Reviewed: Investing In Gold Mine Houses [Book]

It has ugly in the title – I couldn’t help it. That would be the succinct Investing in Gold Mine Houses: How to Uncover a Fortune Fixing Small, Ugly Houses and Apartments by Jay DeCima (2008)

It’s got a hokey front cover… can we get beyond that? I’m not sure. Have you made your assumptions? Here’s what’s inside.

“Who said the American Dream was dead? Certainly not me! I’m livin’ it!” (page 24).

The author starts off by telling us, in broad terms, how rich he is. Add a first-page joke about ‘names changed to protect the innocent’ and I’d pretty much formed my opinion – but kept reading anyway (haven’t got a fireplace). Our new friend is hooked on ‘deal-making’ and wants to teach you about this career – one with “absolutely no limits on how much money you can make” (xiv). Woo! American Dream!

Don’t judge too soon? If I change the sentence to “absolutely no limits on how many apple trees you can grow“… we’d be firm friends. Jay’s bought more houses than me, so I keep reading… one eyebrow raised.

Premise: The book outlines how easy it is to make lots of money – that ”never again will you feel totally dependent on your employer” (xiv). Lots of money, plenty more hyperbole.

Guys? Why did I think reading real estate books was a good idea? Always judge a book by its cover. After leaving the introduction, I’d get more uncomfortable still:

• He’ll show us how to write real estate deals ourselves? Alarm bells ringing.
• Things you need most: knowledge, self-confidence and perseverance.

Approach: he tells you how much money he made using detailed examples of his own past deals (i.e. buying 6 neighbouring houses – page 4), but the advice sticks to “getcha some, here’s why: number, number, number“. There’s very little “how”.

Tone: chatty USA Today-style from a man I imagine presents lots of seminars.

The meat: It’s a book-form strategy for amassing a stash of fixer-upper rental properties (not single family homes but apartments/duplexes, etc.), and then renting them out. The seller provides financing.

 ”I never use any of my own money to buy fixer houses. I’m always able to convince the sellers to provide at least 80 or 90% of the financing” (page 13).

Agree to disagree: “Fixin’ houses should not be treated like a hobby” (page 122). It hurt to re-write “fixin’” straight from a book that’s not Tom Sawyer.

Tidits of interesting things:

• U.S. tax depreciation rate for rental properties is 3.64%/year (page 22).
• A discussion about over-improving a property, particularly when it’s for renters and knowing when to stop.
• Of possible use in house-hunting an ugly baby: walk away from a place when you suspect the owners are “still quite proud of their property” (page 70).
• Though largely anti-DIY in tone, he concedes that “sweat equity is the best game in town for average working folks who [have] very little money to start with” (page 237).

“Rainy weather always makes ugly properties look even uglier” (page 37).

 Covers Canada? No. He uses some U.S. tax stuff, but it’s only illustrative. The book discusses rent-to-value ratios, which Julie Broad explains on her site, and sticks to 1- and 2.0 ratios (page 74). In Vancouver, this would mean renting a similar place in our price bracket for around $3,500/month. Not bloody likely!

1 reason to read it? Ummm…. I didn’t read the cover very carefully, saw UGLY and went with it. Though it’s in Amazon’s top 100 for buying/selling houses, it’ll only appeal to someone with a get-rich-quick mindset. Read if you’d consider dubious creative financing strategies & would outsource all DIY work (& can handle typos in books without losing your freaking mind). Clearly not for me but maybe a fringe interest for some.

Conclusion: Finished the book, put it down, and only then saw the author photo on the back cover. Wearing jean overalls. Ok, Jay, I guess you can say “fixin’” after all.