Chat, 3-21-2004
Posted on March 21, 2004
Welcome to the chat, Ralph Roberts!
[Investment Chat]: Ralph Roberts has entered (7:52 pm)
Ralph Roberts: hi Al
Al Lee: Hi, Ralph. How are you?
Ralph Roberts: doing fine… just doing last minute checks before the chat… we look good to go … [continues]…
Al Lee: I like to get in early so I am sure I can get in and everythign will work. It does!
Al Lee: Need spell check on the message box.
Ralph Roberts: yep…. me too… and I have the added responsibility of shoveling coal into the server’s furnace
[Investment Chat]: Mike Summey has entered (7:56 pm)
Ralph Roberts: which message box? … hi Mike
Mike Summey: Hi guys
[Investment Chat]: Chuck has entered (7:56 pm)
Mike Summey: Hi guys
[Investment Chat]: Chuck has entered (7:56 pm)
Al Lee: Hi, Mike.
Mike Summey: Hi Chuck
Ralph Roberts: I go Roger on, Mike.
Ralph Roberts: got, that is
Mike Summey: What are you talking about Ralph
Mike Summey: Oh! I know.
Mike Summey: We’re a bit early. Roger will be on shortly.
Ralph Roberts: colder than the dickens heah now… so much for Spring
Chuck: hi mike
Mike Summey: Where’d Al go?
[Investment Chat]: Al Lee has entered (7:59 pm)
[Investment Chat]: Roger Dawson has entered (7:59 pm)
Mike Summey: Where are you from Chuck?
Mike Summey: Hi Roger & Al
Ralph Roberts: rehi, Al
Al Lee: I accidentally closed the Window. Trying to do too many things at one time. I am back.
Mike Summey: Operator error eh?
Al Lee: Pilot error.
Roger Dawson: Hi Folks, signing in from NYC, where you have to be a millionaire to survive.
Chuck: I’m from Ogdensburg Ny Mike Love your book
Mike Summey: I’ve been looking at a new plane Al
Mike Summey: I’ll be in New York tomorrow.
Al Lee: Just let me have the stick once in a while.
Mike Summey: In the city.
Mike Summey: Roger is there now.
[Investment Chat]: Summer has entered (8:00 pm)
Mike Summey: Hi Summer
Al Lee: Hi, Summer.
Roger Dawson: Hi Summer
Summer: Hi everyone
[Investment Chat]: JohnJ has entered (8:01 pm)
Ralph Roberts: hi Roger, Hi Summer
Roger Dawson: Who’s made an offer this week?
Summer: Al, I’m loving the book so far and so is my husband.
Mike Summey: We’ll get going in a few minutes when everyone get on.
Mike Summey: Hi John
Al Lee: Summer, I am glad yo like it.
JohnJ: Hello All.
Mike Summey: Chuck, have you finished the book?
[Investment Chat]: Roger Dawson has entered (8:02 pm)
Al Lee: Who has seen the Forbes article about a global “crash”?
Al Lee: Crash in real estate values, that is.
Summer: tell more
Mike Summey: Probably like our weather man who has predicted 14 of the last 3 snows.
Chuck: I actually got the Cd system from Nightingale Conant
[Investment Chat]: Roger Dawson has entered (8:02 pm)
Al Lee: I wrote a response to the FOrbes article and posted it to my website yesterday.
Summer: Will check it out.
Mike Summey: What’s the gist of the article?
[Investment Chat]: markg has entered (8:04 pm)
Roger Dawson: With the WMillionaire buy and hold system, it doesn’t matter if the real estate market crashes. Rents might go down a little but it would make property much more affordable.
Mike Summey: Hi Mark
markg: Hi glad to be here
Al Lee: The Economist believes that RE is overvalued worldwide. They lump Netherlands in with Fort Worth and UK. I think it is a very misleadiong articles, but it had a lot of people concerned. I weoul call it irresponsible journalism and that is a surprise coming from Forbes.
[Investment Chat]: Penny has entered (8:05 pm)
Mike Summey: Things will get going rapidly in a minute.
Mike Summey: Hi Penny
Roger Dawson: Hi Penny!
Penny: Hello Mike.
Penny: You too Roger.
JohnJ: People have been on the sidelines for the last 10 years waitng for the crash of real estate to happen.
Al Lee: Roger, that is one of my points inmy rebuttal. I lived through the 80’s and came out fine. If your plan is to flip houses, you could get really hurt, but if you do what we all agree is best, you come out a winner regardless.
[Investment Chat]: DavidO has entered (8:06 pm)
Mike Summey: Real estate values may be pushed up a bit now sith the low interest rates, but that will affect speculators rather than investors.
Mike Summey: Hi David
DavidO: Hi, Mike! Hi, everyone!
Al Lee: Hi, DavidO
[Investment Chat]: chappy has entered (8:06 pm)
Mike Summey: Hi Chappy
DavidO: Hi, Al! I emailed Tony my questions, but I’m still waiting for his response.
[Investment Chat]: shoe has entered (8:07 pm)
Mike Summey: Hi Shoe
Al Lee: David, Tony is a great guy and he has done quite well.
JohnJ: Al - with so many builders building thousands of new homes in the DFW area, do you think the market will eventually be oversaturated?
DavidO: Al: Yes, he’s a very amicable person. I just hope I didn’t ask too many questions, lol!
Mike Summey: Al, did you get your followers word about tonight’s chat.
Al Lee: JohnJ, I think that the reason so many builders are building so many houses is because so many people are moving in to the area and they can’t keep up. I read a projection that 40,000 new jobs woeul be created in N.Texas (mainly FOrt Worth) in 2004 and there is not enough housing.
[Investment Chat]: pattymelt has entered (8:09 pm)
Mike Summey: John, I’ve seen overbuilding depress prices for sellers, but usually it has little affect on rents.
Mike Summey: Hi pattymelt
Mike Summey: I read an article recently that Las Vegas is bring 6000 new homes a week online.
Al Lee: Mike, I invited lots of people, but have no way to know who might log in. If the yall do, Ralph will be buying a bigger server again.
[Investment Chat]: shoe has entered (8:10 pm)
Ralph Roberts: fine by me, Al… I loves technology!
Mike Summey: Anybody close a deal this week?
Al Lee: Many of the people moving in are tenants, not buyers, because they want the flexibility to move.
DavidO: Can I ask for some advice, and please give an honest answer? If I’m the kind who cannot fix anything in the house and will have to be 100% dependent on professionals to fix up a house, would it even be advisable for me to get into investing in foreclosures?
Roger Dawson: When I became a real estate broker in 1976, I was predicting that average home prices would top $100,000. Nobody believed me but I knew that much higher prices were being sustaining in Europe. That’s still true today, Europeans think that out housing is a bargain.
Roger Dawson: Correction, our housing, not out housing!
Mike Summey: David, I’ve bought many foreclosures that didn’t need any work done to them.
shoe: Hi all. Weekend rookie from rural Ohio
Summer: David O, I have a friend who has purchased foreclosures from the bank and they only needed cleaning up.
DavidO: Mike, really!!! I was watching some video, those houses looked UGH!
Al Lee: DavidO, I recommend that you not do foreclosures because your risk of buyng a lemon, or a property needing serious work, or having a claim against the deed is much greater.
Mike Summey: Glad to have you with us shoe
Penny: Good Roger!
DavidO: Summer, ah, that’s consoling!
JohnJ: Al - where in Texas right now do you feel the best cash on cash returns are?
Penny: Good one.
DavidO: Al, okay, thank you.
[Investment Chat]: Roger Dawson has entered (8:13 pm)
Mike Summey: I bought 12 at one time from the bank that only needed to have applainces put in. Otherwise they were new…never been lived in.
Al Lee: The people I know who do well with foreclosures get very involved personally with the deals. They are not really “investors” in my parlance, they are businessmen who buy properties to resell at a higher price in the near future (they hope)
Al Lee: JohnJ - FOrt Worth–hands down.
DavidO: I was thinking that foreclosures sound so tempting because they’re so cheap, and I would have TWO options — to rent or to resell.
DavidO: I was thinking that foreclosures sound so tempting because they’re so cheap, and I would have TWO options — to rent or to resell.
Mike Summey: Al, that’s true with the run down foreclosures that need a lot of work, but there are still many that are ready to go when you buy them.
ohnJ: Can you get between 5 and 10%
DavidO: I was asking about a $589,000 here in Southern California, and it has a $425000 mortgage on it, and it was not possible for me to even think of renting it.
Al Lee: Mike, you are a very savvy and experienced investor who knows how to make a deal work. Don;t you think that a novice ought to stay with the simple, more sure-fire path?
DavidO: Thing is, in a foreclosure, is it true I won’t even get to see the property until I’ve bought it?
Mike Summey: I agree except where the foreclosures are basically new properties.
Mike Summey: Usually from builders that get in trouble.
DavidO: I read I might not even be able to enter the house until I close the deal.
DavidO: Mike, how did you get that info about basically new houses? I mean, did you know this before you even bid on it?
Mike Summey: David, that’s true to some extent, but the property descriptions are published in the newspaper and can be located through public records.
Penny: On foreclosure, wouldn’t you be able to get a list of required improvements needed for CO prior to the purchase?
DavidO: Oh that’s true.
Roger Dawson: If the foreclosure is occupied, you’ve got to factor in the cost of getting the occupant out. Sometimes bribing them by paying their rent someplace else is the cheapest way to go.
Mike Summey: Penny, not usually.
Al Lee: One thing to keep in mind is that whether it is from a builder or occupant, no house gets foreclosed on as a surprose. The owner knows months ahead that it is going to happen and they are not likely to take good care of it, or spend any money on it knowing thay will soon probably lose it. There are exceptions to everything, but that is true most of the time.
Penny: sometimes? but not usually, okay
Roger Dawson: Oh sure, the owners defaulted or it had been rented by tenants.
DavidO: Haha, the guy who got foreclosed on rented the property out to a tenant, that’s funny!
JohnJ: Al - are investors getting 5-10% cash on cash in FW?
Mike Summey: A rental property can be foreclosed on and the tenants still be in the house.
shoe: I realize that selling isn’t the weekend way, but isn’t that a good way to get working capital?
Mike Summey: If you can turn a property for a substantial cash profit and then use that cash to get into 3-4 more properties it may be worth doing.
Al Lee: Our Tortoise CLub minimum is 5% CoC, Year 1 ROI. We have had members get much hither on some brand new houses they bought below market from builders who wanted to get the houses off their inventory.
[Investment Chat]: pattymelt has entered (8:20 pm)
Mike Summey: Personally, I’ve never sold a property.
DavidO: Al, while I’m waiting on Tony, do you have another person I can write to?
[Investment Chat]: Roger Dawson has entered (8:21 pm)
DavidO: Mike, you’re amazing!
JohnJ: Has anybody heard of ICG? I took one of his Learning Annex classes - I don’t know anything about the company or owner Adi Gorel. Does anyone have any info?
Al Lee: DavidO, email me later and I’ll find someone.
Mike Summey: Roger, are you getting knocked out of the chat?
DavidO: Al, okay, thanks!
Al Lee: I know about CGI.
oger Dawson: No, I’m still here, finishing my NYC %
DavidO: Is it CGI? or ICG?
JohnJ: AL - do you mean ICG?
JohnJ: Any info good or bad?
[Investment Chat]: CINDY has entered (8:22 pm)
Al Lee: ICG, I think faster than I type and often transpose characters.
markg: Mike this relates to a question I have from your book and from hearing you in Asheville. You said to build the return on your investment into your NOI calculation. So what sort of return do you look for?
DavidO: Hmm… I did a search on ICG and got International Crisis Group.
Mike Summey: Just for everyone’s info, we have put up a notice under scheduled chats that the chat room is open every night at 8:00 Eastern for anyone who wants to talk with each other.
Mike Summey: Hi Cindy
CINDY: Hi Mike…
Roger Dawson: I did get knocked out, but I’m back.
Penny: Good, I didn’t know that.
Ralph Roberts: that’s New York, Roger
Al Lee: We have one neighborhood in Fort Worth where we tell member not to buy bucause ICG directed their peoepl to buy a string of nine or ten houses in a row and then put For Lease signs in front of them all at one time. They are now trying to unload the houses because they hurt the neighborhood.
Mike Summey: Roger & I will join in when we can, but we set this up as a time for our readers to talk with each other.
Summer: Thanks for setting that up.
DavidO: Mike, that’s good to know, I hope I can meet other neophyte real estate investors at that time.
[Investment Chat]: cynthia has entered (8:24 pm)
Mike Summey: Hi cynthia
Al Lee: This is so much fun, I will probably join in often.
Roger Dawson: Mike will be a guest on the Joey Reynolds show from NYC on Tuesday night. Check to see if you get it in your area.
Mike Summey: We want this website to be both informative and fun.
DavidO: It is, I learn good stuff when I’m here w
CINDY: Did anybody have an offer accepted this week?
Mike Summey: I asked that a while ago and didn’t get any response.
DavidO: I will be typing all CAPS here when I get my first offer accepted.
Penny: Haven’t made one yet. Still working on that.
Mike Summey: Hey, that’s a good idea.
Penny: I’ll get brave enough over the next few weeks.
DavidO: I need to find a good property first. The ones I came across weren’t good ones for renting.
CINDY: I tried again this week and this time I didn’t get a response
Roger Dawson: It takes courage to make low offers but it’s the only thing that will put you in the game.
Mike Summey: Roger mention that I will be on the Joey Reynolds Show Tuesday night.
Penny: Speaking of offers.
DavidO: I have no problems in making low offers, as long as I’m not within arms reach of the seller w
Ralph Roberts: hi DDM
shoe: Mike, when you say marketable comdition, are you saying just pretty up what is there or replace old metal frame windows, dented doors, new landscaping,etc.
Mike Summey: It’s actually 4:00 - 5:00 AM Wednesday morning and is syndicated in over 225 markets.
Mike Summey: Hi DDM
Al Lee: Hi, DDM
markg: I came close. Presented one, thought they were going to say yes, they wanted to sleep on it and then got an offer for their asking price after I lef, from a guy I knoe who wants to live in it. Oh well.
JohnJ: Al - what neighborhood was this?
Penny: Roger or Mike.. have you ever made an offer to pay monthly payments to the seller using interest only payments?
Mike Summey: Also available on the Internet at www.wor710.com
DDM: Hi Mike.. thanks for answering my Post on the Forums…! =)
DDM: Hello everybody!
Penny: you know, like you can do on equity lines.
Mike Summey: You’re welcome.
[Investment Chat]: Roger Dawson has entered (8:28 pm)
Mike Summey: I’m a bit behind on getting everything answered.
Mike Summey: Roger is making me work too hard.
Mike Summey: Penny, I have a couple of deals now that I pay interest only on.
Al Lee: JohnJ, I don;t recall the name because my property managers handel that, but they won;t let a member buy there any longer until the problem is cured. Some investors do stupid things and hurt themselves.
Mike Summey: It’s for 5 years on one and 3 years on another.
DDM: Mike… I noticed on your example that you always use 15yrs. Have you offered terms longer than that?
Roger Dawson: I’ve sold property amortized over 40 years, which is almost interest only. I loved it! Don’t assume that sellers want cash!
Penny: Mike, is that with large balloon notes at different periods.?
DavidO: 40 years!
Mike Summey: Yes
JohnJ: Al - don’t builders limit the number of investors in a subdivision - and if so, how did this happen?
DavidO: I don’t understand. Paying interest only for 40 years, so you don’t seek ownership then?
DavidO: I mean, eventual ownership?
Penny: Gottcha. Thanks
Al Lee: From time to time you can get 40-year amortizations on loans from banks
Mike Summey: DDM, there’s nothing magical to 15 years, it’s just a benchmark I set for myself.
pattymelt: Al, I have read your book and i am now reading The Weekend Millionaire to learn as much as I can about investing. I have only been able to find properties with a return of 3-5%. I am sure that this has to do with many people taking advantage of low interest rates. would this be acceptable in order to take advantage of the rates myself
Roger Dawson: DavidO: it’s what they wanted to do. they paid $1300 a month for ten years, with almost no principle reduction. Then they refinance.
Al Lee: JohnJ, a foolish salesmand workng for the builder and foolish advisor directing the investors.
DavidO: Roger, so you rent the property out while paying interest only on the property?
CINDY: Mike/Roger…do you focus on Return on Investment or on Cashflow when making offers… From the book I get the impression that you focus on Cash flow?
Al Lee: pattymelt, where are you looking?
Roger Dawson: No, I was selling remember. They had control of the property.
Mike Summey: pattymelt, I buy properties if they will just break even on cash flow the first year. The beauty of buying the Weekend Millionaire way is that the longer you own a property the greater the margin becomes.
pattymelt: n.e. Dallas area
DavidO: Roger, oh okay, I must’ve missed that.
Mike Summey: Cindy, that last answer cover you too.
CINDY: Yep…
[Investment Chat]: Christopher has entered (8:34 pm)
Summer: I must have missed that too.
JohnJ: Al - I am in agreement with Patty - after using your worksheets on your site - I am getting the same returns.
Summer: I thought cashflow was of high importance?
Al Lee: pattymelt, go to the Tortoise CLub website later www.RentHouses.org and click on the email Al button and send me an email and I will direct yo to some hosues that you will get 5% OR MORE returns from.
Mike Summey: Hi Christopher, I’ll just refer to you as Chris…easier to type.
[Investment Chat]: Christopher has entered (8:34 pm)
Summer: I must have missed that too.
JohnJ: Al - I am in agreement with Patty - after using your worksheets on your site - I am getting the same returns.
Summer: I thought cashflow was of high importance?
Al Lee: pattymelt, go to the Tortoise CLub website later www.RentHouses.org and click on the email Al button and send me an email and I will direct yo to some hosues that you will get 5% OR MORE returns from.
Mike Summey: Hi Christopher, I’ll just refer to you as Chris…easier to type.
Roger Dawson: I did a book signing in Burbank California yesterday. Everyone in California is obsessed by real estate.
pattymelt: I have Linda Shilz looking at properties for me
Al Lee: JohnJ, same messasge as I sen tto pattymelt
Mike Summey: I did a book signing at the Sams Club in Asheville, NC yesterday.
DavidO: Roger, oh great, I guess competition out here is going to be tougher than I thought.
markg: But Mike, I recall you saying that you figure the return on your downpayment into the NOI calculation. How low are you will ing to make that to break even on the cash flow?
DavidO: Mike/Roger/Al, if you are ever in Southern California, let us know, I’ll go and have my book signed w
CINDY: everyone in Miami, FL is obsessed by real estate… Most of the times by the time I call to inquire about a house the property is usually sold at above market price
Mike Summey: mark, when I say break even, I’m including a return on my down payment not just the mortgage payment.
Penny: A few questions back, someone asked a question about what kind of return you look for on your investment. I think in your book your refer to including any down payment money in your NOI to get a return, is this right?e return in your NOI as
JohnJ: Al - I will do the same. Thanks.
DDM: Same goes for me! If you guys are ever in SF Bay Area let me know… I’ll camp out! =)
markg: So what sort of return do you look for on your down payment, say in todays market?
Roger Dawson: Problem in California is that prices are over the moon. You really have to hunt in blue collar areas to find something that fits the WMill formula. I envy you guys living in affordable areas.
Mike Summey: Personally, I look for about a 10% return on my cash.
pattymelt: Thanks Al
Al Lee: DDM, I do seminars in San Francisco just about every month through the Learning Annex. Go to my website www.RentHouses.org and click on the link for my scheduled appearances and pick a date.
CINDY: So Roger have you been able to purchase any property this year in CA?
DDM: Roger, that’s really true! I live in SF Bay Area where prices are just horrendous!
DavidO: Roger, so I guess I should look into foreclosures then, they seem to be the only ones within the price range of WMill formula
DavidO: I’m just worried like what Al said, I might land on a lemon.
DDM: Thanks Al!
markg: THanks Mike. Thats about how I have been structuring offers and apparently someone else is doing slightly less as I seem to be coming in a bitlow. Oh well, I ‘ll keep looking.
pattymelt: What percentage is acceptable in the Dallas market to take advantage of the low interest rates.
Al Lee: I bought two houses recently iin Fort WOrth and Arlington. I got 11% CoC Y1 ROI on one of them and 17% on the other.
Mike Summey: Al has a program through his Tortoise Club that will let you invest in better areas if you live in one of those overpriced areas.
Roger Dawson: I think that the market will tip, where the speculators get burned and true investors will flourish again in California.
DavidO: Mike, I know, that’s why I’m still looking into Al’s Club
Al Lee: Roger, I second that think.
JohnJ: Al - Were they new homes?
DavidO: Al, in your club, do your members buy these houses with no money down?
Al Lee: JohnJ - one was new froma major builder and the other was not new.
Mike Summey: Let me got back to the open chat room each night at 8:00. Would you prefer if we posted topics for each day or just left it open for you to talk about whatever you want?
Al Lee: DavidO - you could buy with no money down, but is is not the formul we use. I preach ultra-conservative investment
[Investment Chat]: TT has entered (8:41 pm)
Mike Summey: Hi TT
JohnJ: Al - what percentage of the tortoise club members are buying new homes as opposed to older homes?
Al Lee: Hi, TT
TT: Hi
shoe: Mike/Roger DEfine marketable condition. Are you saying just pretty up what is there or should i replace old crappy windows ,dented doors,new landscaping,etc.?
Roger Dawson: HI TT!
pattymelt: al
Al Lee: JohnJ, almost 95% are buying new homes because in the areas we are buying there is a shrotage of houses and builders are scrambling to buld fast enough. We are getting great buys on new construction and the tenants love them.
[Investment Chat]: Frank, NC has entered (8:42 pm)
Roger Dawson: HI Frank!
Mike Summey: shoe, when I buy a property that is not up to par, I try to put it in rentable condition and then continue improving it as time passes.
Al Lee: pattymelt
Mike Summey: Hi Frank.
[Investment Chat]: Matt has entered (8:43 pm)
Al Lee: Hi, Frank
Mike Summey: Hi Matt
Roger Dawson: Hi Matt!
DDM: Mike/Roger/Al… how many properties do you guys currently own?
Mike Summey: Where have you late arriver been?
Ralph Roberts: hi Matt
[Investment Chat]: Roger Dawson has entered (8:43 pm)
Roger Dawson: No, I’ve been here!
pattymelt: Al, can you recommend a management company in the Ft. Worth area along with a contact person
Al Lee: pattymelt, emal me and I will do that
JohnJ: Al - do you get an override from the builder, real estate agents or property manager for bringing them the buyers?
Frank, NC: Sorry to be late, was out looking at two properties, Frank NC
Roger Dawson: Frank, that’s the best excuse you can have!
Mike Summey: Good reason! You’re excused.
Al Lee: JohnJ: NO, you shoudl go to the website and read the FAQ. That is one big difference between my club and , say, ICG. I let all the savings pas sto the investors, not to me. I make enough just on the dues.
Penny: What do you think about leaving the daily chats to ope topics and then on the scheduled chats, have the professionals give their input on some of those weekly topic and questions.
DavidO: Al, has any members had any reason to have to go out to Texas for mandatory reasons?
Mike Summey: Problem is, we won’t know what was discussed in the open chats. We won’t be able to capture that text and post it like we do the scheduled chats.
DavidO: And I’m not talking about wanting to just see their property.
JohnJ: Al - thanks - I will checking out your website ASAP!
Al Lee: DavidO: noit to my knowledge, though about half have gone because they wanted to see their houses and meet the people who manage them for them.
pattymelt: Can closing costs be rolled into the mortgage and is this advisable if so.
Penny: People that were in the open chats will bring those questions to you on the scheduled chats.
Al Lee: pattymelt: if you can do it, do it.
DDM: One real estate asked me: “Why don’t I use an agent?” Are you guys using one? If yes, what’s the adv/disadv?
Mike Summey: Pattymelt, yes it can be and if the numbers work don’t hesitate to do it.
shoe: In calculating NOI, does anyone account for taxation on your rental income for agiven property?
Roger Dawson: DDM, I think the best buys are from FSBOs (For sale by owners).
Mike Summey: I like using a buyers broker to represent me simply because I don’t have the time to do all the leg work required to clsoe a deal.
Al Lee: DDM: I always use an agent. The people who are our property managers are licensed agents (brokers) and I weoul never buy anythign they did not approve of since they are the ones I hold responsible to make it work.
[Investment Chat]: jamieNC has entered (8:49 pm)
Mike Summey: Hi Jamie
jamieNC: hey mike…
DavidO: Is it advisable to use an attorney for every closing?
DDM: Do they get some commission froom you guys?
Roger Dawson: Should you ever sell, don’t tell Mike about it, because he doesn’t believe in selling, but sell by listing with a good broker.
DavidO: haha
[Investment Chat]: Matt has entered (8:50 pm)
[Investment Chat]: dean has entered (8:50 pm)
Al Lee: IF I find a FSBO, I make a deal with one of the licensed brokers (proeprty managers) to run the paperwork through for a flat fee instead of the usual commission. That way we use the promulgated forms and everythign gets done right.
Mike Summey: DavidO, some states close real estate with attorneys…NC is one of them. Others use Title companies.
Mike Summey: Hi Matt 7 Dean
Roger Dawson: DavidO: it depends where you are. In New Jersey you’re required to use an attorney. In California, we never use them.
dean: Hi guys
Mike Summey: Where hav eyou been?
DavidO: Roger/Mike, okay, that’s good to know.
jamieNC: Hey guys I have two rentals that I purchased last year…What is considered good cash flow. I have $224 on one and $130 on the other
Roger Dawson: HI Dean!
DDM: Is there a way to download the transcript from this chat?
Mike Summey: That sounds good to me jamie.
Al Lee: jamieNC: to know what is good cash flow I have to know how much you have invested in them.
Roger Dawson: Jamie, sounds good but it depends on the cash you invested. Figure out the return on investment.
jamieNC: $0
Ralph Roberts: DDM <--- all chats are posted following the chat
Roger Dawson: Excellent return
Roger Dawson: !
TT: Mike, at what point did you realize that you had “made it” and would be able to retire at any time?
DDM: thanks ralph!
Mike Summey: If they are giving you a cash flow and paying off the loans they are great deals.
Mike Summey: When my cash flow from real estate topped $100,000/mo.
jamieNC: both are HUD repos that I bought through broker…they front the purchase money and then I refi w/ instant equity
Ralph Roberts: See the articles on the front page, then you can just cut and paste it into a word processor for printing out and reading at your leisure.
DavidO: You know, I see HUD all the time, what does that stand for?
Roger Dawson: TT: the great thing about this country is that you’ve never “made it.” There’s always more stuff to spend you money on. Not so in Russia, under the communists. Money wasn’t important because you couldn’t buy anything.
Penny: Whow Jamie, thats wonderful. I was wondering how you did that.
DDM: Being in SF Bay Area, its hard to find a property that I would at least break even. Have you guys bought any property with neg cash flow on the first 1-3 yrs?
Ralph Roberts: Housing and Urban Development I think… cabinet level department of the gov
Ralph Roberts: fed gov
Al Lee: Housing and Urban Development - governmetn agency that subsidizes housing for poor folks
pattymelt: Mike, do you look for a minimum ROI or just a return of any kind
Roger Dawson: HUD has a website. It’s HUD.gov. Beware of HUD.com because it’s an entreprenuer selling foreclosure lists.
DavidO: thanks, Ralph
jamieNC: This broker I use watches the HUDs and when they reach a certain level where the numbers work he calls me…usaually cash back, instant equity and at least 100/mnth cash flow
Mike Summey: The ROI is the return on cash invested. I try to get 10% but depending on the circumstances I may accept less.
Mike Summey: I try to put as little as possible of my money into a deal.
Al Lee: My target is 10% first-year Cas on Cash return on investment, but my minimum is 5%
Investment Chat]: Roger Dawson has entered (8:57 pm)
TT: How in the world do you invest 100,000/mo. if not in real estate?
Al Lee: Bye, John
Penny: Wonder why the broker doesn’t jump on those him/herself? Sounds like a good thing, I’d keep that repoir with that broker!
Mike Summey: Everyone, the low interest rates we have experienced over the past several months has pushed prices up, but that will change as rates start to climb.
Roger Dawson: I never left!
jamieNC: sounds good! Mike do you own any in charlotte/ concord/huntersville area?
DavidO: Roger, you had us fooled.
Matt: DDM from SF had a great question about taking a loss early on. Advisable in his market?
Al Lee: Penny: Most brokers will die broke. They sell the geese that lay the golden eggs thinking that is how to make money in real estate.
Mike Summey: No, my properties are all in Western north Carolina and Upper South Carolina.
jamieNC: oh ok
DavidO: Mike, so you don’t invest in any state except NC?
Al Lee: Matt: NEVER buy negative cash-flow properties. they will drain yoru cash and exhaust your credit (buying power)
Mike Summey: Matt, I don’t ever take a loss in the beginning.
Summer: Thanks everyone. See you next time.
DavidO: Roger, what states do you invest in?
Al Lee: Bye, Summer
Mike Summey: Doing that is how you buy yourself broke.
Mike Summey: Bye Summer
Roger Dawson: Al, some brokers have an ethical problem with investing for themselves when they should be taking good buys to their clients. I wish they all felt that way.
DavidO: bye summer
Ralph Roberts: nite summer
Penny: Sounds right Al. Also sounds like getting a broker’s license wouldn’t neccessarily help you be a better investor?
DDM: Great advice! Thanks…!
Mike Summey: Personally, I think a brokers license is a liability to an investor.
Al Lee: ROger: I have done seminars to brokers and explained to them that they ought to buy one once in a while, but most of them don;t listen.
jamieNC: Mike how do I get banks to keep financing these rental houses. I think after about 5 I am “maxed out” using income assets etc. How do I keep going
[Investment Chat]: pattymelt has entered (9:01 pm)
Roger Dawson: I think that having a broker’s license is an advantage, Mike doesn’t. So it’s a matter of opionion.
Al Lee: jamieNC: buy positive cash flowing properties and your income is going up all the time.
shoe: In calculating NOI, does anyone take taxation into account on your rental income?
[Investment Chat]: Roger Dawson has entered (9:02 pm)
Mike Summey: jamie, a friend of mine waited until he was 60 to start and within 5 years he had an income from his properties of over $100,000/yr.
Al Lee: regarding the licnese, I agree with Mike. You don;t need it and it wouel raise the level of responsibility you have.
TT: Has anyone become discouraged/burned out while well into their investment program(having bought 5-10 properties) and how did you overcome it?
Penny: You should count the taxes in figuring your NOI, right?
Roger Dawson: Shoe, I don’t think so. Real estate is about as good a tax shelter as you can find these days.
Ralph Roberts: Roger, you must have a noisy connection.
jamieNC: I feel like I have read a ton of books but still sooo much more to learn…
Al Lee: shoe, my spreadsheet includes property tax, but you might be talking about something else. If it is income tax you are asking about, there is no income tax on yoru rents if you do it right.
Mike Summey: TT, I’ve bought many properties from people who were burned out with investing in rentals and nearly every one of them was trying to manage the property themselves.
Roger Dawson: TT: I think that burn out comes from trying to manage the properties yourself. Get a manager. Those tenants will drive you crazy.
TT: good advice
Al Lee: I have bought some properties from investors who were trying to “save money” by self managing, too.
Penny: Gotta run. Enjoyed it much!
Roger Dawson: Thanks, everyone. I have to leave now.
DavidO: bye penny
Al Lee: Bye, penny
Mike Summey: We want you to learn to be investors, not take on a second job…that doesn’t pay very well…and is full of headaches.
Al Lee: So long, ROger
Penny: Look forward to next time. Thanks everyone.
DavidO: bye roger, thanks!
Mike Summey: Bye Penny
Mike Summey: Roger is speaking tomorrow so he has to get his beauty sleep.
Penny: Night everyone. Until next time….
Mike Summey: Night
DavidO: g’nite
DDM: buy guys and thanks!
Al Lee: I agree 100% on Mike’s statemetn regarding property management being yoru second job. It doesn;t pay very well and it is a 24/7 job
Ralph Roberts: nite
Al Lee: Bye, DDM
Mike Summey: Wow, our time has flown by hasn’t it?
DavidO: bye DDM
Mike Summey: Night
DavidO: g’nite
DDM: buy guys and thanks!
Al Lee: I agree 100% on Mike’s statemetn regarding property management being yoru second job. It doesn;t pay very well and it is a 24/7 job
Ralph Roberts: nite
Al Lee: Bye, DDM
dean: What nights do you guys chat?
Matt: Thanks, Bye!
Al Lee: I just looked up at the clock and I was amazed
jamieNC: Do you recommend a charlotte property management service
Frank, NC: Was there an answer to Jamie NC question about financing?
Mike Summey: The chat room is open every night at 8:00 Eastern time.
TT: Al did you also start using a manager from the beginning?
shoe: Unless you look at nothing but FSBO , is there any way to get any actual face time with the owners for negotiating
Mike Summey: If you are registered on this site you will get email notification when Roger & I will be in the chats.
Mike Summey: shoe, I use a broker and still meet with the seller over 75% of the time.
Al Lee: TT: I am not as smart as Mike, I tried to self manage for the first six houses and it nearly drove me nuts. Then I gave in and hired a good property manager and everyghing got better. I actually started making MORE money with them managing
pattymelt: Al, I just moved from the Colleyville Southlake area to Scottsdale Az. I am still going to invest in the Dallas /Ft.Worth area but was wondering if you knew anything about the Az. markets
jamieNC: I have two in less than a year and already am nuts
dean: I just registered tonight and I’m halfway through your book.
DavidO: Jamie, are you in NC?
TT: jamie what problems do you have?
Mike Summey: Al, you won’t believe how many investors have told me that same thing. That they actually started making more money when they turned the properties over to a professional manager.
jamieNC: Live in Davidson
Al Lee: pattymelt, I have looked at Phoenix, but could not make it work. I have an article dated June 30, 2003 on my website that explains why I only buy in Texas. Has nothing to do with where I live, either.
[Investment Chat]: pattymelt has entered (9:09 pm)
DavidO: I’m in California, Jamie. Good you got your two properties. Here in CA, I dunno what I’m gonna do e
TT: good night!! enjoyed it!!
jamieNC: prices are so high there I hear
DavidO: I went to Los Angeles Times and did a search for houses from $0 to $300000, nothing came up
DavidO: night, TT
Mike Summey: The key is patience. Set your standards and then find deals that fit them. many people change their standards to fit the deals and they usually lose money in the long run.
Al Lee: Mike, What I want to know is how did you start off right. How did you know to do that? I had to learn everythign the hard way. And I do m,ean HARD.
Mike Summey: godnight TT
DavidO: and when I did a search for $0 to $400000, only FIVE came up.
markg: Hey Jamie. I’m in Boone. Any chance your broker works this part of the state?
Mike Summey: One of those 5 may be your deal.
jamieNC: no only charlotte metro…you go to ASU??
DavidO: Mike, but as Roger mentioned, how can I use WMill techniques if just the mortgage payment alone is too high to rent?
Mike Summey: Keep looking!
markg: No, I am a professor there.
jamieNC: old fball rivalry
DavidO: The only way I can make it work, it seems, is to find a $400,000 or above house that has little mortgage left, and a seller who is willing to carry financing for it for 60 years!
markg: Did you play football??
DavidO: This has been bugging my mind, that’s why I started looking into foreclosures.
Mike Summey: DavidO, you may have to look in a different area. Where do the blue collar working people live?
jamieNC: Mike at what point did you feel it was safe to venture into multi family properties
Al Lee: DavidO: my personal rule, and the rule I teach in our club, is NEVER pay more than $150k for a house.
DavidO: Oh, those areas, I’d have to wear a bullet-proof vest.
DavidO: I see properties selling for $135,000, but they’re condos
DavidO: and in a very very bad gang-infested area.
DavidO: but I saw not one single SF home that was less than $300000
Mike Summey: jamie, I didn’t buy my first multifamily property until after I owned 10 houses. Then it was a fourplex.
Al Lee: DavidO: I buy brand new 3-bedroom, 2-bath, 2-car attached garage, brick houses for under $150k and lease them for at least 1% of the purchase price.
DavidO: Al, you really are making me drool. I really really want to hear from some of your members, and if things look good for me, I am going to devote my time in your club.
Mike Summey: DavidO, maybe you an Al should talk, he has some investors in CA who buy in Texas.
DavidO: I am just so restless on this. After reading Mike and Roger’s book, and robert kiyosaki’s book prior to that, I’m just so fueled!
Al Lee: DavidO: I am certain that you will.
Frank, NC: DavidO You may have to join a gang
[Investment Chat]: andy has entered (9:15 pm)
DavidO: haha!
jamieNC: Could you look out of state David?
Mike Summey: DavidO, don’t get so fueled that you do something stupid. Patience, Patience, Patience.
DavidO: Jamie, that’s what I’m thnking of doing with Al’s club.
Mike Summey: Hi andy, where you been?
DavidO: Mike, oh i won’t. But I’m certain this is what I want to do for the rest of my life.
Al Lee: DavidO: my method of investing is base don hitting a lot of singles and no strike-outs. Don’t get antsy and buy somethign that will giveyou grief. You will get burned out and lose your money fast.
DavidO: It just makes so much sense.
andy: I have been doing some rehab work and was just able to log on
DavidO: As long as I don’t have to dodge bullets, of course.
Mike Summey: It is a great way to build income and retire wealthy. The beauty of it is that when you pass on, the income keeps coming for you family after you are gone.
DavidO: Mike, I know, I’ve thought of so many advantages on this, it makes total sense.
Ralph Roberts: no, makes dollars, David 
Mike Summey: DavidO, Roger wilol be speaking at the Learning Annex event in SF on April 24.
DavidO: that, too, Ralph
pattymelt: Does anyone know the phoenix area markets
DavidO: oh e I’m in Southern California. Are any of you ever coming to Southern California?
Al Lee: I used to play chess a lot. This is similar to chess in that the only way a good player loses a game is to make a blunder. Don;’t make any blunders (big mistakes) and you will win (get rich)
jamieNC: Mike ever thought about speaking at the MREIA here in Charlotte? any book signings around here soon?
Mike Summey: Guys, I’m going to stay with you until 9:30 and then I’ve got to get some sleep. I have to fly to NY in the morning to meet with Roger.
DavidO: Al, why do you think I want to talk to a few of your members first? lol.
DavidO: Al, what you say is really enticing.
Mike Summey: jamie, I’d be glad to if you would have someone call me.
Mike Summey: Jamie, you can go to the “Mike Summey Bio” tab on the home page and click on it. At the bottom of the home page is a video clip from a program I did last week and CREIA in Asheville.
pattymelt: davido, I would recommend Al’s book. It’s a great read. I lived in the area he invests in and there great neighborhoods to invest in there.
Mike Summey: bottom of the bio page
jamieNC: havent joined yet but will be Monday…I will mention it to them. We have a great new barnes and noble here in huntersville.
DavidO: Patty, I already ordered it, just hasn’t arrived yet.
jamieNC: i saw the pictures … I would love to attend
Mike Summey: You’ll be amazed at how similar Al philosophy and our is.
Ralph Roberts: we have a few signed copies for sale here at aBOOKS … 1-800-472-0438
Al Lee: DavidO - if it doesn’t arriv esoon, email me so I can check on it. We have had a number of cases of shipments lost in the mail lately.
DavidO: Al, okay, I will. I’m trying to email you right now as the reminder.
Ralph Roberts: the phones are manded right now
Al Lee: Mike, that is because it works and we both arrived at the method that works.
Mike Summey: Right
Ralph Roberts: manned
Al Lee: mended?
shoe: Any ideas on where to find Al’s book? haven’t been able to find it
Mike Summey: Our Weekend Millionaire audio program is a great addition to the book and you can get it bay calling the 800 number on the home page.
Ralph Roberts: womaned, actually
Ralph Roberts: same #
Mike Summey: Al can tell you that.
andy: I just got ther audio program
DavidO: Mike, do those audio tapes have different content from what I read in your book?
Mike Summey: How do you like it?
Al Lee: shoe, you get it at Barnes & Noble, but they uusyually have to order it. You can get it cheaper at Amazon,com, or even cheaper at www.myRentProperty.com if you Subscribe (free).
Investment Chat]: jamieNC has entered (9:25 pm)
Mike Summey: Similar, but different. The audio program expalains things in “Audio English” while the book is written English.
andy: I like it. I have not gotten through the whole thing, but it seems to be very similar to the book
Mike Summey: the audio program gives you the ability to be listening to what you are supposed to be doing while you are trying to do it.
DavidO: Okay, Al, I sent you my email.
andy: I found the book to be very motivating and I figure if I listend on my way to work on a daily basis, I will continue to be motivated
Mike Summey: Most people learn faster and retain more when they both hear and read something than they do with either one alone.
Al Lee: pattymelt - lately we are buying mostly from builders (new construction) and our property mangers (in FOrt Worth) are always getting the price lowered for members. One member bought a new $156k house for $128k in December.
Ralph Roberts: 7,886 words so far tonight, for those of you keeping score at home
andy: listen to the audio version that is
DavidO: Well, I have to go, hope to see you all again soon.
Al Lee: Ralph, it doesn;t seem like a word over 6,000
Frank, NC: Mike, maybe you do need some sleep.
DavidO: Good night.
jamieNC: see ya david
Mike Summey: Yeah, I’ve got to go.
Al Lee: DavidO, Bye
shoe: anybody’s feelings on forming a LLC
Ralph Roberts: have a good flight, Mike
Mike Summey: I will be flying to NY tomorrow to meet with McGraw-Hill about 3 more books.
jamieNC: see ya mike I will tell MREIA about you
Mike Summey: Thanks.
Mike Summey: Bye everyone.
pattymelt: bye david
Mike Summey: I’ve enjoyed it and the rest of you keep talking as long as you want.
pattymelt: bye mike
Mike Summey: Night all
Al Lee: Mike, So Long. Sleep Tight–Don’t let the bedbugs bite.
Ralph Roberts: nite to all… we’ll end the official part of the chat now… but you guys are welcome to stay as long as you like
andy: where is everyone from?
Al Lee: I will hank in for a shot while longer because this is FUN!
jamieNC: Davidson, NC
Al Lee: short
andy: I am in the Twin Cities, MN
Ralph Roberts: Alexander, NC … near Asheville
shoe: brownsville, ohio
andy: Well, I better get going. Good night.
dean: I’m in Asheville but haven’t bought yet.
jamieNC: randy moss fan andy
Ralph Roberts: nite, all
[Investment Chat]: jrouserr has entered (9:31 pm)
Ralph Roberts: chat will be posted in mer moments
Ralph Roberts: mere
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