Start Small, Profit Big in Real Estate: Fixer Jay's 2-Year Plan for Building Wealth - Starting from Scratch

I think this is one of the best books on this subject. I've read many books on real estate and investing in general, this is one of the few that talks about real estate as a business. The author says that the biggest mistakes that inexperienced investors make is to treat this business like a hobby. One small rental house is a business just as 100 rental houses are. I cannot agree with the author any more. When you own a property, you are selling something that is called rental space. That's your revenue, and you also incur expenses. If you do it right, you will have something left, which can be called cash flow, earnings, or whatever you wish to name it.

The strategy behind this book is to purchase rundown properties in decent neighborhoods, fix them up, and rent them out. The author believes that profits in these types of properties are the highest because most investors are not able to look beyond ugly looking houses. They have no imagination of what they can look like when cleaned up. Since there are few buyers, the chances of getting good deals are high. But the author warns you that you must always buy from motivated sellers. If you want the property more than the seller wants to sell it, this is a red flag.

- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market

I would have like to know before I purchase the book: A little about the
author's Real Estate experience back ground. A preview or summary of the book.

There is some good, useful information in this book. But personally I found it hard to get past the country boy, hick lingo that he uses so much. For example, "Never Try to Milk a Steer". There are so many metaphors like this, I couldn't get through the whole book because I was laughing instead of absorbing the information. Most of the information is good, but if the book was more well written it would be alot better. I stopped reading this book and moved on to another one that I purchased at the same time, Millionaire Real Estate Mentor, I think its written by Russ Whitney or Ross Whitney, something like that. That one is awesome so far and I would recommend it above this book any day.

Author's basic premise makes sense-- there is money to be made buying fixer upper single-family houses that are rehabbed and rented for investment income. Author suggests focusing on houses that require cosmetic repairs and/or sweat-equity repairs that offer cost savings via investor completed repairs versus hiring and paying a professional.

Book's shortcomings include ad nausea repetition, a lack of practical how-to advice and too many references to investment returns based on gross income versus net income or before tax cash flow (i.e., A $100,000 house that rents for $1,000 per month does not produce a 12% return unless the tenant covers all operating expenses, capital improvements and there is no debt service. John Schaub's single-family house investment books offer a more detailed road map.

This book has the strong qualities of Jay's first book - written in a easy-going, lay-back style that makes it enjoyable to read, and it presents an eminently useful model that really works.

Jay says to avoid slick and flashy techniques because "slick is another word for slippery." He points out the gurus who formerly expounded on a wide assortment of get-rich techniques are "either bankrupt or working in gas stations." Jay advises to stick with run-down, fixer-upper types of properties. Buy low, and improve their value, and rent them out. I's a winning formula that I, and many others, have used to make money in real estate.

I particularly liked Jay's technique of taking a low key negotiation approach, like the former TV-detective Columbo when he interrogated suspects. Instead of putting the seller on the defensive, don't directly tell them what's wrong with their house. No one wants a complete stranger to come up and criticize their house. Always show respect to the seller, and have the seller tell you what's wrong with the house by asking him a series of polite questions. Listen carefully to what the seller has to say. You can learn a lot by listening. Don't be critical, never talk down to anyone. Even sellers who must sell, won't sell to you if you try to intimidate them. Jay points out that you still must diligently verify any information you get from the seller. One way to do that is to ask for their "Schedule E" tax form.

Another key to Jay's formula is turning motivated sellers into bankers. This is something that a lot of us, myself included, need to work on. If we follow Jay's advice and get the seller to finance at least part of the loan, the purchase process suddenly becomes much easier.

I also liked Jay's memo system of dealing with renter problems. In using this system, I find it simplifies my dealings with renters. If you call and tell them to do something, they forget. If they see it in writing, in an official-looking memo, they will usually, but not always, do what you ask them to do. It reduces direct contact with them and it gives you written documentation in case you later need it later to remove them from the house. I like Jay's comment "tenants don't intimidate me because they are simply no match for my landlording skills." A bold attitude that we should all aspire for.

Overall, there is a lot to like about this book. If offers sound advice for the new, and the seasoned, investor. The Columbo negotiating technique alone was worth the price of the book for me.


Terry Sprouse is author of the book: "Fix 'em Up, Rent 'em Out: How to Start Your Own House Fix-up and Rental Business in Your Spare Time."