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Living the Dream Fixerjay

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Page 1: Living the Dream Fixerjay
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Opinions and recommendations given in this book are based on the author’s actual experiences

and on research believed to be reliable. It should be noted that investments described in this

book have been chosen to demonstrate a given point.

This book is sold with the understanding that the publisher and author are not engaged in

providing legal, accounting or other professional services. If legal advice or other expert

assistance is required, the reader should seek competent professionals in those fields. If you do

not wish to be bound by this statement, you may return this book to the publisher in good

condition for a full refund.

Published and Distributed by:

KJAY Publishing Co.

P.O. Box 491779

Redding, CA 96049-1779

www.fixerjay.com

1-800-722-2550

COPYRIGHT by KJAY Publishing Co.

First Publishing 2013

All rights reserved. No part of this book may be reproduced in any form, by any means, without

written permission from the author, except when used in advertisements for this book or other

written material by this author. Manufactured and printed in the United States of America.

Library of Congress Catalog Card Number

ISBN 0-9621023- 4-2

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PRODUCT 8210

CONTENTS

-WHO IS FIXER JAY

-WARNING TO READERS

CHAPTER PAGE NO.

1 Become the First Millionaire on

Your Block 1

2 Seller Financing – Investor 11

3 The Power of Leverage

And Compounding 17

4 The Best Stay At Home

Business Opportunity 21

5 Your First Gold Mine Opportunity 28

6 Financing and Control 37

7 Rent to Value Ratio 42

8 Dreams Can Come True At Any Age 50

9 The Right Vehicle – 5 Units or More 53

10 Investing With a Different Twist 61

11 Answers to Most Common

Questions 69

12 Dream a Little Playing What-If 73

The Ball’s In Your Court – It’s

Up To You 79

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WHO IS FIXER JAY?

Jay P. DeCima (“Fixer Jay”) is a seasoned investor/landlord and a national best-

selling real estate author. Over the past 30 years, Jay’s popular books and

“Investor Training Seminars” have helped thousands of small-time investors

create second incomes and launch “full-time” investment careers.

Jay’s unique investment strategies are ideally suited for small-time, “Mom and

Pop” investors who most often have very little money to start with! By developing

their personal skills and learning the right kind of income-producing properties

to acquire, Jay’s students are soon competing with their wealthier competition!

Today, Jay spends his time managing and overseeing his investment properties and

teaching others who wish to learn more about building their personal real estate

wealth! Jay’s current hobbies are visiting Civil War battlefields, cruising on the

high seas and writing more books about his life-long passion, building real estate

wealth starting from scratch!

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WARNING TO READERS

If you happen to be an “eager beaver” or wanta-bee investor searching for the best

way to invest in real estate – and you also have a very limited start-out budget,

which includes almost all regular working folks – this book might read like a

miracle from heaven – or, your constant reminder how close you came to the gold

mine – but walked away!

First, I’d like to show you how one small six unit investment property can literally

make you a millionaire landlord! Then I will tell you about my personal

investment plan that can help you become totally financially independent within a

very reasonable period of time. I intend to let you in on a variety of money-

making opportunities that can ultimately put you and your family on “Easy

Street”.

I call my plan “INVESTING WITH A DIFFERENT TWIST”, and although it’s

not really new or original – I often describe it as a revised version of an older

model with a brand new “hi tech” carburetor. Best of all, my plan works extremely

well for both part-time investors and career changers alike! I’ll show you how to

maximize your monthly income in the shortest amount of time, build yourself a

million dollar investment portfolio and retire like a king!

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There is however an unfortunate downside for looky-loo’s and dreamers. It comes

from learning about this lucrative profit-making opportunity I’ll be sharing –

and then doing absolutely nothing about it! Failure to take action can have a

devastating effect on your financial aspirations for many years to come, therefore;

please be advised – reading any further shall be at your own risk!

FIXER JAY

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Chapter 1 BECOME THE

FIRST MILLIONAIRE

ON YOUR BLOCK

Folks who’ve read my books, newsletters or attended my Investor Training

Seminars already know something about my background and experiences as an

investor. I’m pretty much a two career guy who worked more than 20 years for the

phone company, then spent the rest of my life up till now as a full-time investor. I

began investing in real estate while still in my 20’s – and basically “moonlighted”,

fixing up junky houses nights and weekends while splicing telephone wires during

my day job.

After 50 years investing, a good number of successful “money-making strategies”

have rubbed off – and without trying to toot my own horn too loudly, they’ve made

me financially independent. That said, there’s one strategy in particular I want you

to know about! Pay close attention here because what I’m about to show you is the

best one I’ve ever found for regular everyday investors without a suitcase full of

money to start with. I will promise you this much – if you’ll take what I tell you

seriously and learn the ropes, financial independence can be yours as well!

It took me 20 long years of my investing life to make the switch over to properties

like Cherry Street, and during most of that period, my bank hovered around

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“almost empty”! All the while, I desperately tried to make my single family houses

cash flow! Suddenly one day I finally figured out that highly leveraged houses

with big mortgage payments take way too many years before there’s hardly a whiff

of cash flow! Friends, Cherry Street is 100 times better, and I’m about to show

ya why!

MY MILLION DOLLAR VEHICLE

Cherry Street (not real name) was not any different than hundreds of other small

multi-unit rental properties you’ll find in almost every decent size town or city in

my state (California). In fact, you can find Cherry Street properties in just about

every state in towns or communities with populations of 4500 or more. Many

newbie’s, or start-out investors claim they have great difficulty finding these small

multi-unit properties – however; I’ve found the main reason is because their sights

are generally set on finding single family bargains rather than small multiple unit

properties like Cherry Street. If your goals as an investors are anything like mine –

that is, you’d like to “speed up” your cash flow earnings and start making profits

in a much shorter period of time – pay very close attention to what I’m about to tell

you next. It’s what I call my millionaire strategy for Mom & Pop investors!

CHERRY STREET – MILLIONAIRE MAKER

My first real up close look at six older houses all snuggled together on an oversized

city lot with a skinny dirt driveway running down through the middle sorta

reminded me of an old Norman Rockwell painting with the paint all smeared

together! About sixty years old I’m guessing – each house had two small

bedrooms and a single bath! They were pretty much typical of the smaller homes

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built during the late ‘50’s and early ‘60’s. Small “cottage style” houses like Cherry

Street, are an excellent find for investors like myself because they are extremely

easy to rent – and they’re affordable for most of my customers (tenants).

Purchased at the right price, I can easily afford to spend a few bucks to spiffy ‘em

up, making them very attractive for my rental customers! Best of all, I can still

make a decent profit for myself.

Before moving on, I want you to underline those last two sentences and never-ever

forget them! They contain 38 words that are the essence of making a million

dollars in the income property business. Let me say this one more time so it’s

perfectly clear! Investors who are willing to step outside the box - learn a few new

investment skills, can acquire these properties – rent them at affordable rates and

earn very respectable profits while the tenants are paying off the mortgages and all

the expenses along the way.

When you compare my results to investing in single family homes or flipping

properties, you’ll be absolutely amazed at my huge profit advantage. Naturally,

you must keep the properties and manage them, but in the end they’ll make you a

wealthy investor. If becoming a financially self-made millionaire is your goal –

stay tuned! I’ll show you exactly how it’s done. Take a close look at my Cherry

Street property showing the actual dollar numbers my six little houses produced! I

think you’ll be thoroughly convinced that my multiple unit strategy is the best

game in town! Before I show you Cherry Street, let me make something clear – I

love all income-producing real estate, including single rental houses. However,

it’s the order of buying where I’m different than most other teachers.

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I believe small-time beginners need to develop dependable cash flow or monthly

income first! Cash flow is what keeps the doors open! Once you have money

coming in every month that you can count on - then buying good solid break-even

houses is just fine! To accomplish this goal – buy Cherry Street properties first

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Purchased Many Years Ago

With The

Following Terms:

Purchase Price: $145,000

Down Payment 20,000

Seller Carryback 125,000

Terms: 15 Years – Seller Financing

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CHERRY STREET HOUSES

I operated the property for 26 years, then –

I sold with the following terms:

Selling Price $650,000

Down Payment Received 50,000

I Carried Back A Note 600,000

For 20 Years with the

Following Terms:

Payments to Jay $3250 per Month

Interest Only 6.5% with Principal

of $600,000 – All Due In 20 Years.

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TOTAL OF ALL MONIES RECEIVED

BY JAY

Total Rents Received $999,010

Down Payment from Sale 50,000

Interest Income Seller Financing 780,000

Jay’s Note Principal Payment 600,000

(End of 20 Years)

TOTALS – START TO FINISH $2,429,010

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FINANCIAL RESULTS – BENEFITS

Jay Earned Back His Initial Investment

Down Payment of $20,000 --- 121 Times

For Every Year Jay Owned – And Financed

The Property – Cherry Street Provided

An Average Annual Income of $53,000

Average Rents During Jay’s Ownership

Less Than $550 per Month per House

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Pretty impressive earnings – wouldn’t ya say? Some may argue that $2,429,010 is

indeed a lot of money, but its gross earnings! Fair enough - it is gross, and I paid

mortgage payments as well as normal expenses along the way while I operated the

property. Still, $2,429,010 far exceeds all the money I ever spent on Cherry Street.

You also need to understand this – before I reached my seventh year of operation, I

had all my fix-up expenses, plus my down payment money back in my pocket! In

other words; I had none of my own money left in the deal – and here’s the

beauty. From the seventh year until I sold Cherry Street, my tenants paid for

everything! They paid all my expenses – plus every single mortgage payment till

they were all gone!

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REASONS TO CONSIDER INVESTING IN

MULTI-UNIT PROPERTIES

1. Investment not affected by an up & down economy – or recession.

2. Not dependent on bank financing.

3. Much easier to create your own employment.

4. Monthly income indexed to inflation.

5. Keep your money – no FUTA, FICA, state withholding.

6. Ideal family business – generous write-offs.

7. Easy to expand in any economy.

8. Many “high Profit” related benefits.

9. Rapid wealth builder for net worth.

10. Guaranteed retirement income.

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Chapter 2

SELLER FINANCING

INVESTORS MUST

LEARN HOW

During my book tours, almost everyone who saw my Cherry Street slides were

absolutely “blown away” by the impressive dollar numbers generated

by the property! Remember, the numbers are gross earnings – not net, and of

course, I did have mortgage payments and expenses. Still, as you probably have

already guessed, there was plenty left over for me!

McGraw Hill, my giant New York publisher called me several times during their

review of my manuscript! At first, they told me their real estate staff didn’t believe

I could negotiate seller financing in an age when real estate mortgages were at their

lowest rate in 60 years. One expert (so he calls himself), told me that seller

financing only happens when banks charge high interest rates for mortgages or

when they stop lending altogether like during the Jimmy Carter years.

I invited my personal editor to fly out to California and review my closing files

since I’ve kept them all from day one. After I told the crew at McGraw Hill that

not only was Cherry Street financed by the seller, but also more than 80% of all my

deals are financed by sellers – plus, I can prove it! That really snookered ‘em!

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Apparently they didn’t know what else to say, so they just quit calling. Needless to

say, they didn’t bother flying out to visit me either. In all fairness, I did convince

them that properties like Cherry Street with more than five rental units on a single

lot are considered commercial mortgages at the bank – and for older properties like

Cherry Street; new mortgages are pretty much out of the question!

YOU MUST HELP YOUR AGENT

HELP YOU

Negotiating seller financing and convincing reluctant real estate agents to help you

is something all successful investors must learn how to do! Buyers need to

personally talk with sellers, look them straight in the eye and negotiate seller

financing. This idea pretty much flies in the face of real estate agent training 101!

Agents are taught that principals should always be kept separated – much like bulls

from the heifers! No seller, including me; is likely to ever carry long-term

financing for a buyer unless they can meet him or her personally and judge for

themselves whether they seem like a reasonable risk! Underline this next sentence,

its important! Real estate is always about people and their needs! You need to

meet ‘em to find out what those needs are!

Because seller financing is one of the most valuable benefits to my investing

strategy – my home study course, “EARN $100,000 ANNUALLY WITH SMALL

INCOME PROPERTIES”, dedicates several chapters and CD lessons to the

subject. Seller financing is a big money-maker when you’re the buyer – and

again, when it’s time to sell as you’ve already observed with Cherry Street. Since

wrap-around financing is also very important, and is always recommended, when

you are selling a property with existing mortgage debt, my study course will teach

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you how to write up or draft the mortgage contract. I’ll also tell you how to avoid

a huge tax bill when you decide to sell a property with existing mortgage debt.

This one lesson is worth the price of my entire course many times over!

MORE INCOME IS ALWAYS BEST

Properties like Cherry Street are not the best real estate investment because I say

so! They’re best because they have more benefits that can make you richer – and,

they can do it a whole lot faster than most other investments can!

A bit later, I intend to show how six (6) small properties like Cherry Street can

provide you lifetime security, financial independence and a worry-free retirement

far superior than Social Security. If you happen to be a two career person like me

– take ‘em both! If you’re fairly young, Cherry Street might just be all that’s left –

don’t worry, earning $100,000 a year should keep you outta the poor house –

more about this later.

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In my slide presentations, I show an example of a medium priced single family

house in my town that rents for $1100 per month. As an investor – or non-

occupying owner, it will cost me 20% for the down payment. The balance (80%)

can be financed with a traditional investor mortgage. In this particular case, the

asking price was $149,000 for the 3 bedroom house, so I felt pretty good when my

offer of $125,000 was accepted! Here are the purchase numbers:

Purchase Price $125,000

Down Payment 25,000

Bank Mortgage 100,000

Terms: 6.25% amortized

30 years - payments: $ 615.72

Estimated operating expenses

(35%) of income: 385.00

CASH FLOW: $ 99.28

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MORE INCOME IS ALWAYS BETTER

A small six unit property that looks trashy and rundown with deferred

maintenance, as they call it, would likely sell in my town for around $300,000.

Depending on the seller’s motivation, a $25,000 cash down payment would

probably be enough to purchase the property I’ve just described. Over the years,

my average down payments to acquire these small multiple unit properties has

been about 10%, depending on how the property looks.

CASTING A WIDER INCOME NET

Let’s assume my out of pocket cost or the down payment is $25,000 (same as the

house purchase), but for six units instead! Obviously, there’s no difference there!

However, there’s a huge difference in the income these properties produce! The

house earns $1100 per month or $13,200 annually, while each of the six multiple

units bring in $625 per month or $45,000 annually. That’s almost 3 ½ times more

income for the six units with exactly the same amount invested. My return on the

investment (ROI) jumps from 53% for the house to 180% for the multi-unit

property! Leveraging down payment dollars is truly like leaping tall buildings in a

single bound! Remember Superman?

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Important Reasons to Invest In

Income-Producing Real Estate

1. Investing the way I teach is guaranteed employment for your family if they

wish. And most important of all – you become your new boss – and kiss your old

boss goodbye.

2. Investing the way I teach works the same in a good economy – or bad! It

don’t run hot and cold because shelter is needed by all of us. When you acquire

affordable rental houses as I suggest – you’ll be setting up a guaranteed income for

life.

3. One of the best features of becoming a house provider is you can earn while

you learn. Investing is about learning new skills. Beginners are wise to learn a

few basics before buying their first investment property. Be extra careful about

who you select as a teacher. My advice – check ‘em good.

4. You do not need to be a genius or have a college degree! High school drop-outs

can succeed same as anyone else who has discipline, determination and willingness

to learn.

5. This business can set you up for life! It can provide a sizable monthly income

of your choosing – build a large net worth for you and your family – and a very

comfortable retirement you can depend on. Financial freedom will be the

reward for your efforts.

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Chapter 3

THE POWER OF

LEVERAGE AND

COMPOUNDING

Leverage and its twin sister compounding are two of the most powerful tools in

your investor’s financial kit. You must learn to use them safely! Please underline

safely because leverage can destroy your dreams of riches and security almost as

quickly as it can create them! Just be aware, it’s a double edge sword that can cut

both ways! Safe leverage will make you richer and a whole lot faster – let me

explain how!

Referring back to the example of six rental units purchased for $300,000 with a

$25,000 cash down payment – I want you to understand why leverage is such a

powerful wealth builder. Since the entire property cost $300,000, that means the

price for each rental unit would be $50,000 ($300,000 divided by 6 units =

$50,000). But because we are paying only $25,000 down, we are actually

investing just $4167 for each of the six units. That’s only about 08% of the total

cost – but here’s what’s really exciting! We get to collect and keep 100% of all the

rent money each unit generates because we were smart enough to be the owner.

From an earnings standpoint, our $4167 investment will generate $7500 in income

during our first year of ownership! Think about that for a moment! How much do

you think you might have earned if your $4167 was in some bank account! If you

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earned 10%, that would only be $417! This is how super leverage can speed up

your wealth plans if you’ll invest your limited funds wisely.

THE MAGIC OF COMPOUNDING

Albert Einstein is reported to have said: “Compounding is the most powerful force

in the universe”! Let me explain my version of what Einstein is talking about.

Say for example; you decided to invest $1000 per month into real estate trust deeds

that will pay you 12% annual compounding interest. It might be your personal

savings account or retirement plan, but you must promise me you’ll leave the

money alone for 20 years. In other words, you can’t withdraw or borrow any

money from the account until after you’ve been investing for 20 full years. That’s

my only rule! Now fast forward to 20 years from now!

Can you make a guess how much money you’ll have in your account after

investing $1000 a month for 20 years? Would you ever guess you’d be a

millionaire? If you did, you’d be pretty close – you’d have $989,255 in your bank

account!

WOW – that’s a lot of money. I’m churning the numbers around in my head, but

I’m coming up way-way short! When I multiply $1000 per month times 240

month (20 years), it only comes to $240,000! That’s absolutely correct, but what

you forgot to plug in is the 12% compound interest earnings over 20 years. That

number, my friend, is $749,255! Altogether you’ll have $989,255.

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Okay, I can hear ya thinkin’ out loud --- All this sounds like peaches and cream,

but where does Jay think we’re supposed to find a $1000 every month to invest?

Well – no one said this was easy. Still, lots of folks spend that much money on car

payments, TV’s and new iPhones! Eventually if you follow my investment

strategy, buying small multiple unit properties, you’ll create the extra income outta

thin air – keep reading, I’ll show you how!

SELF-HELP AND SWEAT EQUITY

Earlier I told you why I was able to purchase a six unit income property in my

town for $300,000 with only $25,000 down! Do you recall what I said about the

property when I described its condition or how it looked? Almost all of us judge

value based on the looks. Bad looks will greatly reduce the competition for these

properties. Bad looks and ugliness also tend to lower the seller’s expectations - or

his asking price. When you’re the buyer – this is exactly what you want. This is

the situation where you make your biggest profits! Here’s what I told you earlier!

A small six unit property that looks trashy and rundown with deferred maintenance

would likely sell for $300,000 in my town. Of course, that’s why the rents were

only $625, even though comparable units in the neighborhood were renting for

$795. Why the difference in the rents, you ask? Tenants won’t pay top rents for

trashy and rundown units! Paint ‘em, clean ‘em up and plant nice green lawns

with flowers and in a couple years or so, you’ll be able to get $795, just like the

nicer units. By the way, this is where you’ll find that extra $1000 a month you

need for investing in trust deeds. The difference between $625 rents and $795

equals $170 per unit. Multiply that times six rents and presto - you’ll have your

thousand bucks.

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THE BEST I CAN OFFER YOU

Earlier I told you I love all kinds of residential real estate investing from one room

shanties to larger apartment buildings, but they all have their positive advantages,

as well as their negatives. Since I’ve done ‘em all; I feel more than qualified to

present you with what I consider the very best of the best for ordinary working

folks who’ve been bitten by the investment bug! People I often refer to as “Mom

and Pop” investors, much like myself when I first started. As a group, we’re very

energetic working folks with a common desire to improve our financial lot! It’s

also quite likely that we don’t have a great deal of money to start with!

If my description fits you like it did me 50 years ago – you need to keep right on

reading because I intend to let you in on a very special investment plan with more

than enough income and profits to change your life forever – even the lives of

your family if you choose. The beauty of my plan is that it works for part-time

investors and full-timers alike! It’s also perfect for career changers, family

business ventures and small informal partnerships. The nuts and bolts of my plan

are covered from A to Z in comprehensive detail in my home study course:

“EARN $100,000 ANNUALLY WITH SMALL INCOME PROPERTIES”.

However, allow me to share some of the major benefits to show you exactly what I

mean! Perhaps best of all, you won’t need a Master’s degree to be successful! Of

course you will need some education – but that’s where my study course will come

to your rescue!

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Chapter 4

THE BEST STAY

AT HOME BUSINESS

OPPORTUNITY I KNOW

Before I let you in on my wealth builder plan, which can greatly improve your

financial security – I first want you to think long and hard about your future. If

you’re young – what are your future job prospects? If you’re older, what about

your retirement or your standard of living later on? If you’re somewhere in

between – do you need more income now? Do you need a financial backup plan?

Almost everyone fits in here somewhere, I’m sure! Assuming you do – then here’s

the deal? If you are truly sold on the idea of owning income-producing real estate

– and you wish to take full advantage of the extremely lucrative benefits it can

provide for you – just keep reading! I’m about to show you how you can

accomplish the task. Also, I want you to know you can do this a lot quicker than

you might think if you’ll attend my INVESTOR TRAINING SEMINAR or

educate yourself using my home study course to help you get started.

Many real estate book writers claim you need a special team of experts in order to

be a successful investor! That’s pure horse pucky! These so-called experts won’t

ever show up until after you’re already successful because you can’t afford to pay

‘em! There’s an old saying about banks and their lending policies – they’re willing

to loan you money when you don’t need it. The same thing is true about the

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experts. What you really need instead, is a good workable plan that you can adopt

and make it work all by yourself. That’s exactly the kind of plan I’ll be telling

you about.

CHERRY STREET REVISITED

Back on Page 7, I showed you the financial rewards associated with my long-term

ownership of six little houses on Cherry Street. Over the course of my ownership

and the seller financing profits when I sold the property – my average gross

earnings were approximately $53,000 per year – or about 121 times my initial

investment of $20,000. This happened because I employed the two most powerful

investor tools – leveraging and compounding! You’ve read how the magic of

compounding works on Page 17! Well, guess what – it works the same way for all

properties like Cherry Street! Talk about “hamburger helper”, you can’t leverage

anything and get better results. This is exactly what broke investors need to get

off the launching pad!

A little later on I’ll introduce you to my lifetime investment model. It consists of

six (6) separate properties containing 40 rental units. In my town, even with very

modest rents of $695 per month, you’ll gross $333,600 annually and keep more

than $100,000 for yourself. Right now however, allow me explain how you can

accomplish this task without a ton of money to start with!

YOU MUST SELECT THE RIGHT VEHICLE

You can’t drive up the side of a mountain in a regular passenger car, but it’s easy

as pie with a rugged four-wheel drive “off road” vehicle! Passenger cars are just

fine for highway driving, but they’re almost useless on the mountain side because

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they don’t have the right stuff! Investing is much the same way! You need the

right vehicle with the right stuff to earn the biggest paydays!

To begin with, let’s assume your plan – or goals are to earn $100,000 annually

and develop a cash flow stream quick as possible. I’ll assume, you’d like to

accomplish these things before you’re as old as the instructor. To make this

happen, you must first choose the right vehicle that can get you there! Buying

single family houses with 80% mortgages simply won’t cut the mustard! Why not

– you ask? It’s because mortgaged houses take too long! Remember, it took me

20 years to figure that out! (See Page 1)

Whether your plan is part-time investing or you’re hoping to make real estate

your new career – the vehicle should be the same! Why? Because I’ve yet to find

an investor who told me cash flow doesn’t matter! It always matters to me, so I’ll

just assume it matters to most other investors as well!

QUICKER CASH FLOW REDUCES RISK

The opportunity to acquire the type of property (right vehicle) that allows you to

quickly increase the income – as well as the property value, is very important to

any investor, both newbies and ol’ salts alike! The reason is --- Because it reduces

risk and eliminates the fear of going broke! This is particularly appealing to family

investment teams where everyone can feel much safer.

My example of a single family house with an 80% mortgage payment (Page 14)

clearly shows why you need a better vehicle if your goal is to earn any serious

money while you’re still a resident of this planet! You’ll note that my example

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shows cash flow less than $100 in the best case scenario! With a two month

vacancy, I’d be completely under water! I’ve been there, done that and believe me

– it sucks! It’s far better to pin your hopes and dreams on a plan that can produce a

lot more money – and much faster too! AGREED!

FINDING A DIAMOND IN THE ROUGH

Under-performing properties, they’re called! It means the property is trashy,

rundown and probably butt-ugly. The owner is likely to be a “milker”! Every

month he sucks all the money (rents) from the property and never spends one thin

dime to fix anything or even perform routine maintenance. As a result, the

property is caught in a downhill spiral, looking shabbier every month, and

attracting only marginal tenants who can’t pay regular market rents.

Finding the property I just described is like discovering gold in your backyard!

Obviously, you’ll need to beef up your skills to take advantage here, but assuming

you have my home study course; “Earn $100,000 Annually With Small Income

Properties”, you’ll have the proper guidance to keep you in the moving forward

mode!

HOW VALUE IS DETERMINED

Your first big profit opportunity could come rather quickly when you learn and

understand how property values are determined! With single family houses, it’s

pretty much cut ‘n dried! A licensed appraiser is summoned with his measuring

tape and “boiler plate” forms! He draws a few sketches and then searches through

the current records to find out what the same size houses in the neighborhood are

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selling for. He then basically copies those prices, jiggles the numbers a little – and

BINGO, there’s your appraised value! When the houses all look about the same,

with roughly the same measurements, it’s hard to get much of a price break when

you’re a house buyer. This is called comparable value or “comp’ing”.

MULTIPLE UNITS ARE MUCH DIFFERENT

During my 50 years investing, I’ve yet to see two income properties (the kind I

buy) that look very much alike! The kinds of properties I buy are actually called

income properties. Houses are not called income properties! This is a very

important distinction – and here’s why! Income property values are mostly

determined by the income they generate along with two other factors – the

condition of the property and its location!

I want you to underline what I’m about to tell you next! Under-market rents can

artificially lower an income property’s true value, but more importantly – it’s

selling price! This can create a super opportunity to buy properties at a substantial

discount for investors who have learned a few basic detective skills. Skilled

investors buy income properties for income! When the income is not up to par –

or it’s less than it could be; buyers will pay accordingly. Sellers (owners) who let

their properties run down and become ugly will always suffer at the sales table!

To repeat; multi-unit property values are primarily based on the following three

(3) items:

AMOUNT OF INCOME

LOCATION OF PROPERTY

CONDITION OF PROPERTY

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The two most commonly used methods to determine the value of income

properties are CAPITALIZATION and GROSS RENT MULTIPLIER.

Capitalization is the most precise or accurate measurement because it’s based on

net income, however; the gross rent multiplier is more widely used because it’s

an easier calculation, and it’s close enough to establish a reasonable “ballpark”

estimate of value. In my 50 year career, it’s about the only method I’ve ever used.

HOW TO HELP YOURSELF LEARN VALUES

You’ll find using the GROSS RENT MULTIPLIER method is easy as pie, but you

must first learn the rental rates (prices) in your buying area! You can do this by

studying the classified “For Rent” ads – then driving out to the various properties

to see what your rent dollar will buy you! Basically, you’ll be pretending to be a

rental customer until you’ve developed a pretty fair knowledge about what

different properties will rent for. Be sure to check out the various sizes (1BR, 2BR

& 3BR), the condition of the property and of course; pay close attention to

location! Don’t forget to take good notes for your future reference!

Local real estate agents can help you learn what investors are willing to pay for

income properties in your local investment area! Obviously, if you’ll promise to

do business with an agent, this learning process might just happen much faster.

It’s called the “back scratch’n” formula – I’ll scratch yours if you’ll do mine! As I

told you earlier, income property values are almost entirely based on INCOME,

CONDITION and LOCATION. Once you learn the rents and property values,

you’ll be able to develop your own GROSS RENT MULTIPLIER CHART for

your area like mine on Page 27.

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GRM CHART

(Gross Rent Multiplier)

JAY’S INVESTMENT AREA

6 UNITS – HOUSES OR APARTMENTS

GRM DESCRIPTION RENT ANNUAL VALUE

13X Snob Hill $1,000 $72,000 $936,000

12X Primo 950 68,400 820,800

11X Deluxe 895 64,440 708,840

10X Desirable 845 60,840 608,400

9X Average 795 57,240 515,160

8X Deferred Maint. 715 51,480 411,840

7X Trashy-Rundown 625 45,000 315,000

6X Butt-Ugly 510 36,720 220,320

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Chapter 5

YOUR FIRST GOLD

MINE PROPERTIES

You won’t find multi-unit income properties for sale sittin’ on every street corner

like bank repo houses! The reason is because multi-unit properties generally make

money for their owners – houses don’t! Therefore, one of the most important

lessons you’ll need to learn is how to find them, or dig ‘em out! Like gold, they’re

often hidden in the older established neighborhoods or tucked in out of sight

behind the main house on an older residential street! Often you’ll find ‘em mixed

in with small commercial properties where you would least expect to look.

Don’t fret, there’s plenty enough to go around – and once you begin looking in the

right places, they’ll start pop’n up like targets on a rifle range! Several chapters in

my home study course, “EARN $100,000 ANNUALLY WITH SMALL INCOME

PROPERTIES”, are dedicated to helping students find these properties – and how

to contact owners with “cold-call” letters. When you can deal “one on one” with

property owners, you’ll be in the driver’s seat! The reason is because it’s the

owners who can make the kind of deals that will help you the most! This is one of

the keys to negotiating seller financing with the kind of terms that can help you get

cash flow! Besides, when dealing with an owner, there’s no commission to pay.

Every little bit helps when you’re running on empty – agreed!

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SCOUTIN’ THE NEIGHBORHOOD

Suppose I learn about six (6) small houses in a desirable rental area that have

suddenly become available for sale! I’m told the elderly couple that owns the

property can no longer physically do the upkeep and they’ve decided to move to

Florida! During the 30 plus years they’ve owned the property – their church

friends have also become their tenants! This has worked out quite well because

managing has been a breeze! Their only problem however – they’ve failed to keep

their rents at current market rates because the tenants are their friends – plus they

rarely call for repairs!

As I’ve already told you – income properties are pretty much bought and sold

based on the income they generate. As a rule, the higher the income, the more

valuable the property. Obviously, lower income means less value! Most real

estate salesmen or brokers will generally express an income property’s value in

terms of gross earnings! For example; in my town, a six unit property in good

condition, located in a desirable rental area would likely sell for about 10 times

gross rents (see Page 27). For 2 bedroom units, each house would rent for $845

per month – therefore, 6 units renting for $845 each = $5070 per month or $60,840

annually. 10 times the gross rents would equal a sale price of $608,400.

The GROSS RENT MULTIPLIER CHART on page 27 shows you how values

increase or decrease as the income goes up or down! Understand, these values are

based on what investors are willing to pay for a specific amount of income. They

can vary somewhat with inflation, scarcity and the interest (returns) what other

investments are paying. Investors must study their particular market area before

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they can develop their own chart like mine. A knowledgeable real estate agent can

help you a great deal, particularly in the beginning!

Now back to my example about the elderly couple wanting to sell! I told you they

have a problem and I immediately realized there was great opportunity for me if I

could strike a deal! Their average rents were only $695 per month in a desirable

area where neighboring units similar to theirs, were renting for $150.00 more per

month. This situation often occurs when landlords rent to their friends at below

market rents – or when the owners no longer have mortgage payments to make

(meaning they have more cash flow). Obviously, the most common reason for

lower than market rents is when owners allow their properties to run down and

they simply cannot charge market rents because of the condition. Each of these

situations are “gold mines” in disguise for educated investors.

Referring to my gross rent multiplier chart on page 27, you can see that $695 rents

would translate to slightly under an 8 x (times) gross rent multiplier (GRM). Yet,

as I’ve already told you, the elderly couple’s property was located in a desirable

rental area! Once again, referring to the chart, you will note that rents in a

desirable area are $845 per month. This is what investors refer to as an under-

performing property. Notice that six (6) units renting for $695 per month – or

$50,040 annually would likely have a value between $375,000 to $400,000 (see

chart Page 27, far right column).

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STRIKING A DEAL

Lots of money can be made by finding under-performing assets; both real estate

and small businesses alike – then turning them around. Corporate raiders become

rich and famous when they possess the ability to do this! But they are not alone

however! Small-time real estate operators can become very wealthy tycoons doing

the same thing. A good start would be acquiring the elderly couple’s six (6) small

rental houses using my example on the previous pages.

In my town, a fair offer for six small 2 bedroom rentals (detached houses) earning

$50,000 annually would be somewhere around 8 times the gross annual income.

8 x $50,000 equals $400,000 back when I went to school – I assume it still does!

When I say around 8 x gross; the word around always means a bit less to me.

Thus, my offer will be $360,000, which translates to $60,000 per unit. The rent-to-

value ratio is still over one percent (.011), which I consider good. ($695 rent per

month divided by $60,000 unit price) If the seller agrees to carry the financing

giving me what I consider good terms; who knows – I might even show my

generous side and pay up to $450,000.

Good terms to me means – ten percent (10%) down payment and a monthly

mortgage payment of around 50% of the total monthly income. In this example;

the total monthly income is $4170, therefore; a mortgage payment of $2100 per

month is about what I’m shooting for.

Although my first offer will likely be $360,000, let’s assume I’m countered (or got

pushed up) to $400,000! Here’s how my offer might look:

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JAY’S GENEROUS OFFER

Total Selling Price $400,000

Cash Down Payment 40,000

Seller Carry-Back Financing 360,000

TERMS: Payments to Be

$2158.40 per Month

Including 06% Interest

Amortized 30 Years

Although my monthly mortgage payment is $58 higher than my target mortgage

payment of $2100, it’s still within the acceptable range for me.

Remember, this stuff is not set in concrete. There are ways to be flexible! The

variables are selling price, down payment amount, and of course, the mortgage

interest rate.

IT’S NOT THE ECONOMY –

IT’S YOUR KNOWLEDGE AND SKILLS

Let’s assume we close the deal with the elderly couple like my example above –

“Jay’s Generous Offer”! Can you visualize your earnings and profits? In case you

can’t – let me tell you that finding an under-performing property is like hitting

the super jackpot. If you’re a “do-it-yourself” investor like me; you’ll enjoy cash

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flow starting on day one of your ownership! When you manage the property – and

do your own maintenance and repairs, you’ll save yourself about 25% of the

operating costs, which in this example will put about $500 per month extra in

your pocket.

The real payday comes from your buying skills because almost immediately you

can begin raising rents to match the neighborhood units, which we’ve already

determined are $845 per month. As a rule, I do these rent increases gradually as

new tenants move in. It’s also my policy to make a few improvements – paint the

units, build some new fences and upgrade the yards so new tenants – and even the

existing residents see they’re getting some real value along with their increased

rent payments. My time limit for bringing rents up to the current market value is

generally about 18 to 24 months. I raise the rents in modest amounts during this

period and try to reach full market rates by 24 months or so. Gradual rent

increases while making visible property improvements along the way won’t stir up

the tenants like big rent increases for no obvious reason!

FORCED APPRECIATION ALWAYS WORKS

The beauty of what I’m about to tell ya is that you can have absolute total control

when you acquire the kind of income properties I suggest! It don’t matter a “hill o

beans” whether there’s inflation or mortgage funds available! Neither does it

matter if the economy is completely in the dumper or if your credit score is less

than the days in a year! Why – because everything I’ve told you so far is 100%

within your control. Personal control is one of the key factors to becoming

financially independent and rich by the time you’re old like me!

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Let’s fast forward about two years from now and take a quick peak at our six little

houses example! If you did what I’ve suggested, you should have the rents up to

the market rate by now ($845 per month)! Like I’ve already told you, the value for

rental units is primarily based on the income they generate. In this case $845 x 6

units equal $60,840 annually. We know the property is located in a desirable area

– thus the value is $608,400 as shown on my GRM chart on Page 27.

As the owner, you would now enjoy rents of $900 more than when you acquired

the property – plus equity of nearly $250,000 – life is good. Best of all – you did it

all by yourself because you were serious about the value of educating yourself

before you struck out on your own and made some stupid mistakes.

Congratulations!

If for some reason you believe my only purpose in telling you my million dollar

secrets is to sell you my training course – give yourself some credit – but you’re

only half right! The other half is because I have 50 long years experience doing

this stuff and you really need my help! If your goal is to speed up your success,

and make money a whole lot quicker than you can by yourself – I’m your

shortcut! Remember, I spent 20 years buying houses with hardly any cash flow

and without any help! Believe me when I tell ya – that’s like a slow boat to China

– you and I together can beat the pants off of that - GUARANTEED!

LEVERAGING PROPERTIES AND

THE TENANTS WHO PAY

You don’t need 20 or 30 houses scattered hither and yawn like I once owned.

You’ll be light years ahead acquiring just six multiple unit properties with 40

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rents coming in every month. That will make you a millionaire several times

over; with a whole lot less effort. My home study course; “EARN $100,000

ANNUALLY WITH SMALL INCOME PROPERTIES” is an inexpensive way to

get you started down the right path today! Believe me, right now is the investor’s

perfect storm!

Here’s what several of my “die hard” students have said about my training over the

years. And no – I didn’t pay ‘em either!

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WHAT OTHERS HAVE TO SAY

Jay: I love your courses. I’ve been an investor since 1978. I now own 20 units. I

have applied your knowledge to my recent rehab and I’m very satisfied. I’ve

listened to your tapes over and over and they’ve really helped me. I’m your best

customer for any new courses you write – especially about landlording.

Thanks much - Brian Felch, Columbia, MD

Hi Jay: I’m probably your biggest fan. Being a single mother with two small

children, I’m especially grateful for your help. I was able to acquire 5 rundown

houses in 2 years, which I sold so I could be a stay at home mom with a good

income. You were a life saver to me.

Beth Rosander, San Francisco Area, CA

First Jay: Thank you so much for all your help. Your counseling has been

extremely valuable to me. After attending your 3 day seminar in Las Vegas, I

returned home (Sacramento, CA) and purchased 24 houses in one location using the

seller financing you taught me. Thank you

Dan Shea, Kentfield, CA

I just wanted to thank you for a wonderful course this weekend. Your course was

extremely practical and useful – and thankfully lacking the puffery of so many real

estate gurus. I was very impressed by the breadth of your knowledge and by your

generosity of sharing it with us. Thanks for a great seminar. Cheers!

Richard Kelly – San Francisco, CA

Jay’s Fixer Camp is the absolute “Gold Standard” when it comes to learning all

about adding value to multi-unit properties. Jay’s cash flow techniques are nothing

short of amazing. I highly recommend Jay’s seminar.

John Schaub, Investor, Author,

Educator – Sarasota, FL

Great seminar Jay! Boy did you ever open my eyes to a whole new way of thinking.

A job well done! I really enjoyed the whole experience and plan to send others to

see the light.

Mike Cantu – Alta Loma, CA

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Chapter 6

FINANCING

AND CONTROL

How you finance your real estate holdings makes all the difference in the world.

One of the major reasons I invest the way I do and in the kind of properties (multi-

units) I’m writing about –properties I often call “the right vehicle”, is not because

I’m in love with these properties. It’s because they create the biggest

opportunities for the biggest paydays in the quickest amount of time!

When banks loan money for mortgages, after you’ve paid 10 or 20% down –

would you care to make a guess about who might have the most control or say-so

about your property! If you guessed the bank – give yourself an A+, you’re

catchin’ on! Bank mortgages control what happens to the property with fancy

clauses like “Due on Sale”, meaning no one else can assume or take over the

mortgage without their permission. Also, unless the mortgage is for your personal

residence (owner-occupied), you are generally personally liable for any monies

less than a full payback should the property ever be sold for less than the mortgage

balance; such as foreclosure auctions or a short sale. That just plain sucks, in my

opinion!

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When you purchase five or more units; the bank calls this a commercial loan or

mortgage! These are very difficult to get unless you’re building a shopping center

or new commercial development! So if you follow my advice about buying older

multiple unit properties (over 5 units) and they look a bit shabby and rundown –

you can forget about your prissy little loan officer at the downtown branch. Don’t

even bother bringing the pictures either! He’ll throw up!

Banks don’t do commercial mortgages for older junky lookin’ rental properties.

Besides, they understand that Mom and Pop investors are generally highly

leveraged. Many are investing on a shoe string – and some don’t even have a W-2

from a regular job! Banks really hate that!

SELLER FINANCING IS THE

ONLY GAME IN TOWN

Since the banks won’t come out and play, small-time investors like myself must

look for long-term financing elsewhere. In short, we must ask the sellers to

participate! Most sellers who own the kind of properties I’m looking for already

know that banks won’t provide mortgages, therefore; these owners are fully aware

that financing will be up to them! You could say that buying the older multiple

unit properties (5 or more units) like I’m suggesting, actually forces seller

financing if the owner wishes to sell his property!

When sellers agree to “carry paper” or finance your deals, it’s far different than a

bank mortgage! To start with, bank mortgages are actually a loan – meaning real

money was used! When the bank provided a mortgage so you could buy the

property, they actually used depositor funds to pay off the seller! In turn, you

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signed a promise to the bank that you’ll pay the money back along with interest

over a period of 20 to 30 years. The bank earns a profit on the money in the form

of interest income until they are paid back all the original loan (mortgage) amount.

Seller financing is not a loan – real money is not being used! The seller is simply

allowing you terms; say like 10 years, to pay for his property. He’s not loaning

you one stinkin’ dime. He’s extending credit to you because you cannot pay for

his property all at once! Instead, after an agreeable down payment – say 10%, he

allows you to make payments over a certain period of time until he receives the

total “Agreed-To” price for his property! Just remember; bank mortgages mean

real dollars have been loaned – with seller financing, that’s not so! Seller

financing is only about terms! I need you to understand this distinction because

one will make you rich – the other a whole lot poorer!

BUYING BACK YOUR OWN DEBT

If you have a bank mortgage, you can keep reading, but you’ll hate yourself in the

morning! Why is that, you ask? Because I’m about to tell you about a big profit

opportunity that won’t work with bank financing – yet, it’s quite common with

seller financing (terms).

Sellers who own properties (multi-units), the kind I buy, will generally accept 10%

cash down payments when they sell to me. Would they like more cash if they

could get it? The answer is yes; but with older properties, especially if they’re

rundown looking and not kept up too well, most investors are simply not willing to

pay much more than 10% down! As a general rule, the kinds of investors who are

interested don’t have much more than 10% to give! Also you mustn’t forget, the

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competition to purchase six junky looking rentals on a single lot is only a small

percentage of all the wanta-bee investors roaming around looking for properties to

buy! Roughly 95% are looking at single family houses!

When you negotiate seller financing on your property – as opposed to a bank

mortgage, you’ve set yourself up to earn bonus profits in the future buying back

your own debt – or financing! I’ve found the type of sellers who allow their

income properties to run down (often called milkers) are always needing more

money! They seem to manage money about the same way they manage their

properties!

MAKING $85,000 THE EASY WAY

Years ago I purchased a six (6) unit rental property for $200,000 with 10% down

($20,000). My payments on the balance ($180,000) were $1200 per month. Just

thirteen months later the seller needed cash to open a new restaurant. He was more

than happy to take my $95,000 cash as the full payment for his 20 year, $180,000

promissory note. I borrowed the $95,000 to pay him, cutting my monthly

payments to $765 per month. These large discounts for cash are not the least bit

uncommon when you acquire properties financed by the seller.

Think about this for a moment! Only thirteen months after I purchased my

property for $200,000, I get $85,000 back in the form of a discount! This means

I’ve actually acquired my six (6) rental units for only $115,000. This is only

possible when you buy properties from sellers who provide the financing (terms).

Dealing with people, rather than banks is one of the most profitable benefits when

you invest the way I teach. Buying back debt at super discounted prices works

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equally well when you purchase my kind of properties and assume or “take over”

the existing private financing that comes with the deal! Learn more about this in

my home study course, “EARN $100,000 ANNUALLY WITH SMALL

INCOME PROPERTIES”.

The more you can learn about creating your own financing – which sometimes

includes paying no interest at all, the more money you’ll start making – and

keeping for yourself. Once again, I’ll remind you what I’ve told you several times

already. You must select the right vehicle to enjoy the kind of benefits we’re

talkin’ about.

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Chapter 7

RENT TO

VALUE RATIO

Investing is about $ numbers and investment returns and you don’t need to make

it too complicated or difficult to figure out. My RENT-TO-VALUE measurement

works just fine for me because it’s easy to use and gives me a good feel about how

much money each one of my rental units is earning in relationship to its worth or

value!

For example; suppose I purchase a six unit property for $300,000 – and further,

each of the six units is valued at $50,000 ($300,000 divided by 6 units = $50,000),

lets also agree that each unit will rent for $750 per month after a few repairs and a

spiffy new paint job! My rent-to-value formula is calculated as follows! $750 rent

divided by $50,000 value = .015 or as I call it, a 1.5 ratio. This 1.5 ratio means my

$50,000 asset, the rental unit, is earning or bringing in an 18% annual rent return!

To verify the math; multiply 0.18 x $50,000, which equals $9000. Obviously,

$750 per month for 12 months = $9000.

By comparison, a single family house in my town with a value of $150,000 only

rents for $1100 per month! Therefore, $1100 rent divided by $150,000 value =

.007 or as I call it, a 0.7 ratio! This means the house brings in or earns less than

half the annual rent return compared to my multi-unit property above! A 1.0 ratio

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equals 12% annual rent return or the equivalent of 01% per month. As you can

see, my vehicle of choice (multi-units) blows away the competition when it comes

to the return on my investment!

QUALIFICATIONS FOR

REAL ESTATE INVESTING

The real beauty of real estate investing is that it’s wide open to everyone regardless

of education, age, background, male, female or the size of one’s savings account.

Much like any other business venture; having a few bucks saved up can make

getting started a bit more comfortable! However, far more important than a

savings account is one’s commitment to learning what to do (education), then

quickly following through with a plan of action.

Basically, it means learning enough about rents and values so you can go out and

acquire your first property if you’re just a beginner – or you can make a quick

switch if you feel your current plan is not up to snuff! More than anything else

however; you must follow your dream and stay totally focused until you achieve

the goal. Along the way you must constantly “muster up” the discipline to stay on

course!

Professional golfers will tell you, the toughest tournament they’ve ever won was

always the first one and it often took many years! Fortunately, real estate

investing can produce far better results – and a whole lot faster; if you stay

motivated and keep your plan moving forward. This is where the personal

discipline comes in. In football jargon, you mustn’t stop until you’ve clearly

reached the end zone!

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HILLCREST COTTAGES WAS

MY EARLY DREAM

Had you driven by my Hillcrest property when I finally mustered up enough

courage to buy it, a dream would have been the furthest thing from your mind. “A

nightmare” would have been a much better description! Looking back now, I

should have won a medal for bravery on the day I closed escrow. After all, not

another soul even made an offer so far as I know! Still, I’ve never lacked

confidence in my own ability to clean up a stink’n mess no matter how many

“looky-loo’s” around me thought I was nuts! I did prove to myself that if you’re

willing to roll up your sleeves and take on the challenge, you can make yourself a

ton of money if you’ll stay the course!

Hillcrest was an old outdated motor lodge (the forerunner to modern day motels)

with 23 small cottages all snuggled together on a two acre parcel (city lot). It was

my plan to switch the cottages over to individual senior apartments and rent them

on a monthly basis. The sellers were still trying to compete with modern day

motels when they finally decided it was time to give up.

Fortunately for me, they were quickly going broke so their motivation level was a

near perfect 10, and rising! As it turned out, they agreed to my no cash offer,

accepting instead, a single family house I owned as a trade. I learned early on, the

toughest jobs – often the dirty jobs will produce the biggest rewards! Properties

like Hillcrest present broke buyers like I was back then, a great deal of flexibility

when it comes to the down payment and extra special creative terms! Trading my

house for the down payment was a good example.

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MAKING $69,000 OUT OF THIN AIR

I had just purchased a commercially zoned property (my house) a short time before

finding Hillcrest! I had paid $80,000 with a $20,000 cash down payment. The

owners had agreed to sell me Hillcrest for $234,000. I agreed to assume (take

over) three (3) existing mortgages, which added up to $143,000. That meant I

would still need $91,000 to close escrow! By now my house mortgage balance

was paid down to $58,000, so I simply added $91,000 to $58,000 – and presto,

my new house value, appraised by me, was now adjusted to $149,000. I could

now trade equities straight across for Hillcrest Cottages – no cash would be

needed.

Many folks have asked me – how can you purchase a house for $80,000 and sell it

a few months later for $149,000? That’s an 85% markup. Is that legal? It’s not

only legal, but the sellers were pushing me hard to make the deal happen – can’t

we close any faster, they asked?

There’s a valuable “profit-making” lesson clearly demonstrated in my Hillcrest

transaction! When sellers are determined to dump what they own – when they’re

highly motivated to sell! There are many ways to close a deal. It often takes very

little cash, sometimes none and most motivated sellers don’t pay a whole lot of

attention to trade values like my “puffed up” house value! They’re main concern

is getting out from under the property they’re trying to sell – or dump! Finding

these sellers is worth big bucks to investors who wish to “speed up” their wealth

building plans. This may be a great opportunity to join the “one percenters”.

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CHANGE THE USE –

INCREASE THE PROFITS

I’ve written a lot about Hillcrest Cottages because it’s the kind of deal that can

move “small-time” players (investors) to the big leagues rather quickly. Almost

two years to the day, and after spending nearly $50,000 (borrowed funds) for fix-

up, clean-up, rewiring and hooking up the units to city water; I sold Hillcrest along

with a couple other rentals for almost $600,000 to a local physician looking for a

tax shelter.

Naturally, I was more than happy to carry the financing when I sold! My interest

income alone was nearly a million dollars, well, $939,077 if you wanta be picky!

Later on when I tell you about “selling out” at the end of your investment career,

like when it’s time to smell the roses – I want you to remember the term wrap-

around financing and make it your primary selling tool – we’ll call it, funding

your retirement!

Selling Hillcrest along with a couple other rental units earned me $260,945 in sales

profits – but when you add on the $939,077 I earned from interest income during

the 27 years I carried the seller financing – it adds up to some serious money!

Wouldn’t you agree? You’re gonna want to learn all the details how wrap-around

financing works ‘cause it can easily earn you a million bucks on every multiple

unit property you sell – the same way it’s done for me!

Think about wrap-around financing as your old age retirement plan. You can’t

find a better plan anywhere! You’ll also need to understand the six (6) important

reasons for using “wraps” when you sell your properties so you don’t miss out on

the extra profits. In my home study course; “EARN $100,000 ANNUALLY

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WITH SMALL INCOME PROPERTIES”; you’ll not only learn these six (6)

important reasons – but how and when to use them! My home study course

devotes nearly a full chapter showing you examples about how to draft up your

wrap-around notes, plus I’ll show you where the extra profits come from. Wrap-

around financing will also eliminate most of the seller carryback risks the way I

teach you! That’s especially important at my age – but still, you’re gonna want to

know for yourself!

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WHEN YOU HAVE NO MONEY –

THEN USE WHAT YOU HAVE

People often ask me --- How do you find these special deals like Hillcrest? Many

investors tell me they’re willing to tackle almost any kind of problems in order to

save money on the down payment - or acquire properties at a substantial

discount! It’s no big secret, if you’re willing to do some work yourself and crappy

lookin’ rentals don’t frighten you away, you can earn yourself some serious

profits! As a general rule; you’ll be able to negotiate far better terms – meaning

longer terms, with easy pay seller financing. Always remember – terms control the

cash flow.

Obviously, there are some investors who want no part of hauling away trash and

facing goofy lookin’ tenants. Some may not have the skills to fix anything! Still,

you can make a ton of money without having any hands-on skills, but you must

promise me you’ll make a double effort to learn what things cost. In the long run,

the biggest profits will come from your negotiating skills and your ability to obtain

seller financing with the kind of terms that allow you to operate with cash flow.

The following chart gives you some idea, based on my experiences, about on the

range of discounts you might expect if you’re willing to tackle the clean-up

problems and people issues. Remember, ugliness and people problems always

cause sellers the most grief! Most buyers shy away from rundown ugly properties,

which means; if you can jump in and fix these problems, you’ll have automatically

eliminated most of your buying competition. Being one-on-one with the seller,

with no other buyers in sight is the ultimate dealmaker’s goal!

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Range of Discounts for Various Conditions

Condition of Property Discount Range

1. Ugliness – Pigsty lookin’ 30-50%

with tons of junk on property.

Major clean-up.

2. People problems – dirty 30-40%

unruly deadbeats, often

non-paying tenants.

3. Old junky houses/apts. 25-35%

Lots of deferred maintenance

and repairs.

4. Rundown properties 20-30%

Out-of-town owners,

often a tenant manager.

5. Cosmetic fixer 10-15%

Mostly needs clean-up

and paint – general “tune-up”

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Chapter 8

DREAMS CAN COME

TRUE AT ANY AGE

At seminars I’m often asked about age. Students ask --- Can you still become

successful after 50, 60 and so forth? My answer; without the slightest hesitation is

yes – you most certainly can! You can do almost anything you set your mind to,

I’ve found, if you will stay focused, maintain discipline, avoid negative friends and

all the “nay-sayers” who will always tell you why you can’t!

An excellent role model in my opinion was the late Harland Sanders - an Indiana

born, grammar school dropout, who wouldn’t give up! Harland’s working career

began at age fifteen doing back-breaking, labor intensive jobs – but Harland had a

very special dream! He loved to cook! As a young boy he’d learned how to pan

fry chicken and make scrumptious homemade biscuits from his mother. Harland

decided to open his own restaurant in a 12’ x 15’ storage room in the back of a

local service station. By the time he was 42 years old, his fried chicken dinners

had gained a wide reputation in the county allowing Harland to open up a full size

restaurant, which he named – Sander’s Café! Business was good, but pan frying

was way too slow, so Harland developed a pressure cooking system that worked

much faster. At the same time, he kept improving his special blend of spices!

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A DREAM - PLUS ACTION WAS

HARLAND’S MAGIC INGREDIENTS

Harland was not your ordinary day dreamer. He had a clear vision he’d soon

become successful! When he was 59 years old, he was presented with a

prestigious Kentucky Colonel’s commission from the governor’s office. He even

had his picture taken dining with the governor!

In 1959, Harland was offered $164,000 to sell his popular roadside restaurant, but

he turned it down! He dreamed of much bigger opportunities, perhaps expanding

his building size or opening up a second location! However, fate was about to play

a dirty trick on Harland and his popular highway café.

Expecting a brand new freeway interchange that would literally dump hundreds of

new customers on his doorstep, it wasn’t to be! Instead, the U.S. highway that ran

directly past the front of his restaurant was re-routed several miles away. Harland

was forced to sell out for just enough money to pay his bills.

With his restaurant gone, the Colonel now faced the prospect of living on his paltry

Social Security check of $105 per month. He was now 66 years old. Down but

never out, Harland wouldn’t even think about giving up! With an overabundance

of lifetime experiences, he was “dead-bang” certain there was one thing he could

always do better than anyone else – fry chicken with homemade biscuits!

Loading up his herbs and spices in the trunk of his aging white Cadillac, Harland

took to the road! He convinced himself, he could still be a success. More

importantly, he never gave up on his dream, even though he was now almost 68

years old! He would stop at every restaurant and offer to cook for free, just to

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prove that diners would fall in love with his special southern style chicken formula.

Harland would then convince the owners to pay him four cents for every chicken

they cooked using his now famous herbs and spices.

A bit slow at first, but by 1960, there were more than 200 Kentucky Fried Chicken

outlets in the United States and Canada. The Colonel could now afford to stop his

traveling! While his wife Claudia kept the books – Harland would mix and mail

out his herbs and spices working from home. The Colonel had now reached 70

years of age, but he wasn’t done by a long shot! Successful folks never are!

By 1963, the popularity of Kentucky Fried Chicken had expanded to more than

600 outlets. By now, the Colonel and his wife employed 167 employees to keep

the operation running – but it soon became too much! The Colonel sold his

business to a Nashville millionaire for two million dollars cash and a $75,000

annual lifetime salary to travel around the country in his white linen suit,

promoting his famous chicken. With his bleached white hair, neatly trimmed

goatee and a black string tie, the Colonel would soon become one of the most

recognized marketing personalities in America.

By 1971, just seven years after the sale, the number of Kentucky Fried Chicken

stores grew to 3500 – and before it was bought out by the giant Heublein

Corporation in 1995, there were 9400 KFC outlets worldwide with reported annual

sales of seven billion dollars. When members of the U.S. congress asked Harland

Sanders what one should do to prepare for retirement, the Colonel replied --- “Give

him the opportunity to do for himself! A person should never stop dreaming or

stop working to achieve his dream – a man will rust out long before he wears out!”

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PROOF THE AMERICAN DREAM

IS STILL ALIVE

Colonel Sander’s life is an inspiration for entrepreneurs everywhere! Harland’s

story should be a constant reminder that no matter how old you are, the best is yet

to come. To be a successful real estate investor, you must never recognize defeat.

To keep trying is not the mark of a loser. As the Colonel no doubt would tell you –

it’s the mark of a millionaire in the making!

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Chapter 9

THE RIGHT VEHICLE

5 UNITS OR MORE

I’m sure you’ll agree – it’s much better to collect six (6) rents instead of just one

like I already told you back on Page 15. $45,000 annually trumps $13,200 per

year any day of the week! It’s only fourth grade math, but yet, I know PhD’s who

can’t figure out how to make a profit!

I also told you the down payment cost to purchase six units instead of buying just

one would be the same amount, $25,000! How can that possibly be, you’re

probably wondering! WELL – here’s the reason! All real estate investing don’t

follow the same set of rules. Take financing for example! It’s customary for

most houses (homes) to be financed by banks and mortgage companies using

traditional 30 year amortized mortgage or at least some form of institutional

financing. Yet, when you inform your banker the house will be occupied by

renters – they charge more interest because banks consider renters to be higher risk

compared to owner occupants. Banks also have tons of restrictions written into

their mortgage documents telling borrowers what they cannot do.

One such restriction (clause) says that if you sell, lease or encumber the property –

they want all their money back right now! This restriction is known as the DUE-

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ON-SALE CLAUSE, and you’ll find one written in every bank mortgage you sign!

Banks also require that house buyers sign mortgages which say – they agree to be

personally liable if the property gets foreclosed and is sold at auction for less than

the mortgage balance when the property is being used for business – like a rental.

FINANCIAL SUCCESS CREATES FREEDOMS

After being both a W-2 wage earner and full-time investor; I can honestly tell you

– there’s no way I’d ever switch back. From a financial standpoint; they’d have to

pay me more than the President. Still, it’s not just the money – it’s the lifestyle!

As a general rule; investors like myself start out with a goal of FINANCIAL

FREEDOM. Once we learn the business well – work hard and achieve success, we

soon realize there’s another equally important goal we need to conquer! It’s called

PERSONAL FREEDOM! It’s having enough free time to do all the personal

things we’d like to do. With enough money jingling in our pockets, we can now

set our sights on doing all the things that regular wage earners with a boss, can’t

ever do!

For example; in the past 20 years or so, I’ve become quite fond of annual cruises –

sometime I’ll even sail twice! Another personal freedom, which of course,

financial freedom has given me are my trips to visit Civil War battlefields. There’s

simply no way I could have ever dropped everything – jumped on a jet plane,

headed for Miami and a two week cruise while working for the phone company.

Back then, I found myself in a rather peculiar situation! After twenty years of

service, I had earned my full four weeks vacation, but I only had enough money

saved up to pay for one week’s worth! Working for the other guys has severe

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limitations! Seems like in the beginning, I couldn’t get enough time off, then

finally, when I could – I was broke! Jumping on a plane to visit Civil War

battlefields without advance permission - and having some extra money in my

pocket, was only a distant dream before my real estate success!

WHEN THE LIVIN’ IS EASY

I don’t wish to suggest that real estate is ever easy, but like most opportunities in

this life – with the proper education and a strong desire to succeed, it does become

much easier! It also becomes a lot more fun because your deals will keep getting

better, which generally means more cash flow! Now that’s real fun - agreed!

I’ve concluded that investor benefits come in two different flavors! We tend to

think first about the money benefits – as in getting rich – and obviously, that’s a

very important part! But I also believe almost equally important are the lifestyle

benefits! It’s all the personal freedoms I have which are far superior than working

for someone else.

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LISTED BELOW ARE 13 INVESTOR BENEFITS THAT I TREASURE

VERY MUCH!

1. I can earn a very good income; the amount is up to me. The sky’s the only

limit!

2. I can work whenever I choose – no specific hours or days. When I’m not

working – I’m free.

3. I can take time off my job anytime I need to because I’m the boss. I’ve got

permission!

4. I’m both the boss and CEO. I hold my strategy meetings every morning in

the shower. Needless to say – I’m in total agreement.

5. My earnings are never frozen or voted on by others. My rents are indexed

to normal inflation. Rents go up just like pork-n-beans at the supermarket.

6. I enjoy the best home business opportunity in America. My assets are

income real estate, which continually increase in value, unlike personal

property assets, which wear out and generally decrease.

7. I get to keep most of my income because Uncle Sugar allows me very

generous business write-offs, therefore; less taxes to pay.

8. I’m layoff proof – no pink slips or downsizings – plus, my earnings don’t

stop when I’m sick. Rents keep coming in around the clock.

9. I’m like a walking tax deduction. A large majority of my expenses are

what accountants call “above the line” tax deductions. They’re legally

paid by my business – not me!

10. Driving and auto expenses – most are management expenses - driving back

and forth to my rental properties or other business related trips.

11. Invisible earnings without any taxes due – when I acquire a $250,000

property for $150,000, I’ve earned $100,000 without a tax bill. Try this if

you earn an extra $100,000 on your job!

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12. My business assets, my properties, are being fully paid off by my

customers (renters). I get the deeds, they get rent receipts. Which do you

like the best?

13. Best retirement plan in the world – “Pajama Money” I call it! Payments

from my carryback notes – comes from the financing I provide to the

buyers when I sell my properties! It’s now time to smell the roses, but my

income never stops!

If your dream is to enjoy the same benefits like me, this could be your lucky day!

You can start right now with my home study course; “EARN $100,000

ANNUALLY WITH SMALL INCOME PROPERTIES”. You’ll be glad you did!

ONLY FOOLS RUSH IN

There’s not one single reason to race out quickly “halfcocked” to purchase income

properties! You need to understand a few basics first! I’m familiar with

investors who set strict goals for themselves to acquire at least one house every

month – sometimes even more! That’s kinda what I did when I started nearly 50

years ago and it don’t work any better today than it did back then!

When you’re a brand new investor just starting out – you’re bound to make

beginner-type mistakes. If you keep repeating these same mistakes twelve times in

a year; you might very well be going backwards with each new purchase! Take

my advice here – slow down, there’s really no hurry. Ya got it!

Preparation and quality rather than speed and quantity will bring you far better

results no matter which kind of properties you acquire. But as you shall learn, it’s a

lot more profitable when buying multiple units or colony properties, as I call them.

Once again, let me repeat myself – take your time – there’s absolutely no hurry!

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Buying just one multiple unit property each year will make you a millionaire if

you follow my strategies! Just imagine where you’ll be financially if you decide to

own six!

WORKS FOR NEWBIES & OLD SALTS ALIKE

The genius of my multi-unit strategy is that it works for newbies and ol’ timers

alike! It’s also an excellent investment strategy for part-time investors like I was

starting out – yet, it’s perfect for “full-timers” and “career changers” as well. I’ve

already told you – I began investing nights and weekends while working my day

job at the phone company.

One of the biggest benefits that comes from investing in multi-units – or colonies,

is much quicker cash flow – and more of it! On Pages 19 & 20, you may recall

my example showing how rents were increased more than $1000 during the first

two years of ownership. That was no misprint or Disneyland fairytale! The fact is,

it’s really quite common when you choose the right vehicle – multi-units, like

we’ve been talking about!

Also, I want you to consider the huge returns on your initial investment dollars! In

our example; the down payment was only $25,000 needed to acquire a $300,000

property. Just two years later, with increased rents, the property was earning or

taking in $12,240 more annually. With the added rents, you’ll soon be able to

recoup your total down payment back - roughly 2 years. For Mom and Pop

investors hoping to expand rapidly – there’s no better game in town!

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The beauty of multi-unit investing is versatility! You can make some serious

money even if you decide to acquire just one property and keep it for monthly cash

flow until you sell out and retire! See my Cherry Street property on Pages 2 thru 8.

On the other hand – you can go for the gusto! Keep right on buying and become

the first millionaire in your family. Don’t forget, this is America; every family

deserves at least one!

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Chapter 10

INVESTING WITH

A DIFFERENT TWIST

I call it my lifetime investment model! Six (6) multi-unit properties or colonies –

six separate locations with 40 rental units! It’s more than enough to make you a

millionaire several times over and will guarantee financial freedom for you and

your family for as long as you stay invested. This model is my personal

investment plan of choice.

I call it lifetime because if you follow through and accumulate six separate

properties with 40 rental units combined – you’ll be able to create a six figure

annual income, total financial independence and a worry-free retirement

without ever reducing your active investment income. SOUND INTERESTING?

Take a look at the next page, I’ll show you what they look like!

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Multi-Unit Rentals

The Colony Concept

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Referring to the sketch – six properties or colonies with 5 to 8 rental units at each

location. In the center is the owner or investor! I often describe this configuration

as my investment wheel! The hub or the center represents the owner. Those

straight lines running out to each colony location are the spokes of the wheel! The

properties themselves make up the wheel, although they’ll likely be scattered

around your town or buying area!

These colonies are small multi-unit properties, generally groups of houses or

apartments all together on an oversized city lot. They are mostly older property 45

to 70 years old, and most were built or established back when zoning laws and

building codes were far more lenient. There’s no need to fret over codes and

zoning because in most cities, towns, rural areas and just about anywhere else, so

long as they’re still standing and being used as rentals – they’ll be grandfathered in

if you keep ‘em that way.

The units themselves can be detached houses (my favorite), duplexes, small

apartments, individual mobile units and even an old motor lodge might be

converted to monthly rentals (like my Hillcrest units). Also, any combination of

these types will work just fine!

Often I’m asked --- Is it okay to have larger or smaller size properties? The answer

is yes, but my investment model (sketch) is based on sizes that I believe most

investors (even beginners) can handle – or manage!

Multi-units or colony investing can make you rich for a number or reasons, but to

start with, the competition is at least a thousand times less! I can’t begin to tell you

how important this is! Most small-time, Mom and Pop investors are chasin’ after

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single family homes, especially in the foreclosure – short sale markets. The

competition is fierce and the rewards are mediocre at best! Mediocre rewards

might well be good enough for the other guys, but it’s never been good enough for

me!

As I told you earlier – my goal has always been to become rich, at least rich by my

definition, during my lifetime and enjoy a financially secure ride during my

sunset years. Even though I began investing many years ago, it took me a little

time before I eventually discovered that “highly leveraged”, single family houses

weren’t keeping pace with my dreams - or my version of financial freedom! My

version means never again having to worry about money problems – plus, having

enough personal freedom to pretty much do as I please!

For these reasons, I switched to multi-units or colonies as I like to call them!

Colonies have not only met my expectations, but they’ve exceeded most of them

when it comes to producing income and profits. Additionally, multiple unit

properties are much easier to manage, which allows me the time to enjoy my

personal activities! To me, colonies are simply the greatest investment strategy

and the fastest wealth building vehicle available to everyday, start from scratch,

investors like me.

SO YOU WANTA BE A MILLIONAIRE

If I got you all worked up and excited when I told you about my Cherry Street

houses (pages 2 thru 8), just hang on – ‘cause I promise you’re gonna fall in love

with my lifetime investment model – six separate properties just like Cherry Street

and I guarantee, they’ll make you a wealthy tycoon! I say lifetime model because

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six multi-unit properties with 40 individual rents coming in every month will make

you financially independent – and eventually give you all the personal freedom

you deserve with the money to enjoy it!

SIX (6) COLONY MONEY SHEET

GROSS ANNUAL INCOME $333,600

40 RENTAL UNITS @ $695

PER MONTH = $27,800

OWNER/OPERATOR’S

SHARE (30%) $100,000

TAX SHELTER FROM

PROPERTIES --- $80,000

DEPRECIATION

(REAL & PERSONAL PROPERTY)

Sheltered income earnings mean little or no personal income taxes for

owner/operator.

Rental income is pretty much indexed to inflation. When “pork-n-beans” go up at

the supermarket – so do rents! This means if you can make it on $100,000 today,

chances are; you’ll be just fine in future years.

How long will it take you ask? The answer my friend, it’s up to you! Obviously,

you will need to educate yourself, but I will help you shorten the time it takes by

teaching you the fundamentals. You can start immediately by ordering my

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home study course; “EARN $100,000 ANNUALLY WITH SMALL INCOME

PROPERTIES”. My course is designed to help you achieve the following three (3)

primary goals:

BUILD $100,000 ANNUAL INCOME

BECOME FINANCIALLY

INDEPENDENT & SECURE

DEVELOP A WORRY-FREE

RETIREMENT

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6 Multi-Unit Properties (Colonies)

Location Description # Of

Units Monthly Rents Annual Rents

#1 Duplex + 5 Houses 7 5,130 61,560

#2 6 Houses, 2 mobiles 8 5,400 54,800

#3 6 Unit Apt. Building 6 3,675 44,100

#4 6 Houses , 1 Mobile 7 5,275 63,300

#5 4 Unit + 3 Unit Apt. 7 4,475 53,700

#6 5 Detached Houses 5 3,845 46,140

TOTALS Small Apt & Houses 40 $27,800 $333,600

Above Properties = 40 Individual Rents / Month Locations Loc. #1 Loc. #2 Loc. #3 Loc. #4 Loc. #5 Loc. #6

Unit #1 775 685 600 775 650 800

Unit #2 695 695 600 675 650 750

Unit #3 795 625 600 750 650 795

Unit #4 695 675 625 725 650 775

Unit #5 695 650 625 750 625 725

Unit #6 725 675 625 750 625

Unit #7 750 700

850 625

Unit #8 ___ 695 ___ ___ ___ ___

TOTALS $5,130 $5,400 $3,675 $5,275 $4,475 $3,845

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SPECIALIZATION QUICKLY MOVES YOU TO HEAD OF THE CLASS

Doctors, teachers and corporate CEO’s all understand the power specialization!

Learning to be the best there is at something – meaning your specialty! Should

something go haywire with your ticker, wouldn’t you want the best heart specialist

you could find? Just say yes!

For real estate investors, specializing works exactly the same way by making you

the best! If you start out tomorrow morning and make it your goal to concentrate

on multi-unit properties like I suggest – it won’t be very long before you’ll

become the best multi-unit investor in your area. You’ll no longer be wasting your

time looking at every property for sale like the other investors do. Your

concentration on just one type of property will soon make you the expert or

specialist! When you talk to most rich folks, you’ll find they understand the

power of specialization – that’s why they’re rich!

Master sales trainer, the late Zig Ziggler, used to say: “If you don’t zero in on a

specific target or goal, and continually strive to become the very best you can –

you’re pretty much destined to wind up a wandering generality with very little

direction – or results.”

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Chapter 11

ANSWERS TO THE

MOST COMMON

QUESTIONS

1. How would you suggest I start?

Whether you’re a beginner, intermediate or seasoned investor, colony

house investing begins with one, your first one. Congratulations, now

you only have 5 more to go. Acquiring one property (colony) per year is

a very reasonable plan.

2. What’s in the future for these kinds of properties?

It’s very bright – multi-unit colonies are basic affordable rental stock.

Nearly 50% of the population in my state (California) are renters. Of

those who rent, 60% have lower paying service-type employment. For

this group, housing is scarce as “hen’s teeth” and no one is building

anymore. Preserving what we have now will only become a higher

demand product. Besides that, investing in one of people’s basic

necessities (housing) can’t be anything put positive.

3. How quick might a new investor expect monthly cash flow from a

multi-unit property?

Faster than any type of real estate I know of. I explained how this can

happen on pages 19 thru 20. Naturally, much will depend on financing!

Financing controls cash flow! That’s why seller financing is so very

important. My home study course; “EARN $100,000 ANNUALLY

WITH SMALL INCOME PROPERTIES”, covers many lessons on

financing and negotiating with sellers. My course will help you

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determine how much to pay – and when to walk away. A complete

financial analysis with samples are provided in the course materials.

4. How can I keep buying when my funds are limited?

Obviously, negotiating will determine your down payment or how much

cash you may need to close. My average down payments have been

around 10% of the purchase price, but sometimes trades of personal items

can be substituted! Cash savers – I call them! More about this in my

home study course. If you improve properties like I do (adding value),

it’s quite likely you’ll never again need out-of-pocket cash for another

down payment. Your first property will grow in value enough to pay the

down payment on the next purchase. Refer to Jay’ generous offer, page

29 thru 34 (adding value).

5. Will managing overwhelm me?

The colony concept – having all your units in one location – or six

locations later on will greatly help your management task. Scattered

units hither and yawn are much more difficult to manage when you

consider travel time and service calls. Having multiple units at a single

location allows for killing several birds with one stone. Combined

service calls; reduce trips to the hardware store and save both time and

gas – much greater efficiencies.

6. Is family investing a good idea?

Multi-unit investing as a family partnership is as good as it gets if you

can pull it off. In many ways, it can strengthen families by creating

common goals. Each member works at the property and earns his share.

An excellent way to help junior buy his first truck by managing family

properties. In this day and age, having a reliable family income,

employment for the kids and assets to pass along makes a whole lotta

sense!

7. What’s the hardest part starting out?

Finding and acquiring your first multi-unit! This breaks down into two

major challenges! First; finding the right properties to begin with. New

investors will struggle with this for a while! Then suddenly, like when

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the fog lifts, they begin popin’ up everywhere. Hope this helps you, but

it’s the same for every new investor!

Acquiring the right property and passing over the ones that won’t work –

here again, it’s a matter of education and developing your skills. If

you’ll furnish the time and effort, I’ll contribute the “how to” part! Don’t

miss my next INVESTOR TRAINING SEMINAR. It makes this much

faster. If you can’t attend, then order my home study course; “EARN

$100,000 ANNUALLY WITH SMALL INCOME PROPERTIES”.

Let’s get started!

8. Does multi-unit investing work for women?

Very well indeed – years ago at my seminars, 2 or 3 women showed up.

Today, most classes are nearly 50/50! Gender has very little to do with

making money with real estate. My most famous female student, Beth.

R.; fixed up properties in the San Francisco bay area with her two small

children by her side. She’s famous because she was interviewed by the

local TV channel, which publicized her success.

9. Are bank mortgages available for colonies?

Mostly not! When you acquire multi-unit properties with more than four

(4) units (which I recommend), bank loans (mortgages) would be

classified commercial lending. For Mom and Pop investors acquiring

older, often non-conforming properties, most banks are not interested!

The good news is; sellers of small multi-unit properties know this too.

This is the main reason that nearly 85% of all my deals are seller

financing! Believe me, you want seller financing.

10. How does income property ownership compare with owning any

other kind of business?

Very well indeed! For starters, income property owners are providing

one of the basic necessities (food, clothing, shelter), therefore; in terms of

stability, rental units are here to stay! Secondly, the ability to acquire

properties using high leverage (small down payment) and yet become the

100% owner and collect 100% of the income – that’s a tremendous

advantage for average folks without much money to start.

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Perhaps the biggest advantage in the investment business is the assets

themselves. Not only do the properties provide monthly income, but the

real estate (assets) are growing in value. When it’s time to quit;

properties quite often sell for two or three times what they cost, creating a

guaranteed retirement plan!

Contrast this with operating a restaurant – not nearly as stable. It’s

possible to earn decent wages working your tail off – but when it’s time

to quit or retire – no more wages and the worn out fixtures – worth

maybe - ten cents on the dollar, if you’re lucky! Not very much to

compare, I’d say!

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Chapter 12

DREAM A LITTLE

PLAYIN’ “WHAT IF”

WITH YOURSELF

Suppose I take Jay’s advice and acquire my first multi-unit property – then for

whatever reason I don’t buy anymore! Would that be worth my effort?

For heaven’s sake yes – just one property like Jay’s Cherry Street houses would

earn you more money than many employees make during their entire working

lives. As you might recall; Jay’s annual earnings for the time he operated the

property and financed the sale, averaged more than $53,000. Granted, we’re

talkin’ gross income, but do the math! Even if you only got to keep half of $4400

per month for a very long time, would that work? Would that be a good return on

your $20,000 down payment? Think about that!

Lots of folks don’t earn that much money from Social Security, so in terms of

planning for your future, just one Cherry Street property could well become your

personal retirement plan! Don’t forget, after Jay sold out and no longer had

anything to do with managing the property or tenants – the income from his

carryback financing was $3250 every single month for 20 years. I can’t speak for

other property owners, but receiving $780,000 for financing fees works for me!

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Besides, all I have to do is boogie down to my mailbox every month in my pajamas

to pick up the check!

DREAMING BIGGER

Now close your eyes and just pretend. Say you fall in love with Jay’s lifetime

model and you begin to wonder --- How far can I go? How much money can I

make?

First of all – the sky’s the limit! Even though Jay’s six (6) property model with 40

rental units has a beginning and end. Yet the truth is; there is no limit! Jay has

owned and operated lots more than 40 units at his “high water” mark! Still, 40

units will make you a millionaire several times over! 40 units is a very reasonable

goal or target to shoot for!

Since we’re only dreaming here – what if you owned and operated Jay’s six (6)

property model with 40 rental units for the next few years? How would you fare

financially?

To begin with, you’d have a great income! Even using Jay’s hometown rents of

$695 per unit – your gross income would be nearly $28,000 per month! Roughly

one-third or $9300 would be yours to keep. By the way, very few people in my

town earn that much, so you’d be on all the local charities mailing lists.

Obviously, you’d have created yourself “full-time” employment along the way!

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WHY LONG-TERM INVESTING PAYS OFF

Rents go up like peanut butter and pork-n-beans! Let’s assume that down the road

aways they’ve increased to $825 per month! Now, what happens to the extra

money? The answer, my friend – it’s yours to keep! You’ll immediately become

more popular with all your long lost relatives. They’ll begin showing up outta

nowhere! It’s hard to keep success under wraps!

Finally the time comes to cash in your chips. What happens now? If you follow

my teachings, you’ll carefully begin selling off properties to the next generation of

investors! Hopefully, you will have learned the right way to do this! But since I

don’t want you guessing – I’ll teach you at my Investor Training Seminar or you

can learn from my home study course: “EARN $100,000 ANNUALLY WITH

SMALL INCOME PROPERTIES”. Either way, selecting the right buyers and

setting up your carryback financing to provide you maximum safety, are the keys

to a quality retirement.

I HAD A DREAM – I’M RICH

If you’re like me – you’ll be a lot richer, than you ever dreamed – you’ve got my

word on that! Let’s say I sold six colony properties, providing selling financing;

just like Jay’s plan! Is there anyway to know how rich I might be?

Not exactly, but we can look back to Cherry Street for some guidance. I owned the

property for 26 years and the value increased nearly four and a half times. That’s

just a smidgen over $19,000 per year. When I bought the property, I could have

never guessed; but an up and down economy always favors real estate. It’s hard to

look forward and imagine prices going up – yet, they always do!

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For the sake of comparing, I’ll use my Cherry Street to calculate how rich you

might end up. Today, Cherry Street properties will cost a skilled buyer in my town

between $350,000 and $400,000. Even if we estimate values three (3) times higher

when you decide to sell out and retire – that would be 6 to 7 million dollars!

I’ll assume you follow my advice and sell for about 10% down and carry back

$6,000,000 or so. Financing at 6.0% interest only on the unpaid mortgage debt

would allow you to live quite happily with a monthly income of $30,000. Unlike

rents, your mortgage payments won’t go up! But by now I’m assuming, you’ll be

old like me and you’ve adjusted to $30,000 per month! Regarding the principal!

Let the kids have it when it comes due; they’ll know how to spend it – agreed!

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THE BUSINESS OF

MULTI-UNIT INVESTING

Learn this business – there are basically three (3) stages of development – and

there are no shortcuts.

LEARNING

STAGE ONE is learning how to buy the right kind of properties that produce

cash flow the quickest. This will be your most challenging – and exciting learning

period. You should expect to read lots of books, purchase home study courses and

attend training seminars in order to develop your investment skills. You’ll begin

acquiring properties and you’ll make the usual beginner mistakes. Money will

always be tight. This is the stage you’ll work most of the bugs out as you “fine

tune” your investment skills.

OPERATING

STAGE TWO will find you a much more sophisticated “deal maker”. You will

now have the knowledge and skills to “flush out” properties with the highest

potential for quick cash flow and long-term profits. By now your abilities are

good enough to attract equity investors should you choose. With money available

from “deep pocket” investors, the sky’s the limit. But with or without financial

assistance, your cash flow should allow you to pick-n-choose new investments

more carefully. You must continue your education and training to broaden your

knowledge. By now, your investments are taking good care of you – life is good!

SMELL THE ROSES

STAGE THREE is about reaping the harvest. By now you’re living well – and

“cashing out” will put you on Easy Street. You’ll begin selling off your

properties selectively – taking back wrap-around notes for monthly payments.

You may even consider hard money lending to support your twice a year cruises.

At this point, you can pretty much do as you please, so long as you manage your

business well. The time has come to pull over in the slow lane. Your biggest

chore now will be making those daily jaunts down to the mailbox in your pajamas

to pick up your wrap-around note payment checks! Ain’t life grand – or what!

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THE BALL’S IN YOUR COURT

IT’S NOW UP TO YOU

Well my friends, there you have it! I’ve given you a good look at what my kind of

investing can do for you. I even warned you at the beginning about reading this

book and doing nothing! You’re now at the crossroads. It’s your chance to

become wealthy – or simply do nothing! That you must decide for yourself.

If you like what you’ve read and you choose financial independence; here’s the

next step.

Order my training course; “EARN $100,000 ANNUALLY WITH SMALL

INCOME PROPERTIES”, and let’s get started today. See the description on the

next page.

–Click www.fixerjay.com/info/7050-2

– or call 1-800-722-2550, ask for Kathy

– or fax the order form to 1-530-223-2834.

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Much like leveraged real estate will increase your yield – this home study course

will do the same for you. This course is specifically designed to “speed up” the

time it takes between your education and ownership of your first multi-unit

property. Each chapter moves you closer to your goal of financial freedom, more

income and the security you get with income-producing real estate. Starting with

Chapter One, you’ll learn Jay’s insider secrets to finding the kind of properties

that produce income quickly. How to acquire properties not listed for sale is

covered in Chapter 3. Jay’s special “Cold-Calling” technique using letters is in

Chapter 4, along with how much to pay.

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The four methods to acquire properties, as well as instructions for writing “Cold-

Call” letters, are covered in Chapter 4. You’ll also find examples – how much

you should pay. Leverage & Compounding are explained in Chapter 5 with

examples – how it works.

Understanding jay’s isolation factor is important before you buy. Chapter 6 tells

you how to use it! Also avoiding most risks when buying multi-unit properties is

explained clearly to help you avoid early mistakes. You find 10 things you

shouldn’t be doing in this chapter.

Six studio recorded CD’s help you understand each chapter fully explained by

Fixer Jay and Dan S., Jay’s millionaire student. Chapter 7 is about building your

own “money machine” – adding value and learning how to spot opportunity.

Chapter 8 shows you how to develop a wider vision and the principals of

operating your own business compatible with managing your real estate. The

benefits will totally eliminate paying income taxes.

Chapter 9 shows you how to select the right real estate agent, what you should

expect and where to find “Mr. Right”. Planning is covered in Chapter 10 – how

much to spend for fix-up. Chapter 11 is extremely important – all about creative

financing, explained so you understand it. In Chapter 12 creative techniques

continue and Chapter 13 fully explains how wrap-around can make you rich.

Shows you examples – how it works and teaches you the benefits and how to avoid

any risk.

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Online: www.fixerjay.com/info/7050-2 Phone: 1-800-722-2550 TOLL FREE

FAX: 1-530-223-2834 – 24 HOURS

Mail: KJAY Publishing

PO Box 491779, Redding, CA 96099-1779