How to Get Started Investing in Fixer-Uppers, Fixer-Uppers part 4

Everything we do begins with “the first time.” It’s not necessary to be fully trained and have years of experience before getting started. On-the-job training has long been recognized as one of the most effective methods for gaining competence quickly. Getting started is always top priority. First, find out what you must do. Then, go out and do it. Keep learning how to do it better as you are actually doing it. Live combat training with real bullets will speed up your education by tenfold.

Getting Started Ranks First
Getting started also ranks higher than finding the best deal in town when you start out. Don’t look forever trying to find a “blue ribbon” property. When you start, chances are you will stumble past the right deal on the way down to see it, without even realizing you were there. Most of us don’t really know enough at the start to distinguish a good bargain from a “Grade B” dirty deal. (By the way, that’s poultry jargon from my old chicken farming days.) The best approach in the beginning is to special-ize in whatever type of property you decide works best for you. I recom­mend the older fix-up types, because profits can be earned much faster by adding value than with the nicer-looking units.
Continuing Education—A Must
In my own particular case, I specialize in fixer (rundown) houses and apartments. That’s how I started and I’m still doing the same kind of deals today. I’ve gotten used to the money. I also invest in other types of proper­ties now, but only if the projects are good enough to meet my financial objectives. Also, I’ve gained lots of experience from buying properties over the years. I’ve already paid my dues. I’m an educated buyer now, thanks to what I’ve learned from others, attending many educational seminars, read­ing several hundred books (many over several times), and spending liter­ally thousands of hours practicing my first love—fixing rundown houses.
Specialization Is the Quickest Way to Learn This Job
Specialization is the best way I know to learn this job quickly and rise above your competition. When I started buying rundown houses, most of my competition was from agents and owners who looked at every proper­ty listed for sale. I looked only at fix-up properties and could, therefore, concentrate all my efforts on just my specialty.
After a few deals, I became very knowledgeable and soon learned how to beat my competitors on many of the best money-making properties. Later on, agents started calling me as soon as they listed good fix-up prop­erties. Needless to say, you’re in the driver’s seat when you’re the first one to know about a good deal. It took a while to build my credibility; howev­er, by concentrating in just one area of the market, I soon became recog­nized as the local authority on fixer houses.

Real Estate Investors Must Think Like Business Folks

Can you guess the similarities among real estate investing, cattle ranch-ing, and running a railroad? At first thought, you might not think there are any. However, let me assure you, there are. They are all specialized businesses that must be operated using good sound business principles if they are going to be successful. A negative similarity is that if they fail to earn a profit, they’ll all go broke about the same way.

A fault common to many speculators is they tend to see themselves as “dashing real estate tycoons.” Operating a business—using time-test­ed methods and a well-defined plan—sounds like a “real drag” to most tycoons, so they simply don’t bother learning. “Let the accountants fig­ure out my taxes and worry about employees and payroll,” they say. When a tenant sues a tycoon over some management violation, which, of course, he or she didn’t bother learning about, it’s no big deal. That’s what attorneys are for, right? As for setting up the books necessary for good operating records, tycoons never have enough time to worry about things like that. “Someone can do the records later when we need them,” they claim. Speculators and tycoons often think like that. However, it’s a very poor plan for real estate investors who would like to be around long-term and enjoy their wealth.
Building Real Estate Wealth Doesn’t Happen by Accident
Every so often, speculators will make a killer deal. They need a dump truck to haul their money home. But I’ve noticed they never stay rich very long. When they do deals that don’t work out, they’re always back to zero again. When you study wealth building, you’ll quickly discover—as I have—this is not the best way to achieve it. You need a plan that takes you from where you are right now to where you’d like to be later on. It must be simple and easy to follow, because complicated schemes seldom work.
The “no-money-down” craze of the early 1980s was based on simplic­ity, which is exactly why it was so popular. No-down seminars sold out everywhere. It was a simple idea all right, but it had a serious flaw: the debt was too expensive for the income. The plan was not achievable for most people. Even the instructors couldn’t make it work well enough to stay out of the bankruptcy court.
Always Invest Where Demand Is Highest

It’s very important to stay within your means financially and to acquire the type of properties you can handle yourself. If you do that, you can almost write off the risk factor. Inexpensive rental houses and small apart­ment buildings will always have long waiting lists of qualified tenants if you keep the properties looking attractive and in good repair.

According to the U.S. Department of Housing and Urban Development (HUD), thousands of lower-income rental units are disappearing in this country annually. Some are torn down for urban expansion, some are con­verted into condominiums, and some just fall down. The reasons don’t matter much. The point is that they are becoming scarce as hens’ teeth. The next thing you know, the federal government might start subsidizing landlords and landladies who own what’s left. Certainly that would make as much sense as paying farmers to plow their tomatoes under so they don’t flood the market and bring the prices down.
Because they are scarce and in such high demand, the risk of owning and operating inexpensive rental houses is almost nonexistent. That is exactly what new investors need, no risk. There are plenty of other things to worry about.
Jay’s Formula for Making Money in Real Estate
My wealth formula is designed for do-it-yourself investors. If your goal is similar to mine—that is, to build long-term real estate wealth for your­self and your family—my strategies can help you. I never speculate unless I have extra money to gamble. Even then, I always insist on favorable odds to tilt the scales a bit my way. For the record, however, let me simply say I’m truly an investor at heart. Once I earn profits in this business, I get very possessive and have no intention whatsoever of giving them back. That’s the way most investors think and it’s also the key to staying in busi­ness for the long term. Let me tell you the four basic ingredients to my formula—then we’ll analyze each one.

Investing My Way—Four Basic Ingredients

My formula for successful investing is simple. It’s easy to do. Only four ingredients make it work. If you use them all, you’ll find as I have that they’re all you’ll need.

A workable plan—You must have achievable goals and allow yourself reasonable time to achieve them.
Action—You must do the work necessary to execute the plan. Periodic adjustments are OK, but quitting is not an option.
Investing—You must invest continuously, in profit-making real estate. Speculation is never allowed in the early stages.
Compounding—You must keep your money continuously in the earning mode (that means fully invested). Your knowledge will com­pound automatically as you follow steps 2 and 3.

Now let’s discuss each one individually to make sure you understand what I’m suggesting here.

1. A Workable Plan—Setting Achievable Goals

A workable plan does not mean you need a complicated computer study with stacks of printouts, to support some preconceived notion that all real estate is bound to make money no matter what—because that’s not true. All real estate does not make money. The simple fact that many banks and savings and loan associations have thick files crammed full of “take-back” properties (REOs—real estate owned by banks after foreclo­sure) should offer sufficient proof of that.

A basic truism you can bet your boots on—nobody ever gives proper­ty back if it’s making money for them. People who give properties back do so because they are losing money. Chances are they jumped into a deal quickly, without doing the proper research. Many new investors start out before having sufficient knowledge to operate the property after they own it. Still others buy properties without the foggiest idea of how to make a profit. In short, the lack of advance planning is the number-one reason investors go broke.
The Investment Plan Must Be Simple with Achievable Goals. My basic business plan has always been to acquire rental houses that will earn a reasonable operating income. To achieve my monthly income (cash flow), I buy houses that will return 18% to 24% annually. That’s a realistic and workable plan.
For example, let’s say I purchase four older, two-bedroom houses or small apartments on a large city lot for $110,000. To get that low pur­chase price in my town, I’ll need to buy rundown, junker houses to fix up. Assume my fix-up costs are $10,000. That means my total cost, or basis, in the property will be $120,000. (Don’t confuse this example with tax basis information. This is for the income analysis only.)
Once the four rental units are fixed up, the basis for each house will be $30,000 ($120,000 divided by four equals $30,000). After fix-up, my target rents will be a minimum of 18% annual return, which equals $450 per month ($30,000 times 18%—$5,400—divided by 12 months). If mar­ket rents are $500 per month, my return will be 20%; with $600 rents I’ll earn 24% annually.
Once you learn this business well enough to consistently earn rent returns of 20% or higher, you’ll begin to visualize more opportunities— perhaps diversify your portfolio. This strategy is a major advantage for investors who follow my advice. The idea is to go for cash flow first—then acquire the better houses after you’ve established a steady monthly income. Folks who do this in reverse are always fighting the cash flow battle—and many lose the ranch.

2. Action—the Magic That Makes It All Happen

It goes without saying, you’ll never make any serious money in the real estate business unless you do something—you must make this happen. I’ve briefly described my plan of action, to give you an idea about how I earn my money. Without question, the most important ingredient in any success formula is action. Nothing moves forward without it; even the most brilliant idea will fail without action to make it happen.

Once I discovered I could make more money than other investors by fixing and renting rundown houses, I just kept doing it. I became a spe­cialist at finding the right properties, fixing them up economically, and renting them out quickly. Folks often say, “Jay, fixing your type of hous­es seems like a lot of work. How do you fix them so fast?” Two things will automatically happen as you gain experience. First, you get to be very good when you specialize at doing something. You become more and more efficient, as you eliminate needless work. Second, with cash flow coming in, you’re quickly in a position to hire help. You can furnish the knowledge, while your help does the work. This allows you to expand at a much faster pace.

3. Investing—and Knowing Exactly How You Will Profit

Obviously, in order to make money in real estate, you must invest. However, that’s not all there is to it. You must invest only in those prop­erties that will earn income and produce profits. Buying property is the easy part. Earning income and profits requires a good thorough analysis before you sign the deal.

So far, I’ve told you how I started out by investing in inexpensive rental houses. I did this not because I’m cheap, but because I discovered that inexpensive rental houses will earn a lot more money than higher-priced houses. What that means is more cash flow. Many people ask me about the long-term profits from inexpensive rental houses. Will they be as good as the profits from the more expensive, single-family houses? Probably not, from an appreciation standpoint. But appreciation was not my top priori­ty when I started. Appreciation is a luxury for folks who have extra money in their wallets to buy groceries while they wait for it to happen.
Write Your Profit Plan—Then Get a Second Opinion. My highest pri­ority when starting out was to have a little cash left over at the end of every month. Appreciation often takes too long, so I made it my second priority. That strategy has served me very well over many years of invest­ing. It’s tried and tested and—best of all—it works!
Determining how you will earn profits on a property you plan to acquire can be done best with an ordinary pencil and a yellow legal pad. That means manually, by hand. Writing numbers out longhand helps reveal flaws quickly, I’ve found.

4. Compounding—the Secret to Building a Fortune

Compounding is a silent but powerful wealth-building ingredient that works continuously around the clock to make you richer as you invest, almost without you noticing. A money-growing cycle begins when each one of your investment dollars starts earning money from itself. Those earnings, in turn, join forces with more invested dollars to keep repeat-ing the wealth-building process. Rich folks can tell you that real wealth comes from repeating the compounding cycle over and over.
Compounding money at extra high rates of return is perhaps the greatest single advantage of investing in real estate. Small investors who learn how to make compounding work for themselves can quickly move up to “wealthy tycoon” status.
I have personally completed transactions that have exceeded 100% compounding. However, it’s difficult to do this for very long. Still, expe­rienced investors can keep their dollars earning consistently in the 25% to 50% range. If you were to invest $20,000 today and compound at 50% annually, after 10 years you’d be a millionaire. If you average just 30% annually, it will take you only about five years longer to get there. Compounding is very powerful medicine for your financial health and well-being.

It’s Important to Position Yourself to Make Money
For hands-on investors like me, I’ve long held the notion that the best type of real estate to buy, when you are just starting out, is something between rundown and ugly and a complete junker. The degree of run­down or ugliness will depend mostly upon how brave you choose to be. Personally, I think the braver you are, the better off you’ll be with your first several acquisitions.
Evaluate Your Personal Financial Status
As you might suspect, how you invest will depend on your present finan­cial situation. Do you have a regular job right now? How long will it last? Are you planning to quit or retire? Do you have some cash available? Do you own a home with borrowing equity? Are you flat broke with nothing but determination and a pretty face? Each individual’s situation will be different to start. However, do not despair if you don’t have much money right now; many have done fine without any.
Guts, determination, and desire to succeed are the top priorities. They are necessary with or without money. Money simply adds some comfort. Remember that just as many flat-broke investors make it big as those who can easily borrow start-up money from their mothers-in-law. The methods for selecting your first property will be the same whether you are currently employed and hoping to change careers down the road or presently unemployed and desperately in need of work that will produce some spendable income right now.

If You’re Short on Knowledge or Money, “Adding Value” Strategy Is a Perfect Opportunity

I have used exactly the same advice I’m passing along to you. The day I started investing, I knew there were two important things I was short of—knowledge and money. Do-it-yourself investors just can’t lack a whole lot more than these two things.
On the positive side, I had two good things going for me. First, I had a very strong desire to learn everything I could about real estate invest­ing as quickly as I could do it. Second, I was 100% ready and willing to substitute my own personal efforts, whatever was needed, to make up for my lack of money. Those two things can level the playing field if you don’t renege on them. Also, they work absolutely perfectly with my “adding value” strategy.
The following is an actual classified ad from my local newspaper that seems to fit my plan:

Will trade, sell, or whatever
Small duplex unoccupied on 3/4 acre. Partly remodeled. Ran out of money. Each unit 2 bedrooms and detached garage. City services. Good potential for fix-up. Assume $21,000—$167 per month. Will take vehicle, lot paid for, motor home, boat, etc. for equity. Call 227-3414. Leave message for owner.

When I read this ad, I can pretty much tell that the two things I don’t have much of, knowledge and money, will not likely be too important in doing a deal. Conversely, my two strong suits would seem to fit this prop­erty quite nicely, namely a strong desire to learn and 100% willingness to contribute personal efforts. My thinking went something like this.
Agreed, I’m not very knowledgeable about real estate transactions because I’m just getting started here. It looks as if I’ll be dealing directly with an owner who probably doesn’t know much more than I do; other­wise, why would he or she be stuck with such a mess? Also, I don’t have much money, but it doesn’t seem like I need very much to acquire this property. The owner says he or she is willing to take almost anything for his equity. Obviously, my personal efforts (saw, hammer, and labor) can be substituted for lack of fix-up cash.
Pending further investigation, this property sounds very exciting to me because it seems almost tailor-made for what I am able to contribute. If an ad sounds interesting, you should immediately make contact and start talking with the owner. This is how high-profit deals start out.
I realize we’re merely discussing the ad at this early stage, but try to envision what you might quickly uncover here. Some things are written; others you must interpret by reading between the lines. Also important to note is the ad appears to be written by the owner, rather than a real estate broker office. Most generally, owners tend to state the truth because they’re not professional ad writers.

Looking for Mr. Right, Not Mr. Perfect

The first property you buy should be the largest one (in terms of the num­ber of rental units) that you can acquire based on your available resources. Resources can include cash, trades, or sweat equity (working on the property in exchange for the normal cash down payment). Trades can be boats, trailers, cars—even your personal residence, bare land, or whatever. If you’re a good negotiator, perhaps a no-cash-down deal is pos­sible. However, be very careful with large mortgage payments and short-term financing with large lump sums or balloon payments due in a year or so. Don’t get yourself trapped by either one, especially when you’re just starting out and you don’t have extra cash reserves.
Zeroing in on the Target
The target purchase should be a rundown property with management problems and a very discouraged owner. The location and condition are not nearly so important as seller motivation and the potential for proper­ty improvements or upgrades. Improvement means the ability to increase the property value and in turn increase the rental income. Obviously, there are properties in some locations that are good only for tearing down and starting over. However, the vast majority of older rental units suffer only from poor management and neglect by owners who simply milk the property and do little or nothing about upkeep or improvements.

Selecting a Property That’s Right

Your first property purchase and the next several after that will be extremely important to your investing career, although it’s very likely you won’t realize just how important at the time. There are right properties and wrong properties on the market. What I’m talking about is choosing those that earn long-term profits and short-term cash flow.

Making a good, solid first selection can easily spell the difference between establishing a strong permanent launching pad for your invest­ment career and creating a deep financial hole in which you will quickly find yourself buried. Your dreams of wealth can quickly fizzle out and die if you purchase properties that cost you more than they’ll ever be worth. Buying the right property is the first step—and it’s extremely important because it’s usually make-or-break for new investors. What I tell you next will provide valuable information on how to buy your first properties right and what to look for before you sign the deal.
Finding Sellers Who Truly Want to Sell

Before you start looking at the specific properties to purchase, it’s time to pause and think. Ask yourself this question: “Who is most likely to sell their property at the best price and with the best terms?”

I can assure you, motivated sellers are out there. You must purchase properties from sellers who are really serious about wanting to sell—not from sellers who might want to sell. That little five-letter word, “might,” makes a very big difference. The seller you must find should have a strong reason for selling. It can be one of many reasons. However, I’ve found the most common of these to be financial problems, management problems, divorce, and job transfers or moving. It’s not uncommon to find all four of these problems existing at the same time.

Don’t Be Stopped by Lack of Cash
Perhaps the most used—or overworked—excuse given for not investing in real estate today is “I’m waiting until I get enough money together to start.” Money is not what you need most. What you need is creative think­ing. There are numerous completely legitimate and respectable ways to acquire real estate without waiting for your financial ship to come in. And besides, who’s to say if it ever will?
No Money Down Is Not the Goal
Now let me also explain why it’s not always best to buy for no money down. Years ago, a highly popular book directed novice investors to buy real estate for little or no money down. This strategy will often work when employed by savvier, more sophisticated investors; however, in the hands of the uneducated, it’s almost a sure path to disaster. The inherent prob­lem is that financing 100% of anything will most likely cause the month­ly mortgage payment to eat up all the income generated, sometimes even more. Investing is not much fun when you have to pay additional out-of-pocket money each month, just to keep the property operating.
Plus, quite often a little cash, inserted at just the proper moment, will hasten the desired results and will more than make up for the problem of finding the money somewhere. You normally get far better terms. Obviously, you must have some cash or you must find it somewhere.
Many no-down investors attempt to use what I call the “Christopher Columbus technique.” When they begin their investment voyage, they have no idea where they’re going or what they should buy. When they finally acquire a property, they seldom know much about it until after they close the deal. Finally, they seem to think the entire transaction should be financed, using someone else’s money. Quite often they go broke before they ever realize where they’ve been or what they’ve done. Hopefully, by learning a few basics, you can avoid such a fate. A little early planning can make your maiden investment voyage smoother sailing and more profitable.

Until You Know How Much to Pay

The only way to avoid overpaying for your first property—or any proper­ty you plan to purchase—is to determine how much the property is worth and then make an offer. Use my income property analysis form (see Chapter 9) to help determine the operating income and monthly cash flow you can expect from the property. It will force you to dig out the information you need. It’s an excellent checklist. And, of course, everyone should use some kind of checklist so as not to overlook expenses.

Perhaps the most important use for my form is as a negotiating tool. With all income and expense numbers on the table, it quickly becomes apparent if the property will make any money. This form tends to take away the emotional aspects of negotiating. For example, if the seller argues that the expense numbers I’m showing are too high, I say, “Fine. You show me what they really are, then prove it.” When the form is prop­erly filled out, it will show you and the seller exactly how much money is needed for operating expenses and how much is left over to pay the mortgage debt. When you can see all the income and all the expenses in one place, at the same time, it helps you avoid paying too much for a property.

Spreading the Risk

The other thing to keep in mind when considering properties to purchase is that the more units there are the better the financial leverage and per­centages. For example, it’s often just as easy to purchase 10 rundown hous­es with the same down payment as a four-unit, nicer-looking apartment building. The seller with the nicer-looking units can obviously be more selective and hold out longer for top price and terms, because a lot more buyers are interested in buying nicer-looking properties. Assuming all the important numbers (price and terms) fit, it’s always better to pay the least down per unit as possible in order to obtain maximum returns on your up-front money (down payment). If you buy 10 rundown houses, a $20,000 cash down payment would equal $2,000 per unit for the 10 apartments. The same down payment would equal $5,000 each for just four nicer-looking units. Again, always try for the least down and the most units.
Buying Properties Is a Numbers Game
The same logic applies for vacancies: the more units, the better. One vacancy in a 10-unit group is only a 10% vacancy, while one vacancy in the four-unit property means 25% of the total units are available for rent. Obviously, this percentage is not conclusive by itself, because other impor­tant details have not been considered. I’m merely trying to show you that bigger numbers mean spreading the risk. With more units, it’s cheaper to operate per unit as well as cheaper to purchase. You’ll be getting a lot more bang for your investment buck. If this doesn’t seem clear now, I promise you, it will later on. If I can help you buy the first property correctly, so that you can actually experience success, I will have achieved my purpose. After that, you’ll do just fine by yourself, the same as me.

Diversification Later Is the Best Strategy

Once you’ve become established financially and, even more importantly, become more knowledgeable about real estate investing, you may then enjoy the luxury of diversification. You might even venture out and buy several “pride of ownership” properties. After all, money’s not every­thing. Besides, you might want to own a good-looking property to drive by with friends or your mother-in-law so you can show off a bit. It’s important to remember that most of the world judges by looks. Most of my advice is about making money. Once you have all the money you need, who cares what you do? You might even consider buying property that just breaks even.
The Greatest Seven-Inch Fisherman

TV minister Robert Schuller tells the story of a young boy watching an old man who is fishing off the river bridge and doing quite well. The young boy couldn’t help noticing something very strange about the old fisherman. It seems that ever time he would catch a really nice trout, 10 or 12 inches long, he would very methodically take it off the hook and toss it back into the river. Each time he would catch a small fish, he would take it from the hook and carefully place it inside his fishing basket, mak­ing sure to close the lid each time.

After several hours of watching the old man fish, the boy’s curiosity got the best of him. He walked out on the bridge and told the old fisher­man what he’d observed. “Why,” he asked, “do you keep all the small fish and throw the big ones back into the river?” The old man looked at the boy, slightly amused and smiling, then answered, “Because I only have a seven-inch frying pan. The bigger fish won’t fit in my pan.” The old fish­erman had already determined ahead of time what worked best for him. Now he was merely working his proven plan.
Most beginning investors would be much better off using a single-size pan to begin with—in other words, specialize. Nothing fits seven-inch pans better than seven-inch trout. Once you become famous for your seven-inch trout dinners and understand exactly how to make money serving them, only then would I recommend getting another fry­ing pan. It’s far more rewarding and profitable to be good at doing one thing very well than to be just mediocre trying to be good at everything. Besides, it’s a lot easier to learn just one thing at a time. Your life will be much less complicated, believe me.
If, by now, you get the feeling I want you to specialize in the early stages of your investment career, then give yourself an “A” for perception. You may also move up to the front of my investor training class. Who knows? With any luck at all, you might even become the teacher’s pet someday.
The Best Odds for Your Success
William Nickerson, author and rehab millionaire, began fixing rental houses over 50 years ago. Bill quite accurately concludes in his best-sell­ing book, How I Turned $1,000 into Five Million in Real Estate in My Spare Time (revised, New York: Simon and Schuster, 1980), “The chances for success are 1,600 times better owning and operating rental properties than for starting another type of business.” If you need more convincing, I suggest you write to Bank of America Business Services Dept. or Dun & Bradstreet Credit Rating Service, Inc. The information they provide about starting other businesses and the odds of success are quite gloomy by comparison.
Must-Do’s That Will Speed Up Your Success

1. Develop a total investment plan from start to finish. I recommend specializing to begin. Say you plan to buy four rental fix-up proper­ties each year for five years. Each one must produce a cash flow of $100 per month. That’s a reasonable plan.

2. Learn your local market. Know what properties should cost and what they can reasonably sell for. Learn how much rent you can get. Do this step before you buy, not afterward.

3. Develop a business sense. Think like a retailer. That will help you to pay wholesale prices when you buy. Buying at retail prices and sell­ing for retail prices simply won’t work.

4. Learn to identify hidden bargains quickly, then act fast to acquire them. Remember: competition is keen. You must develop a sixth sense for sniffing out hidden money makers. Become a house detective.

5. Learn landlording, firsthand, from doing it. Manage your own cus­tomers (tenants). Many inexperienced investors farm this function out to professional property managers. I consider this a serious mis­take for new investors. Maybe it’s OK later on, but owners should first know the job inside and out.

6. Invest, don’t speculate. Investing is a plan to make money. You must be able to identify exactly how you will do it. That’s why step 1 is necessary. Spectators are guessing without a plan.

7. Establish local trade accounts. Most building supply stores will give you 10% discounts. It’s not automatic; you must ask for the dis­counts. Besides saving money, you build a solid credit history. Another benefit is you don’t need to always have a pocket full of money. Paying monthly statements is better for bookkeeping.

8. Learn to live on tax-free or tax-sheltered income. Rents you collect are normally tax-sheltered. Rehab loans, like Title One loans, are tax-free, the same as borrowing on equity or refinancing. When you collect $100 rent, you get to keep $100. When you earn $100 in wages, you keep only $60. Taxes eat up the rest.

9. Learn how to do deals where you have as close to 100% control as possible. Basically, this means owner financing and doing the man­agement yourself. Avoid short payback notes and variable-rate mortgages offered by institutional lenders. 10. Once you’ve developed a plan that works well and consistently makes money for you, stick with it until it stops working. Most investors suf­fer from a common weakness—they are suckers for a better mouse­trap. Avoid the “too good to be true” temptation—it generally is.

 

Throughout this chapter, I’ve told you about many things that will help get you started purchasing and fixing up property. Getting started, specializing in fixer-uppers, developing and acting on a financial plan— these things are necessary for becoming a successful fix-up specialist. That’s what I recommend for you, at least in the initial years of your investing. Later on, you’ll have many more options—but never forget that monthly net income is what you want first. With it, you’ll continue to grow and become successful. Without it, you won’t. It’s as simple as that.

To be continued . . .

Fixer-Uppers part 5

Tags: Fixer-Uppers, real estate, real estate book
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