discipline and commitment. Can ya dig it! See you at a future seminar.

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What’s better – a fish dinner tonight, or learning how to fish so you’ll never go hungry again?  I think you know the answer, but did you know that real estate investing works almost the same way?  It might seem more hip or fashionable to purchase bank foreclosed houses (REO’s) and flip them for a profit – but it’s still a one trick pony that will hardly make anyone wealthy!

Most “red hot”, follow the crowd strategies will work quite well quite well for short periods of time- but they can stop working faster than last year’s love affair!  Whey is that, you ask?  Too many contingencies, that’s why!  First, bank mortgages always come and go!  Government manipulated interest rates can change overnight and even the fickle public’s perception of value in the housing market can cause total stagnation!

If your goal is to develop a dependable real estate income, you must learn the business of investing!  In short, you must learn how to fish!  When you learn to fish, you’ll discover that bank financing – whether it’s available or not; won’t slow you down!  Interest rates and public opinion will be only topics at the dinner table, but they won’t affect your real estate income one iota!  The reason is because the business of investing includes a variety of different ways to profit.  If one strategy quits working, there’s a dozen more.

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People often ask me if it’s necessary to know everything about doing fix-up work to be a successful house fixer. The answer is no, but the knowledge is very helpful, even if you don’t plan to do the work yourself. The reason is because you need to know how much things cost.

In my case, I did everything I could (90 percent or so) when I first started out because I didn’t have the money to hire it done. Many investors do a portion of the fix-up and contract with others to do what’s left. Some investors lack handyman skills and hire everything out.

In the final analysis, it boils down to money no matter who does what. Approximately 30 percent of every fix-up dollar goes to purchase materials. The balance (70 percent) is the cost for labor. Obviously, you can save $700 for each $1000 you plan to spend by doing the work yourself. Saving $700 is almost the same as earning that much. It makes a pretty strong case for learning how to do your own fixing.

It’s not necessary to have a lot of money to make a lot, but you must have a good substitute if you don’t. Fix-up skills and the ability to acquire bargain properties and manage them are cash equivalent skills

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Many property owners over-improve the houses they live in. They add all sorts of extras (whistles and bells) that surrounding houses in the same neighborhood don’t have: fancy kitchens gadgets, add-on rooms, finished garage interiors, costly backyard. Improve­ments including in-ground swimming pools are just a few that come to mind.

There’s an old saying in real estate circles that says you can spend all the money you want on a $75,000 tract house, but you’ll still have a $75,000 tract house when you’re done. That’s pretty much a real world fact of life. You might be able to sell for a few more dollars than the neighbors, but rarely are you likely to ever get your full investment back.

They call this “over improving.” It’s done every day by countless thousands of homeowners. It’s even done by rental property owners who haven’t read my books about fixing rundown houses. I offer sound advice on what to fix and how much to spend. Of course, I’ve spent lots of years figuring out what works and what doesn’t.

If by some strange circumstance you find an over-improved property matched up with an owner who urgently needs to sell, BINGO­ you’ve likely discovered a quick path to instant built-in equity. Someone else has already done the work. All you have to do is find the situation.

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If you can teach yourself to think like your tenants, you can stay a step ahead of them most of the time. Believe me; a step ahead is very important. It’s always better to act now rather than to act later. A friend of mine who’s been a cop for thirty years told me the best detectives in his department are the guys who could have easily been the best crooks. The reason, he claims, is because these officers naturally think just like crooks. It’s like they’re able to anticipate a crook’s next move before he ever makes it.

This same kind of uncanny ability can be a tremendous advantage for landlords who can develop it with their tenants. Just like the cops, landlords can benefit by knowing “tenant moves” ahead of time. With practice anyone can do it.

Good landlords always act, they don’t re­act. Don’t fight and argue with tenants any more than your boss would fight and argue with you about work requirements on your job. Obviously discussions are all right and I fairness should always prevail. Landlords are the boss of houses. They make the rules for tenants who live there. Never compromise the issue of who’s in charge. When tenants have the upper hand living in your rental properly, you’ve got big problems.

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Many people like the idea of investing in real estate but can’t seem to decide how or where to start.  Part-time investors or those just starting out need training and experience in about equal proportions.  Stated another way;  they don’t need more education than they can use. They need enough education and “know-how” to begin; and then on a continuing basis as they gain experience from doing it.

Real estate investing requires many skills other than simply buying properties. Obviously classrooms and books are impor­tant and necessary in order to learn technical information. However, there is no faster or better method to learn the practical side than doing it yourself. It’s called “on the job training.” This learning experience is best.  Accomplished with properties that require some personal attention.

Rundown houses that need work are ideal candidates because they’re inexpensive to acquire and because perfection is not so important. Most any work you do is likely to improve the property even if it lacks profes­sional quality. We all get better with experience.

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