Fixer Jay’s Mom & Pop Millionaire Blog

Nothing comes ahead of cash flow! If you have it, you can continue to grow. You can transition from smaller properties to larger ones or fixers to pride-of-ownership. You can use your cash flow to buy mortgages for passive income or take a trip around the world. Cash gives you choices!

When you own the houses, you have your own personal money machine! Obvi­ously, you must maintain the property and provide the necessary management. But, in exchange for doing that, you control the money. It’s yours to spend any way you choose. The basis for wealth behind nearly every rich person can be traced, back to the ownership of a patent, a copyright or a deed! Owning income real estate puts you in with the right crowd.

In terms of investment risk, rental pro­perties are about the safest kind of invest­ment you can make. Residential renters are easier to attract than commercial tenants. Houses are considered a basic necessity of life. The risk of loosing your investment houses, with any equity, is almost nil. Buy them right and structure the financing so your tenants can pay them off and you’ll be very well rewarded for your initiative.

Houses aren’t glamorous like shopping malls and high-tech commercial buildings but they are far better suited for investors, who start with very little cash and no reserves.

Most investors and wanabees are better off to stay away from strategies that sound slick. Over the past 10 years, I can recall the names of at least a dozen so-called invest­ment gurus who expounded the virtues of a wide assortment of “get rich” techniques. Most of these pitchmen are bankrupt or working at a filling station today.

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It’s not a sound idea to buy houses that don’t pencil out on the day you acquire them or shortly thereafter. There’s only one reason I know of to buy investment real estate-that’s to make money. If it can’t, then I don’t want it regardless of whatever else I may like about it.

I have been sucked-in on future value, higher potential, and pride-of-ownership many times but I learned my hardest lessons early in my career before I lost the ranch.

If your goals are investing for current income and long-term security with the least amount of daily management involve­ment, then my strategies will work for you. There are many things to learn and most of it should be accomplished during the early steps of your investing. On-the-job training is most effective.

When you acquire properties with financing, you should always insist on long-term pay backs, the longer tthe better, but nothing less than 10 years. Be very careful when you agree on the amount of the mortgage payments. Investment properties that have combined mortgage payments higher than 50 percent of the scheduled income are too risky, unless of course, you have adequate back-up resources to pay for negative cash flow.

I’m always satisfied when my mortgaged properties earn small positive cash profit consistently every month. Little profits allow me to buy more properties, which in turn provide additional little profits. First thing you know, little profits add up to big bucks.

It doesn’t happen overnight, but when you consistently keep the profits rolling in, you have the money to take on bigger and better opportunities when they present themselves.

There are several, good economic reasons, why I favor keeping a flock of rental houses, but the reason dearest to me is they furnish me with cash every month, come rain or shine!

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Like most successful investors, I suffered through a probationary period! That’s when there’s almost as good a chance of going broke as being successful. What finally saved my bacon was when I started buying the kind of properties that would earn enough income to pay me every month. That might not sound like much to some folks – but to me, it was the discovery that kept my investment career alive – and my faith intact!

Fixer investors enjoy a major advantage over all the other investors because there’s no up and down cycles to slow you down. Unlike the general housing market, the fix-up strategy never changes regardless of what the economy does. Although I currently own a number of American dream houses now – I don’t mind confessing – my fixer properties bought every single one of them!

Once you have a few dollars to jingle – and a respectable cash flow, you are now in a position to acquire quality houses, so long as they’re close to break even. I could never move forward very fast until I figured out the sequence! Go for cash flow first – quality houses, second!

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It goes without saying, but it’s extremely important: FIXER PROPERTIES SHOULD AL­WAYS BE CLEANED UP OUTSIDE FIRST! This effort includes removal of all the trash and broken items, like falling down fences and junky sheds. Overgrown bushes, trees and shrubs must be neatly trimmed. Lawns can be raked, re-seeded and groomed. Even weeds can be turned into attractive green yards with regular watering, re-seeding and routine mow­ing.

Here’s what’s really important here! These outside improvements I’m suggesting are not using very much of your fix-up budget, You can really leverage your fix-up plan with plain old “Grunt Work”. That’s my term for non-­skilled labor. But, believe me; it counts just as much as the higher skilled stuff when it comes to making a bottom-line profit.

Avoid the Two Deadly Sins

Whatever else you do DON’T PLAY HOUSE WITH YOUR FIX-UP PLANS and DON’T SPEND OVER 10 PERCENT OFYOUR ORIGINAL COST ESTIMATE.

Both of these DON’TS are not the easiest advice to follow! I don’t expect you to get ‘em both right on your first attempt. That’s exactly what I did and I don’t know of any shortcuts to help you! It simply takes practice!

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Inexperienced fixers have trouble saying no! If you figure on spending $700 to paint the kitchen and replace the counter tops, do just that. Don’t replace the cabinets and flooring as an afterthought. If you decide on replacing the worn roof shingles on the street-side of the house because they look so ugly, that’s fine. But, don’t let your roofer sell you on the merits of doing the whole roof at one time because it’s cheaper while he’s there!

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!

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Enforcement of the rules, whether civil code laws or your own house rules is the best way you develop a smooth running manage­ment operation. Preventative techniques are as important to managing tenants as they are for the doctor who manages your personal health. One of my main criticisms about professional property managers is that they rarely act-mostly they react. They’re always ready and willing to fix the busted door, but only after the horse is outta the barn.

Rent monies are life blood to apartment owners. Yet, I know many property manag­ers and owners alike who participate with their tenants each month in a silly little “rent collection ritual.” The tenant starts the game by saying the checks in the mail. Then the landlord begins calling every day or driving out to the property to inform the tenant he hasn’t received it yet. This can go on for weeks.

Don’t allow yourself to be part of this game. Use the rules already on the books: the state landlord-tenant civil laws and your rental contract terms agreed to by your tenant.

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I can tell you from experience – buying the right properties, in the right sequence, makes all the difference in the world. If you’re like me, cash flow is always the biggest concern! It took me several years and some seriously overloaded Visa cards before I gave up the notion that average three bedroom, American dream houses would set me free! They almost broke me instead! Don’t misunderstand me here – I’m not saying they’re not a good investment – I’m saying they don’t provide any cash flow! My dream was to be a full-time investor and have my real estate support me.

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!

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Daniel Webster said: “The world is governed more by appearance than by reality.” And, that’s exactly how your customers will judge your fix-up job.

If you spend $5000 working under the house, you can consider that money to be mostly a gift for the next owner. If instead you can spend that money for beautification like exterior paint, carpets, new lawns and a white picket fence around the front, you’ll not only be’ in harmony with Webster, but you’ll also be adding sizzle items that both buyers and renters are willing to pay you for!

HIGH PROFIT PROPERTY

My Haywood property consisted of 11 older rental houses on a two acre lot. It was com­pletely overrun with weeds and brush when I bought it. About 50 percent of my fix-up profits were earned by simply cleaning and hauling.

… drive-bys and quick peeks make the sale…

When Haywood sold, I had made a $150,000 profit. The profit cost me roughly $20,000, which I think you’ll agree, is not very much to spend for that much profit. This is fix-up lever­age’ For the Haywood job, I’m talking about 7.5 ­to-1 leverage. That means for every dollar I spent doing fix-up and clean-up, I got back $7.50 when 1 sold the property. I might add that during the 14 months I owned Haywood the monthly rents were increased over $1200. Natu­rally higher rents equate to a higher resale value.

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Rich people know about the Wealth For­mula – They know it’s nearly impossible to earn BIG MONEY working at a regular job – they understand to get rich – you must earn money around the clock - 24 hours everyday and finally … rich folks do what’s necessary to educate themselves so they can use the Wealth Formula to build their king­ size bank accounts.

Cash Flow Houses Perfect

Owning income producing houses creates the winning formula – the right kind of houses earns money while you sleep. You’re no lon­ger working by yourself – Jay’s wealth plan is simple - YOUR HOUSES ARE WORK­ING 24 HOURS TO EARN YOU MONEY You simply manage the houses … and of course, make bigger bank deposits.

Other Peoples Money

The bottom line is this – you must acquire the know ledge to put this plan into action. It’s you who must find the RIGHT HOUSES and set-up the financing. It’s you who must arrange the fix-up and choose the right customers … After that, its other peoples money that will make your rich.

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BECOME A BLUE JEANS MILLIONAIRE

There’s never been a better time to join ranks with “do-it-yourself’ real estate investors than right now – TODAY! From a pure financial standpoint, owning income-producing properties could easily turn out to be the smartest security decision you’ll ever make.

Tens of thousands of traditional jobs have simply vanished into thin air, while savings and retirement funds are siphoned away for everyday living expenses. Creating a long-term financial backup plan makes more sense today than ever before!

Investing for monthly income has hardly anything to do with the “topsy-turvy”, up and down real estate market. It’s not about qualifying for “hard to get” mortgages either. When you learn about this business, you’ll quickly discover that sellers are ones who will give you the special terms you need for cash flow earnings every month. By acquiring the right kind of properties, you’re not the least bit dependent on appreciation or victimized by sudden downturns that plague most new investors.

The investment business I’m talking about will allow you – the investor; to enjoy almost absolute control over all your earnings and future profits. This is extremely important! It’s the real key to investor success. Look around you today! Most workers have almost no control over their jobs – or their earnings. They must live in constant fear about the decisions of others – not a great confidence builder for your future, I’d say! It doesn’t take a lot of money to start, nor must you have a handyman background! Average working folks can become “blue jean millionaires” and build a future with bigger paydays, long-term profits and a guaranteed retirement.

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