All Forum Posts by: Jay DeCima

David

I have pretty much been teaching this to my students for the last 35 years.  Look for them in older parts of town, not slums or suburbs.  Note banks will not finance ugly properties over 4 units, therefore 85% of the time the investor that is selling will take back the financing.

Multiple oddball configurations are the kind of properties that I preach about because they offer a wide range of opportunities. These are mostly older non-conforming type real estate. For example; "cluster houses" like my Haywood and Cherry Creek properties. I call them "challenged properties", meaning most investors don't want to touch them. I own many properties with various building combinations such as a three-unit apartment building, surrounded by 4 cottages and a duplex. My Oregon Street property was an older 4 bedroom family house and a large 2-story duplex with a garage. The property was easy to convert to 5 rental units by making the garage into a 1 bedroom apartment and splitting off a bedroom and bath ­from the 4-bedroom house. A rear door entrance made the house conversion fairly inexpensive and of course created 5 separate rental units and of course more income.

Obviously, my basic idea was to purchase three rental units at the regular 3-unit price, knowing all along I would be able to modify them and quickly start earning 5 units worth of income. Oregon Street was an extra special money-maker because the property was rundown and rents were abnormally low when I acquired it. With the conversion to 5 units plus my fix-up work, I was able to increase rents from $1000 monthly to $1900. The total job took me just over a year to complete. A short time later I sold the property for more than double the price I had paid.

From an income standpoint, which I care most about; oddball units command the same rents as newer apartments, sometimes more because they generally offer more privacy. Another very important common attraction is that older challenged units have long been paid for! They have no bank mortgage to mess with. More often than not owners can finance the sale. That means no credit applications, tax forms, loan fees, appraisals and variable rate bank loans. In summary, lower purchase prices, less competition and long-term owner financing are commonplace with these types of properties. If cash flow turns you on, my advice is start looking for my kind of "challenged" properties today.

Alfredo

I posted the following on a forum last week. Hope you can use it. I have done this for 40+ years and 200+ rental homes in Northern CA.

Post:

Let me make a slight change in what you are looking at that can have a huge effect on your investing. Instead of a 4-plex, start thinking just a little differently.

My biggest success over the years came from buying GROUPS (5-8 houses) of older homes on a single parcel, in older, blue collar parts of town (not slums). Because banks will not finance these types of properties, 90% of the time I got seller financing (on over 250+ rental homes I had at my high point). The seller knew he/she would be taking back the financing. I did not have to talk them into it. My down payments usually were around 10%.

On many of these notes (money I owed previous seller), I bought back that note at a discount. This strategy is worth big bucks when you do it right. I purchased a $77,000 note (that I owed) for $41,500 just 31/2 years after I signed it. You’ll never get this opportunity dealing with banks.

I suggest you read up on a few kinds of investing you are interested in and then pick the one you think would be the best for you, and one that will not require a boatload of cash to start. Then find the best mentor or expert you can in that kind of investing. Learn from that person and stay focused on their kind of investing. Find some of these mentors on a Google. See how many pages of results pop of for them.

Good luck.

Fixer Jay DeCima

Forrest

I like your "smaller towns" ideas.....keep going.

I posted the following on a forum yesterday. Hope you can use it. I have done this for 40+ years and 200+ homes

Post:

Let me make a slight change in what you are looking at that can have a huge effect on your investing. Instead of a 4-plex, start thinking just a little differently.

My biggest success over the years came from buying GROUPS (5-8 houses) of older homes on a single parcel, in older, blue collar parts of town (not slums). Because banks will not finance these types of properties, 90% of the time I got seller financing (on over 250+ rental homes I had at my high point). The seller knew he/she would be taking back the financing. I did not have to talk them into it. My down payments usually were around 10%.

On many of these notes (money I owed previous seller), I bought back that note at a discount. This strategy is worth big bucks when you do it right. I purchased a $77,000 note (that I owed) for $41,500 just 31/2 years after I signed it. You’ll never get this opportunity dealing with banks.

I suggest you read up on a few kinds of investing you are interested in and then pick the one you think would be the best for you, and one that will not require a boatload of cash to start. Then find the best mentor or expert you can in that kind of investing. Learn from that person and stay focused on their kind of investing. Find some of these mentors on a Google. See how many pages of results pop of for them.

Good luck.

Fixer Jay DeCima

Gary

With 40+ years and 200+ rental houses in Northern California (mostly buy and hold) let me share a few ideas.  

Here is something I sent to one of my students a few years back:

Every so often I like to mosey in to a motel and listen to those free 90- minute “Get Rich with Real Estate” pitches being offered by several so-called national education groups. A full page advertisement in the Sacramento newspaper said the founder had accepted a challenge to create 1000 new millionaires in the next twelve (12) months. The paper said you could do this with no money down, no experience and even if you had lousy credit. I fully expected my tenants might show up since most of them fit this description.

The seminar leader apparently had not read the full page million dollar challenge ad because he started right out telling all of us how we could earn three million dollars in the next 12 months. Naturally we’d need some specialized training, he said – then the lights went dim. Suddenly, by remote control, appeared giant color slides showing the state capital building and the projected housing appreciation numbers for the entire Sacramento area. 

Being a fast learner, 15 minutes was all the education I needed! I ducked out just before the slide show started up again. I have never figured out how those folks operate so fast – but before I could even drive back to my hometown, only 160 miles away – there was already three separate messages waiting on my answering machine. They all said about the same thing. I could still attend a $7500 specialized training camp in El Paso, Texas, for only $4900 full price. It occurred to me – why do I need to go to El Paso to learn about buying California real estate? Worse yet, what would my Governor think!

One of the most powerful pieces of advice I can give any investor in the early stages (that means starting out) is to, choose your teacher and/or mentor with the same due-diligence you would use in searching a heart surgeon for yourself or a family member. Folks often ask me — How can I find a good teacher when I’m just getting started? Exactly the same way you find a heart surgeon when you first start having chest pains. You start calling around, and you ask people. Make a list of the names you hear and keep cross-checking them with everyone you talk to. Certain names will begin to appear more often as you collect various opinions! You are searching for a teacher who invests in real estate – and is successful doing it. As one old man of Babylon instructed — If you would desire to know the truth about sheep, go directly to the herdsman. As for real estate investing, there can be no substitute for a successful investor teacher who does the same things he teaches.

Good luck.

Fixer Jay DeCima

Enrique

I posted the following on a forum yesterday. Hope you can use it. I have done this for 40+ years and 200+ homes

Post:

Let me make a slight change in what you are looking at that can have a huge effect on your investing. Instead of a 4-plex, start thinking just a little differently.

My biggest success over the years came from buying GROUPS (5-8 houses) of older homes on a single parcel, in older, blue collar parts of town (not slums). Because banks will not finance these types of properties, 90% of the time I got seller financing (on over 250+ rental homes I had at my high point). The seller knew he/she would be taking back the financing. I did not have to talk them into it. My down payments usually were around 10%.

On many of these notes (money I owed previous seller), I bought back that note at a discount. This strategy is worth big bucks when you do it right. I purchased a $77,000 note (that I owed) for $41,500 just 31/2 years after I signed it. You’ll never get this opportunity dealing with banks.

I suggest you read up on a few kinds of investing you are interested in and then pick the one you think would be the best for you, and one that will not require a boatload of cash to start. Then find the best mentor or expert you can in that kind of investing. Learn from that person and stay focused on their kind of investing. Find some of these mentors on a Google. See how many pages of results pop of for them.

Good luck.

Fixer Jay DeCima

Rod

I sent this note to one of my students:

KNOWLEDGE OVERCOMES MOST FEAR

“You might as well realize that the time for opportunity is past. There’s no longer any use trying to save for investing. The best you can hope for is to keep a steady job and stay off welfare. Nobody will ever again be able to build an estate big enough to produce an independent income". 

Those are the words from a senior economics pro­fessor at a prestigious California university. In a moment I’ll tell you the rest of the story, but first let me stress how important it is to choose who you listen to. You can learn the most from positive people.

The world is full of “Chicken Littles” who are always telling whoever will listen that the sky will surely fall by a particular date that they pick. I’ve yet to see even a small piece of blue sky lying on the ground. I’ve even quit wearing my hard hat, except on those rare occasions I visit a tenant to pick up a late rent payment.

“Real estate cycles create winners and losers alike.“

Real estate cycles, both up and down, are nothing new. Every investor who has been successful enough to stay in business for a while has experienced them. Real estate cycles create winners and losers alike. The secret to survival is learning how to surf or stay afloat. If you’ve ever watched surfers you can’t help notice how they roll with the waves. Good surfers are not toppled by even the most treacherous waves. They even look forward to experiencing the thrill of meeting them head-on.

Real estate investors can prepare them­selves for treacherous times just like surfers. They can do this with new experiences and by continuing their education. When you are knowledgeable about what you’re doing and have the confidence that comes with that knowledge, doom and gloom predictors will have very little effect on your investment strategy.

As to the economics professor and his gloomy forecast about future opportunities, let me just say that he’s the kind of educator who can keep an entire graduating class working their buns off at Burger King.

Good luck.

Fixer Jay DeCima

Rashad

I posted this to a newbie recently:

After 40+ years and 200+ of my own rental homes in Northern California, and teaching on this subject for 30+ years here are some things I did and recommend:

1. I buy groups of older houses on a single parcel. Maybe 5-12 small homes, duplexes, etc on a single lot. It would have taken me lots of time if I bought my 200+ homes, one at a time. Because the banks won't finance them, 80-90% of my buys are with seller financing and average down of 10% (about the amount of cash you would put down on a single family home).

Here is a sketch of what I do:

2. I do not recommend going out of state, especially IF YOU ARE A NEWBIE. You give up almost all your control. I like to control all aspects of MY business.

3. I like all kinds of real estate and have bought most kinds, like flips, wholesale, etc. I bought different kinds at different times in my career. But keep in mind that flipping and wholesaling are jobs. You are buying and marking up and reselling things like a retail store would. You pay ordinary income taxes, get really no tax benefits, pay social security tax and have to start over again after you sell.

4. I teach my students to EXPAND THEIR VISIONS FOR PROFITS.....like the following:

One question that I’m asked constantly: “Where can we find the kind of properties you talk about?”

The most common alibi I hear is, “There’s no property in my home town like the ones you write about.” With very few exceptions, I must disagree. The proper­ties are there! You simply haven’t found them yet. There are several different reasons why you haven’t, however, I’ve found most folks simply haven’t been looking for them.

Most investors I know tend to do the traditional kind of prop­erty searching. If they decide to be apartment owners, they look mostly at tradition apartment buildings. Single house investors generally drive through the ‘burbs’ in search of prey. Hardly anyone is goofy enough to buy 5 house on one lot or an old motor lodge. I’m going to suggest that you broaden your vision a bit. After all, non-traditional properties can be lots more fun-as well as more profitable.

First of all, don’t panic. My kind of properties are almost always avail­able; you just haven’t found them yet. Finding the right properties,meaning the kind that will produce monthly cash flow and long-term profits, is one of the most important skills you must develop to enjoy any success in this business.

You must always keep in mind that finding profitable deals is our goal, not just finding lots of deals!

Good luck.

Fixer Jay DeCima

Jay

Eric

THE TIMING IS PERFECT TODAY

If the train left the depot without you before, this is your time and opportunity to catch up! You can now buy properties with seller financing and cash flow that make sense. For many, it’s a second chance to buy real estate that can lead to financial freedom. Today, you can often start with cash flow, build a second income and even switch to full-time real estate investing. It’s truly the perfect real estate investor storm. The opportunity is right now! It’s time to learn the basics and get started without delay!

Rents are actually increasing as more homeowners lose their houses and are forced into renting. Income property prices have shrunk to 20 year lows, just like houses, however, the financing for older rental units that I mostly recommend, can now be negotiated between the buyers and sellers. In other words, we’re once again back toseller financing where cash flow can be automatically structured in the deal. No longer are small-time investors stuck with what the bank says.

Right now is a perfect time to consider income-producing properties! Done correctly, these properties offer fail-proof investing – plus the income (rents) is indexed to regular living costs, which provides protection against inflation. For W-2 wage earners attempting to save money for retirement, acquiring small apartments offers the perfect business opportunity.

Good luck.

Fixer Jay DeCima

Faisal

I LOVE BEING MY OWN BOSS

Many years ago I quit my 23 year telephone job. At first, I was afraid I might starve to death, but I didn’t. I was constantly worried about losing my company paid health insurance, but soon I was earning enough money to buy my own. I think the fear of losing a steady (every two weeks) paycheck bothered me the most. Those fears all disappeared when I sold my first fixed-up investment property for a bigger profit than two years’ worth of tele­phone paychecks put together!

Looking back now, I can honestly tell you the fear of change will be your biggest obstacle. It’s the uncertainty of what will happen next! Obviously, no one gets any guarantees. However, I can tell you from experience, most fears are easy to overcome with knowledge. As you de­velop your personal skills, confidence gradually pushes your fears behind you. Of course, that’s hindsight, No one told me that when I first started out.

Besides the money, being your own boss gives you many other choices. The first choice I often call “The Ultimate Freedom.” There’s no more dreading Monday mornings or driving the crowded freeways before its even daylight. Hassles with the boss about being “passed over” for promotions, "piddley" cost of living raises and boring job assignments are all memories of the past. Believe me, no one ever invented a better way to earn a living and have so much personal freedom doing it.

Good luck.

Fixer Jay DeCima

Nathan

I wrote this for one of my students.

8 RULES OF CAREER CHANGERS

1. Learn your local market. Know what properties should cost and what they can reasonably sell for. Learn how much rent you can get. Do these steps before you buy, not afterwards.
2. Learn to spot or 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.
3. Develop a business sense…think like a retailer. This will help you to pay wholesale prices when you buy. Buying at retail prices and selling for retail prices simply won’t work. Don’t do it!
4. 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 one is necessary. Specu­lators are guessing without a plan.
5. Learn how-to do deals where you have 100 per­cent control or nearly so. Basically, this means owner financing with you doing the management. Avoid short payback notes and variable rate mortgages offered by the institutional lenders.6
6. Learn how to live on tax-free or tax-sheltered income. Rents you collect are normally tax sheltered. Rehab loans, like Title Ones, are tax-free 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 $70. Taxes eat up the money you can easily keep to benefit yourself.
7. Learn landlording first hand 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 okay later on, but owners should know the job inside and out first.
8. Once you have developed a plan that works well and consistently makes you money, stick with it until it quits working. Most investors suffer this common weakness. We’re all suckers for a better mousetrap. Avoid the “too good to be true” temptation-it generally is.

Good luck.

Fixer Jay DeCima