A housing entrepreneur is what I call myself.  I’m a business person with real estate assets.  I own rental houses and my customers pay me monthly rents.  Housing entrepreneur sounds somewhat different than what most folks think about when they consider going into business for themselves!  They normally think more about owning a hamburger stand, buying a rug cleaning franchise; perhaps a special-built steam cleaner truck, acquiring an ice cream and popsicle route or setting up a silkscreen T-shirt factory.

Typically, these kinds of businesses don’t have hardly any long-term appreciating value and they seldom provide much more than steady employment for their owners.  In several cases I’m closely familiar with, the operators feel quite fortunate to earn what I’d call – just average wages.  Sometimes their actual take-home pay would be much higher if they worked for someone else and didn’t have all their money tied up in their business.

Let me say it like this — many folks who are wrapped up in a wide variety of small businesses work very hard and put in twice as many hours for a lot less pay they could expect to make as regular employees.  Self-employment can be a big temptation for people like me and many others who often have this blind obsession to be our own boss and prove we can make it on our own!

A Business with a Much Better Future

When I purchased my first investment property, I had no idea I was just beginning a journey that would make me a wealthy business person!  Well, lots wealthier than I was, that is!  In my early years, it simply never occurred to me that buying houses was a business opportunity!  I thought of myself as just an ordinary everyday real estate investor and that was that.  Looking back today, I stand corrected!  Buying investment properties is indeed the best business opportunity I can think ofbar none!  It’s also one of the safest and most profitable businesses as well!

If you’ve been thinking about starting a small business or even if you’re already involved in the kind of operation like I’m talking about here, it may well be worth your time to thoroughly analyze the long-term payoff!  Why – you ask?  It’s not the least bit uncommon to spend abnormal amounts of time (sometimes years) pursuing a dead-end venture that will provide you hardly any long-term security for all your time and effort.  This can happen even when a business appears to be doing fairly well at the present time.

Here’s a hypothetical situation.  Let’s say you purchase a “carpet cleaning” setup.  You now own a truck with a special built steam cleaner, mounted on the back.  Next, you build a route and work your tail off for the next eight or ten years.  Now stop and ask yourself these questions.  What will you have to show for your efforts after 10 years?  What is your business worth if you should sell out?  What will your income be if you suddenly stop cleaning carpets yourself?  Do the words “HARDLY NOTHING” ring a bell?  My guess is – you’d likely have a sore back, a worn out truck and a business with no more value than the day you started it.  And about your financial future – I think you can probably figure out the answer for yourself!

It’s my personal view that working for yourself is the “ultimate freedom”.  It’s very exciting when you can earn a decent income doing exactly what you want; when you want and in an activity of your own choosing.  Some folks work long and hard in a no-future, dead-end business.  They often become very disappointed when they finally realize they can earn more money, working less hours, for someone else.  Many business opportunities allow the freedom of working for yourself – however; they fail to provide adequate compensation.  There is no thrill being your own boss if you can’t make a decent living for yourself and family.  That brings us to what I consider the safest and most profitable business opportunity today – the business of owning income-producing properties.

A Hybrid Opportunity – Real Estate Vs. Widgets

It’s a very simple concept!  Take the best of several ideas and mix them together like one.  Every successful business needs short-term cash flow and long-term growth (increasing value).  Without this combination, your business future will always be uncertain.  Many businesses have adequate cash flow to meet daily needs, but hardly any long-term value increase for the future.

Take the case of selling widgets when the public wants to buy them.  Sales are hot!  The registers are ringing, but that’s short-term only.  For the long-term, however; we must look at the value of business assets.  Here we find worn-out delivery trucks and a broken down “widget maker”.  The value is zip!  When these assets wear out, you would need to find the money to buy new ones or the business would go down the tubes.  Let’s assume for a moment you own real estate assets instead!  Even as your properties wear out, they are most likely increasing in value.  If widget sales were to suddenly drop off or stop, but your business assets were real estate – obviously there would still be some value remaining in your business.

The combination of a cash flow business that owns real estate assets is truly the best of both worlds.  In my case, the tenants are my widgets.  I sell residential space to my customers.  My business assets are houses.  Instead of losing value as they get more used, they are instead becoming more valuable.  Let’s say my widgets decide to quit paying for residential space someday — will I go broke?  It’s not very likely because my real estate assets have continued to grow in value.  That value is easily converted to cash in my hand if I need it.  Houses are much better assets than worn out machines.  Since my business assets are real estate, they are most always increasing in value.  Theoretically, my assets will never wear out if I keep them fixed up and painted.  As the fiery ex-chairman of Chrysler used to say, “Show me a better deal and I’ll buy it.”  My properties are that better deal, and of course, that’s exactly the reason I’ve always kept buying them.

I often tell my seminar students — “I don’t mind working extra hard for long hours, so long as the anticipated rewards are in line with my efforts.”   Over the years, my rental business has met all of my expectations and even exceeded some.  Once you get this housing business on track and rolling, you will see, as I have; the rewards are almost unbeatable.  Following, I’ll tell you about some of the extra benefits in the housing business.  Read them carefully.  I think you’ll see how each of them can add to your personal wealth plan, especially in the early years.

First, there are a variety of ways to earn extra cash in the income housing business, depending on where you are financially when you’re just starting out.  One temporary method I used successfully when I first started out was managing properties for other investors.  I did fix-up work and received pay from the owners.  Sometimes I was allowed to keep the cash flow, which kept increasing as I improved the properties.  In several cases, I was given an option to purchase half the equity after I fixed up the property.  I also received “finder’s fees” for locating good deals for others.  Finder’s fees, compensation for fix-up work and being allowed to keep a portion of the rental income does not require having a real estate license.  This extra income made up for my lack of cash flow from my own property during my early years.

Being Creative – You Can Enjoy Low Start-Up Costs

Quite often when you find motivated sellers, it’s possible to use sweat equity or perhaps trade your old pickup, travel trailer or even your old ski boat as a down payment to become the proud new owner of a rundown duplex next to a garlic factory.  Sure it stinks and it’s not much to look at, but now you’re a full-fledged investor.  Here’s what’s really important – your duplex will more than likely increase in value as the rents go up, they always do.  Ski boats always go down in value, plus they take up lots of extra space in your garage.  Believe me, it’s an excellent trade if you can pull it off.

The rental property does not have to be terribly expensive to start out, if you’re not too “picky” about how it looks!  A friend of mine bought a fancy air machine that blows up balloons with your picture on them.  It looks like a portable “out-house” on wheels.  He tows it around to the shopping malls and county fairs.  It has a built-in camera, a hot air blower with a portable work table.  The glossy four color sales brochure claims it will pay for itself in about five years working on weekends.  At the rate my friend is selling balloons; he estimates it’ll take at least 31 years.  Smart people often do strange things for money!  I would guess the sales promoter blows a lot more hot air than my friend’s machine ever will.

It’s generally best to start out with a duplex or even a small group of units – say four or five houses or apartments if you wish to move faster.  $15,000 or $20,000 is generally more than enough cash to start.  Many folks start out with less when they learn how to negotiate.  My entrepreneurial friend is paying twice that much on his “air blower” contract.  All together, it will cost him $43,000, with the interest added on.  All he’ll ever own, from what I can determine, is a hot air blower, left-over balloons and a worthless camera!

Ugly Rundown Houses Quickest Path to Cash Flow

First you must understand that all investment properties are not equal performers!  If you were to purchase average rental houses in average neighborhoods, not surprisingly, you’ll likely have average cash flow.  It could easily be negative cash flow!  Negative cash flow is for “wimps”, not rich tycoons.  That kind of strategy is a path to nowhere!  If you need money to eat on and you wish to own a business that has far greater cash returns, try this approach.  Look for rundown “El Dumpo” properties in acceptable neighborhoods (that means no wars going on).  Look for properties that will respond well to “inexpensive fine-tuning” (fix-up), using cheap labor.  Cheap labor means you’ll probably be doing it yourself, or hire a friend.

This strategy is a quick “cash flow generator” because there are some powerful laws of human nature working to assist you.  Natures’ laws work like this – rundown ugly properties don’t look good or smell very nice.  You can buy them cheaper with a lot better terms.  Obviously, you’ll need to learn a few negotiating tips, but all it takes is practice.

You Can Work This Business at Home

Consider how much less complicated your life would be if your office was your own kitchen table.  No freeways, babysitters or strict time schedules to follow.  The kitchen table is still my main desk and I’ve been doing my income housing business for many years now.  I did add the extra center leaf when I needed more room to count my rent money.

If you decide to become a rental housing entrepreneur on a full-time basis – obviously, your home can be your office, without any question!  As such, you may claim full tax deductions for the rooms you use.  Most certainly, working at home is a big advantage for beginners by not having the extra expense of an outside rental business office.  I would suggest a separate telephone number, with a recorder and monitor, to be used for your business office when you have enough properties to justify the expense.

Folks who attend my investors training seminars and management classes are very much aware that I consider investing in small multi-unit properties to be one of the very best home business opportunities available for ordinary working class families.  I’m talking about families who don’t have a ton of money to spend, but are more than ready to contribute their time and personal efforts for a chance to improve their financial status and share in the American dream.  Many families I’ve been acquainted with over the years have built considerable wealth starting with almost nothing to begin with.  Obviously, they were smart enough to educate themselves as they went along, but their results are nothing short of amazing!  I know a couple millionaire families who got there so quickly, it baffles me – and I’m their teacher!  The point is adding value to rundown rental units is a profitable investment business that offers all family members something they can do to contribute to the family bank account.  It shouldn’t take forever, either, if you’re dead-set on doing it and you maintain your discipline!

Many long-time subscribers will remember reading about my good friend Rob Colson and his son Ricky.  When I wrote about their success several years back, son Ricky was only eleven or twelve years old.  Then Rob caught the fix-up bug – and like most young boys; Ricky did not volunteer anymore after he helped clean up the first “pig sty” duplex.  Fortunately, Daddy Rob had enough enthusiasm for the entire family – so the words I can’t do it was never an acceptable answer when it involved the family’s rental houses.  On a more positive note, Ricky learned to paint and his paintbrush literally paid his tuition through college.  Not only that, but Ricky’s share of the pie earned him a brand new shiny pickup truck with all the gadgets exactly a month before he turned 19.

This Opportunity Has Never Changed

In 1931, my long-time friend and fellow real estate author, Bill Nickerson, was told by his economics professor at Fresno State College, that the days of individual achievement and opportunity were over!  The professor told his graduating class that nobody should ever expect to build an estate large enough to produce an independent income anymore.   As it turned out, Bill paid very little attention to the professor.  Bill claimed the professor meant well, but the Great Depression had stripped him of any initiative he may have possessed.  Bill and his wife, Lucille, began investing in small rundown duplex properties when he was 28 years old while working for the telephone company.  At 42 years of age, Bill and Lucille retired in the hills of San Ramon Valley, California, with enough rental income to enjoy all the added comforts they had both worked for.  Bill wrote about his investment techniques in his now classic book; “How I Turned $1,000 Into a Million in Real Estate” (1959).

Many folks still believe Bill and Lucille were lucky – or possessed some magic formula!  Knowing them both quite well, I can tell you – their magic was hard work and discipline.  My own strategy differs very little from Bill’s.  I acquire rundown, ugly-looking properties and through my own selected improvements, I can often double the property value within a couple of years or so; many times increasing the rents by 40-50%.  Impossible you say?  Not hardly; some folks do even better than that.  The key is having the knowledge and developing the special skills, which almost anyone can learn from a good teacher.  Nickerson informed his readers that anyone, after being shown how, and who possesses average ability, average intelligence and average luck can become a real estate millionaire if he or she sets their sights on the target.  I’m living proof that Nickerson was right! 

Jay P. DeCima, aka Fixer Jay, lives in Northern California where he operates multiple rental properties.  With nearly 50 years’ experience, he’s a street-wise landlord and best-selling real estate author. Jay’s recession-proof, adding value techniques are ideally suited for small-time, Mom & Pop investors seeking faster paydays and financial security.  Jay’s self-help books have been voted no. 1 by both the Los Angeles Times and Chicago Sun during the past 12 years.

Readers are invited to download Jay’s latest “How To” e-book, Living the Dream (free) at:  http://bit.ly/aoa-6.

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