Basically some of it's real and some of it isn't. He's obviously prone to hallucinations, and as the book is in first person he probably exaggerated some of it as well. Like, he probably killed that hooker, but probably didn't drop a chainsaw down a flight of stairs onto her. Although, as it's satire, even the real parts aren't realistic.
Incidentally, I discussed this book in an English class, and the teacher said it was the only book he's ever thrown in the trash. We debated whether it was good or not, agreed to disagree. The other students who had read it were split down the middle too.