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“The tenants won’t pay the rent, you’ll go into foreclosure, lose the house, destroy your credit, and ruin your entire future. What you need to do is go to law school, get a job at a nice law firm, work eighty hours per week for ten years to become a partner, then after forty years you can retire as a millionaire.”

This was the advice I got from my Dad when I told him I wanted to go into real estate investing.  Not exactly the encouragement I was hoping for.

At the time, I had just graduated from college and was working a minimum wage job. I had heard all my life “you WILL go to college and land a great job.”

Only, the job didn’t come. I may have graduated summa cum laude from college, but each interview I took I was told I had:

  • not enough experience
  • not enough schooling
  • or just not “right for the job.”  (Sound familiar? You aren’t alone!)

Thus, the only job I could get was an overnight shift at a group home for the developmentally disabled while I studied for the Law School Admissions Test.  I had accepted my fate of working overtime for the rest of my life in a career I had no interest in, simply because it was “the way things are done.”  I honestly believed my life had peaked in college and I was on the slow decline toward slavery and eventual death (old, fat, miserable, but probably rich).

This is when my interest in real estate began to develop. I had begun watching the “flipping” shows where entrepreneurs bought, remodeled, and sold homes to make large sums of profit.  I had no construction ability, but I began to devour every piece of information I could about this “flipping” of homes. I slowly learned that investing was more than just flipping, and that true wealth was in the collection of rentals.

I called my Dad to tell him of my new career in real estate investing- thus the, “you will ruin your entire future” speech I began this story with.

With that, I was back to studying for Law School.

TV is just TV, and in real life – people ruin their lives with real estate.  My dad was not the only one advising against it. Everyone has a story of an uncle who invested in real estate and lost money to deadbeat tenants.  It was fact, or so I thought.

Brandon, Meet BiggerPockets.


I decided to Google my concern. “What to do when a tenant doesn’t pay.”

My search brought me to a website known as BiggerPockets, and it changed, and I would even say “saved,” my life.

For those of you not familiar with, it is a social network for real estate investors. The site is home to (currently) nearly 100,000 members, thousands of blog posts, hundreds of articles, and enough forum discussions to keep you reading for years.

For the first time, I realized there were answers to the “you’ll ruin your life” objections. There were people actually investing in real estate, and making a killing off it.

I can still remember the feeling of knowing there was hope.

I didn’t have to suffer through forty years of a job I hated. I could actually craft a career around something I enjoyed. The income I could make was unlimited and I could be excited to wake up each morning.

Since that day, hardly a week has gone by that I have not been on the site reading articles, asking questions, connecting with others, and learning everything I could.

I love reading books on real estate, but interacting on the forums is like reading a living book. I could ask a question, and often immediately I would receive back suggestions, ideas, and other help from seasoned real estate investors who have been there, done that.

A New Life


When I say “BiggerPockets” saved my life, I truly believe it. It saved me from a life that had been chosen for me, but I did not want. It saved me from the “slave-save-retire-die model” that nearly every American believes is the only way.

Not only did BiggerPockets save my life, it also gave me a life. It helped me on my journey to become a real estate investor, which I now do full-time. I wake up each day excited for the work that I do – because it’s mine. I don’t report to any others (except “the Mrs.”) and have a free reign to express my creativity.

BiggerPockets continues to help me out, even today. There is a good chance that you are reading this blog after finding me through BiggerPockets.  The majority of all my traffic on my site comes from BiggerPockets. Last month I was asked to become a regular contributor on the BiggerPockets Blog which has been an awesome experience and I hope I can give back to the community that has helped me so much.

If you are not currently a member of BiggerPockets or don’t regularly get involved, I highly suggest you get connected. Follow me on BiggerPockets by visiting my profile here. Get involved in the forums, read and comment on blog posts (especially mine, currently on Sundays), like them on Facebook, and start to grow. You never know, BiggerPockets might just save your life as well.

P.S. – My Dad has since come around and is now my biggest private investor.  We own several properties together and are continually talking about “the next property.”   Thanks Dad for all your support! I think you’d agree I make a much better investor than I would have a lawyer!

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Also – be sure to download my free e-book “7 Years to 7 Figure Wealth.” It’s totally free, no up-sell, no affiliate nonsense.

Just a good ‘ol fashion plan.


P.S. looking for hard money loans in California? Be sure to check out my friends over at They have very competitive rates, can fund within a week and specialize in fix and flip loans and other hard money loans.


This list might look familiar for those who have downloaded my free e-book, “7 Years to 7 Figure Wealth,” but I thought I’d share it here for everyone else and dive in a little deeper explaining each item more fully.

Also, I’ve got big news about my newest property acquisition coming out later this week!  Be sure to get automatic updates by entering your email in the bar at the top of this page and sign up for my newsletter by entering your email on the right (I know, there is a lot of signing up around here! I promise I don’t use your email for bad purposes!)

So without further ado, here is:

Ten Ways to Fail as a Real Estate Investor:

  1. Don’t Read- If you really want to stop moving forward, stop reading about investing. Don’t learn new strategies, because you will be left in the dust when the market changes. Don’t read quality real estate blogs or download a free e-book. (shameless plug, I know!)
  2. Don’t Connect with Other Investors – Associating with other investors will give you confidence and knowledge, as well as help navigate muddy waters. Therefore, be sure to steer clear from other investors. Especially don’t join websites like or your local real estate investment club.
  3. Don’t Have A Plan – Knowing the direction you want to go will only get you there faster. Instead, simply aimlessly “invest” in whatever floats your boat at the moment.
  4. Only Listen To Gurus – Pay lots of money to attend seminars full of up-sells and “hidden secrets.” Make sure you only listen to them and don’t ever question their dated information or underhanded sales techniques.
  5. Do Everything Yourself – By stretching yourself thin, you will lose both interest and money – so be sure to never ask for help or hire a professional.
  6. Run Your Business On Emotion – Don’t be rational when making business decisions. Instead, rely on how it feels at the moment. Feel bad for tenants who spend their money on drugs instead of rent and give them another break.  Be sure to take everything personal as well and take our your frustrations on your family at home.
  7. Get Fancy and complicated – Investing is fairly straightforward and simple, so if you want to fail – be sure to get real fancy and complicated. Using seventeen layers of LLC protection, cross-collateralize everything you own, and take huge risks to help speed up the process of failure.
  8. Spend your money frivolously – There are many ups and downs when investing in real estate, so be sure you don’t save enough money to cover you in the down times. Be sure to leverage yourself out as thin as possible, buying the best new cars and toys so you look as rich as you want others to think you are.
  9. Don’t stick to your standards– following a recipe is for those who want the food to turn out tasting delicious. Instead, deviate as much as possible, buying property that doesn’t meet your standards and rent to tenants who would never qualify. Combine this with number six above for even faster failure.
  10. Wait Until Tomorrow –You will never succeed if you don’t start, so make sure you sit back and watch one more episode of Desperate Housewives. You can always invest when you have more time, more energy, and more desire. Besides, the government will take care of you when you retire.


Do you have other ways to fail you want to add to the list?  Comment below and let me know! (That rhymed. I’m a poet and I didn’t know it!)

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P.S. looking for hard money loans in California? Be sure to check out my friends over at They have very competitive rates, can fund within a week and specialize in fix and flip loans and other hard money loans.


In a recent article I wrote on concerning partnerships, I mentioned knowing the difference between “front-end” and “back-end” debt-to-income.  Today I want to briefly discuss what that is, and why it is important for a real estate investor, or just a casual homeowner, to know.

What is Debt-to-Income?

“Debt-to-Income” is a ratio, used by banks and other financial institutions, to determine how much credit you are using compared to how much income you make.

Why does this matter?

Because income is deceptive.

Let’s say you make $10,000 per month in income (we’re just pretending…).  Could you afford a car payment that is going to cost you $500 per month? You probably want to quickly respond with “yes, of course” but like I said, income is deceptive. If your $10,000 income is eaten up with a $9600 house payment – you couldn’t do it.  Banks are smart (okay, that’s debatable) and they understand this.  This is where the debt-to-income ratio comes into play.

Your debt-to-income is the total amount of minimum payments you make on your debt divided by the total income you make in a month.

For those who love math (guilty!) here is how the equation looks:

Debt to Income = Debt Payments / Monthly Gross Income.

So, if your gross income (before deductions) is $10,000 each month and your minimum debt payments are $3500 per month, then your debt-to-income ratio is 35%.

A bank does not want you to be “over leveraged,” because it increases your risk of not paying back the loan. The more debt you have, the higher chance the bank has of losing money.

What is “Front-End” and “Back-End” Debt-T0-Income?

“Front-end” debt-to-income uses the formula above and simply looks at the debt related to the mortgage – including property taxes and insurance. For example, if your mortgage payment (with taxes and insurance) is $1500 per month and your income is $10,000 per month, your front-end debt-to-income ratio is 15%.

“Back-end” debt-to-income, on the other hand, uses the above formula to determine your ratio, but includes the minimum monthly payment on all your debt, including credit cards, student loans, mortgage (with property taxes and insurance), auto loans, and any other debt that might show up on your credit report (including loans you might have co-signed for that are not even yours). So, if your credit report shows that you have $3000 per month in minimum monthly payments plus your $1500 mortgage payment all on your $10,000 monthly income, your back-end debt-to-income will be 45% ($3000+$1500 / $10,000).

Why Does Debt-to-Income Even Matter?

Debt-to-income is important because you want to qualify for a mortgage.  

You cannot qualify for a mortgage with a bad debt-to-income ratio.  Lenders will require you to fit below their maximum standard for debt-to-income in order to qualify. If your debt to income is too high – your application won’t even be looked at. You will be shot down automatically by the computers who first process your loan.

Even if right now you aren’t looking around for a loan, you will eventually. At that point, you need to make sure you debt-to-income is in good standing.

What is a Good Debt-to-Income Ratio?

While every bank has their own standards (and can often slightly bend them if you qualify in every other way), generally a bank would prefer:

  • Your front-end ratio be less than 30%.   AND
  • Your back-end ratio be less than 40%.

This is often written with a hyphen, such as 30/40.

Keep in mind, a bank will usually want BOTH ratios to be correct in order to qualify.

So, going back to our story of you earning a $10,000 income – your front-end debt-to-income ratio would allow you to purchase a home that cost you $3000 per month (including property taxes and insurance).  Your back-end debt-to-income would allow all of your total monthly debt payments – including the loan you are trying to get – to be less than $4,000 per month.
Obviously, if you are trying to get a mortgage you may have other qualifications to pass before getting a loan,  but by making sure you at least fit within the debt-to-income ratio you are one step closer to hearing the banker say “Yes!”

Photo from s_falkow

P.S. looking for hard money loans in California? Be sure to check out my friends over at They have very competitive rates, can fund within a week and specialize in fix and flip loans and other hard money loans.


This is a post (the second in a three-part series) by John Fedro of

In my last post here at, I introduced myself, teased you with my simple cash-flow generating secret tool, then KAPOW!! – completely threw you a curve-ball by divulging my money-making strategy is investing in small, individual, easy-to-close mobile homes in and out of mobile home parks. I need to be brutally honest with you for the next minute…

Before we get into the meat of a cash-flow deal (next post) and talk about where all our money is made, you have to understand why sellers will sell you their unwanted mobile homes for such low prices; and conversely, why buyers will pay over retail prices for the same mobile homes. Much like any j.o.b. – you must understand your product, market, and all the players before you may truly thrive.

1. Understand Your Target Homes:

The mobile homes that will make you the most money are often times not the ones you would first believe. In a nutshell 3 bedrooms almost always outsell 2 bedrooms, and clean mobile homes always outsell mobile homes that need repairs. But what else… If you have been in real estate for any length of time you understand that it is not the cleanest or largest homes that make the most money but it is the more motivated sellers that you are truly after. The more motivated the seller, often times the more lucrative the deals end up becoming.

2. Understanding Your Buyers:

Approximately 80% of your end-buyers that call from your “Mobile Home For Sale” advertisements will not have the cash or approved credit to pay you all-cash for your mobile home. Another way to say this is that most mobile home buyers can make you a move-in payment and monthly payments for the sales price of the home. Understand that there is an ocean of buyers looking to buy a home with monthly payments instead of paying with all-cash.

What about buyers with all cash? These buyers are out there but in far less supply than buyers with some cash and great job history. Go where the demand is… payment buyers.

What about bank financing? Bank financing is very hard and restrictive to obtain especially concerning mobile homes on rented land such as inside a mobile home park.

There is a large segment of American society that are credit-conscious, hard-working and honest folks that would love to stop renting and finally own a mobile home of their own. If you choose to sell a home for all cash you are competing with all other sellers looking to sell their properties for all cash; driving home prices lower and lower. If you choose to accept monthly payments for your mobile home you can likely find tenant-buyers eager to pay over retail price for the value/opportunity to own a beautiful home.

3. Understanding Your Sellers:

My real estate investing business changed forever when I began to see my sellers for what they really are; fragile, scared, vulnerable, friendly, and selfish human beings. Let’s step outside the relationship that we typically have with mobile home and traditional real estate sellers and realize that each is a unique soul with his or her own set of skills, ambitions, loves, fears, and wants.

So what does all this mean for you: In a nutshell sellers are real people in real situations. Some sellers need to sell today, and others can wait weeks, months, or even years before becoming desperate to sell. Again some sellers are at the end of their ropes, while others have enough savings/income to ride out whatever situation is requiring/pushing them to sell. By being a mobile home investor in your area you may close deals and generate cash-flow by knowing your market and knowing what buyers will pay.

In my next post here at you will discover an simple method to help ensure you underpay for every mobile home you purchase.


Impact a life daily,

John Fedro

P.S. looking for hard money loans in California? Be sure to check out my friends over at They have very competitive rates, can fund within a week and specialize in fix and flip loans and other hard money loans.

Hey everyone!

After many days of writing and editing, my first eBook has arrived and I’m giving it away for free! Yep, just as a gift for hanging out at Real Estate In Your Twenties.

And yes, you can still get the eBook free if you are thirty, forty, or a hundred years old!

Simply add your name and email to the box below!

Also, let me know your thoughts about the book!

P.S. looking for hard money loans in California? Be sure to check out my friends over at They have very competitive rates, can fund within a week and specialize in fix and flip loans and other hard money loans.

Looking for the “right” home to buy can take a lot of time and effort, especially when trying to comb through the hundreds or thousands of deals that are on the market today. It is important not to waste time and maximize your efforts (see my last post on the 80/20 principle).  The following is the quick mental math that I use to analyze a single family home quickly and decide if it’s even worth looking into.

First, I only look for homes in areas that I am financially comfortable with. So, if I am not comfortable with the average sale prices, rent prices, days on market, etc of a given area – I learn that first. I live in a fairly small community, so it is fairly easy where I live.  If you live in a large area, like a major city, you should be focused on a small area that you can fully wrap your mind around. Never invest where you don’t know the market.

Second, I determine how much it is going to cost me to rehab the place. This is a VERY loose number, and generally just use $10,000 for a small paint/carpet turn,  $20,000 for a medium turn, and $30,000 for a major remodel. This includes labor, material, closing costs, and holding costs.

Third, I look at the purchase price and add the repairs. So, if I found a house for $65,000, and it needed $10,000 in repairs, I use the number $75,000.

Fourth, I then take that final number and knock off two “zeros”. This gives me a good estimate of my monthly mortgage payment with taxes and insurance. So $750 becomes $750 per month. I know this is a bit high, but I like to be conservative.

Fifth, I add a few hundred for vacancies, repairs, etc. So I might say this property is going to cost me on average $1000 per month.

Finally, I just need to know what the average rent will be. If the average rent, on the low side, will give me $200 per month in cashflow, this is probably a deal worth looking into. If not, I’ll move on. Additionally, if the total cost I would have invested in the  the property is $20,000 less than it’s value, then I will also move forward.

I believe any property needs to have both positive cashflow and good equity. There are too many good deals today to buy something that doesn’t have both.

That’s pretty much my quick and easy strategy to sort through all the listings to find a gem. I do this whole process in about thirty seconds per home, and it has worked great for me. Obviously, if I decide to pursue it in more detail I will learn exactly how much repairs are going to cost, what the mortgage will be, and more. This is simply a very quick way to sort out 90% of the deals and only focus on the ones that might be good.


image credit: NNECAPA


P.S. looking for hard money loans in California? Be sure to check out my friends over at They have very competitive rates, can fund within a week and specialize in fix and flip loans and other hard money loans.