Chat 4-25-04
Posted on April 25, 2004
Welcome to the chat, Ralph Roberts!
[Investment Chat]: Ralph Roberts has entered (7:56 pm)
Ralph Roberts: hi folks
[Investment Chat]: Al Lee has entered (7:57 pm)
Ralph Roberts: hey Al1
Al Lee: Hi, everyone
[Investment Chat]: Dean-nc has entered (7:57 pm)
Ralph Roberts: hiya Dean!
Dean-nc: Hi guys
JimAndConnie(NC): Hello
Ralph Roberts: hi Jim… where you at in NC… I’m near Asheville
JimAndConnie(NC): Us too… Fletcher
Dean-nc: J&C what part of nc
JimAndConnie(NC): FYI… last week we were Jim(Fletcher,NC)
Ralph Roberts: I’m out near Alexander
JimAndConnie(NC): OK
Ralph Roberts: ah zo… got ya now
JimAndConnie(NC): HEy Dean…. Nice talking to you last week
JimAndConnie(NC): I enjoyed the phone conversation
[Investment Chat]: equinegurl has entered (8:00 pm)
Dean-nc: Me too, keep in touch
Ralph Roberts: hi equinegurl!
Ralph Roberts: welcome
JimAndConnie(NC): Will, do, Dean
equinegurl: Thanks, all!
JimAndConnie(NC): Anyone have any offers accepted this week????
Dean-nc: Isn’t that Mikes line?
Al Lee: I sold two houses, my own and a rent house that is paid off and depreciated down. I will buy new rent proeprties using Section 1031 exchanges
[Investment Chat]: Penny has entered (8:02 pm)
JimAndConnie(NC): I am learning….
Ralph Roberts: hi Penny!
JimAndConnie(NC): Aren’t those 1031s great???!!!
Penny: Hello everyone!
Al Lee: You betcha!
JimAndConnie(NC): We have done a couple 1031s.
JimAndConnie(NC): Hi Penny
Dean-nc: Hi Penny
[Investment Chat]: sal has entered (8:03 pm)
Ralph Roberts: hi Sal… welcome to the chat.
JimAndConnie(NC): Hey Sal
Al Lee: I am going to sell all the old, paid off, depreciated away proerties and load up on new ones
[Investment Chat]: BobJ (Md) has entered (8:03 pm)
sal: Hi
BobJ (Md): Greetings
Ralph Roberts: welcome, Bob
Dean-nc: I’m not offering yet. I think I need a mentor
JimAndConnie(NC): Hello BobJ
[Investment Chat]: Mike Summey has entered (8:04 pm)
Ralph Roberts: there he is! …. welcome
BobJ (Md): Hello!
Al Lee: Hey, Mike
Dean-nc: Hi Mike
JimAndConnie(NC): Yo Mike.
Mike Summey: Sorry I’m a bit late. I was in the middle of a project I was determined to finish before getting in the chat.
Mike Summey: Have I missed anything important?
JimAndConnie(NC): We know…. you were making an offer… Right?
sal: I am a new investor and would like to know how to get started getting the right property with numbers that work
Penny: Glad you got it finished and joined us.
JimAndConnie(NC): We wer just getting started
Mike Summey: sdal, have you read our book?
Mike Summey: sal
sal: not yet
Mike Summey: That’s the first step. It outlines what you need to know step-by-step.
sal: ok
sal: iM 55 YEARS OLD IS IT TO LATE
Al Lee: sal, now way! Never too late
Mike Summey: sal, after you’ve read the book you’ll have the answer to that question too.
Al Lee: no way
sal: thats good
JimAndConnie(NC): Question: We have found a house that has gone thru foreclosure, but before the owners were evicted, they filed bancruptcy.How long will owners be allowed to stay?
equinegurl: Mike, does your book include recommendations on business entity selection?
Mike Summey: there is a story in the book about a friend of mine who started at age 60 & built up a $100,000 plus income by age 65.
sal: I feel like I let the horse out of the barn
JimAndConnie(NC): Don’t feel like you are alone, Sal… It is NEVER too late!!!
Al Lee: sal, only some of the horses and you only need one
sal: that makes me pretty confident
Mike Summey: Jim % C, that’s a question for an attorney, I don’t know.
[Investment Chat]: zert has entered (8:09 pm)
sal: Ive had anylasis paralysis
Dean-nc: Al, why did you sell the house that was paid for?
Mike Summey: equinegurl, we don’t have a section about entities but there are several other good books on that subject.
equinegurl: Such as?
Al Lee: Dean-nc: because I will buy 5 houses with that money and all of them will be generating depreciation allowance and cash flow
Mike Summey: Hi zert
Dean-nc: OK
Mike Summey: sal, analysis paralysis is what stops most people from becoming wealthy.
Al Lee: Dean-nc: leverage is one of the specail benefits you get in RE investing and I want all I can get
zert: Good Evening, how are you tonight
JimAndConnie(NC): MIke… what is your recommendation/thoughts about double wide homes that are on a concrete foundation with pitched roofs in a nice, well-kept development?
sal: I hear ya
Mike Summey: J & C, personally I don’t like doublewides. that’s not to say they won’t work for you, but I have stayed away from them myself.
zert: I have been calculating NOI on a few properties that I looked at today, not sure they will flow at the current asking price
JimAndConnie(NC): These doublewides are very nice looking (they look more like conventional house on the outside).
sal: Just looking at properties in different areas and doing the research has been very exciting, I should have started a long time ago
[Investment Chat]: Roger Dawson has entered (8:12 pm)
Dean-nc: I feel the same Sal
Ralph Roberts: welcome, Roger
Al Lee: J&C: they weoul have to be VERY cheap for me to be interested. They are not like a house, they depreciate like a car.
JimAndConnie(NC): the one we are looking at is to be sold at auction. The rent would provide a nice pos income
sal: Hi Dean
Mike Summey: zert, are you only considering conventional bank financing to determine if they will work or are you looking at alternatives?
Roger Dawson: Hi Ralph. Sorry I’m late. I was stuck in LA traffic.
Mike Summey: Hi Roger, I’m glad I’m not the only one late tonight.
JimAndConnie(NC): OK… thanks, AL.
zert: Mike: where do you recommend keeping the $ being set aside for maint and vacancy ?
JimAndConnie(NC): Hello Roger
Dean-nc: Hi Sal
zert: Right now I have only looked at bank financing. Next stp is to consider alternatives
[Investment Chat]: cnote has entered (8:14 pm)
sal: Mike a heard you a few nights ago on the radio and by listening to you gave me the confidence to start
Mike Summey: zert, set up a separate account for you rental income and keep it separate from your other funds.
Ralph Roberts: welcome cnote
Mike Summey: Hi cnote
Mike Summey: Thanks sal, which program did you hear me on?
cnote: hey
zert: Thats what I plan to , but do you suggest keeping all extra $ there or finding an alternative like short term cd’s
sal: I,m not sure It was about 4am on 710 am
JimAndConnie(NC): Prime time!!!!
JimAndConnie(NC): Ha Ha
Mike Summey: sal, we recommend that you keep your funds segregated and let the funds from your rentals build up and then reinvest them in more properties. Treat them like a 401(K) or IRA account.
JimAndConnie(NC): Actually, some of the BEST stuff is on at that time of day.
Roger Dawson: I did seminars this weekend in two of the most overheated markets in the country: San Franscisco and Santa Monica.
sal: thats sounds good
Mike Summey: That was the Joey Reynolds show that originates in New York. I was there in the studio tthat night.
Al Lee: Roger, how did you like SF?
cnote: i attended the seminar in san francisco
Roger Dawson: I love
Roger Dawson: I love San Francisco. My favorite American city.
JimAndConnie(NC): SF is a great city
Al Lee: Roger: fantastic audience fore RE investing topics, too
sal: you were very informative
Mike Summey: cnote, I did the Learning Annex event in New York last weekend and Roger did the ones in CA this weekend.
JimAndConnie(NC): Mike is the man!
JimAndConnie(NC): Roger too
JimAndConnie(NC): You too, AL
Al Lee: Thanks
Mike Summey: Alright guys, enough!
Roger Dawson: Jim and Connie: I don’t know about Fresno. I lived for three and a half miserable years in Bakersfield and hope that I never have to see the Central Valley again.
[Investment Chat]: Anna has entered (8:19 pm)
cnote: i thought Roger was one of the top speakers there
Mike Summey: Hi Anna
JimAndConnie(NC): Our sympathy to you, Roger. B’field is the gateway to Fresno. We have several properties in Fresno/Clovis
Mike Summey: Roger is always the top speaker wherever he goes.
Roger Dawson: Thanks Cnote!
Mike Summey: When I grow up I want to be just like him.
sal: I find that the high taxes in the city makes it very difficult to get a positive cash flow
Anna: Hello, thank you for the greeting.
imAndConnie(NC): what city, sal?
sal: nyc
Al Lee: sal: I tell people to invest where it makes money and live where they like it.
Mike Summey: I was just going to ask the same thing.
[Investment Chat]: MarkN has entered (8:20 pm)
Mike Summey: Hi Mark
Al Lee: sal: I graduated from Seward Park Sr. High–know it?
Roger Dawson: Most people think of buying the kind of house that they would want to live in and that’s not where the best market is for rental houses. You have to go to the neighborhoods where the workers live.
Mike Summey: Al has a very interesting concept in Texas where he locates investment properties and puts thedeals together for out of town investors.
[Investment Chat]: bk has entered (8:21 pm)
Roger Dawson: Some of these neighborhoods you’ve probably never driven through before.
sal: the areas that I am able to get a pos cash flow are very depressed areas, do you think that is the rught thing to do
Mike Summey: Hi bk
JimAndConnie(NC): Good advice, Al… We want to buy property in other states. Any advice on trying to bid/negotiate over the phone???
Roger Dawson: Sal: No, don’t buy in depressed areas. Look for depressed houses in moderate neighborhoods.
Al Lee: J&C: As Mike said, I have a program that does it all. A network of people who find properties, tenants, everything. Evay proeprty cash flows, too
Mike Summey: sal, it’s difficult to make the numbers work in the city. You may have to look out a little further into the suburbs. Find the areas where the blue collar workers live.
JimAndConnie(NC): Tell me more, AL!
zert: Yes Al, tell us more please
Mike Summey: sal, were you at the Learning Annex event where I spoke last weekend?
Al Lee: J&C over 120 activbe members from all over the US
JimAndConnie(NC): Al… do you have any people in Valdosta, GA area?
Al Lee: J&C: For reasons I define on the website we ONLY buy in Texas.
Dean-nc: Al, do you arrange financing? How much cash would it take to get started?
Mike Summey: How’d your event in Santa Monica go today, Roger?
sal: the taxes are pretty high in the suburbs, IKm trying to put as little down as possible..Are piggyback mort a good way to iunvest with variqble rates
Al Lee: Dean: Yes, I recommend 20% down, but we have guys using 5% down, too
Roger Dawson: Santa Monica was great, Mike. 150 very excited potential real estate investors.
sal: No I wasn’t
Al Lee: Dean: average price for new construction 3-2-2 is about $135k
[Investment Chat]: RJ has entered (8:25 pm)
BobJ (Md): Roger, any idea how many “potential” investors actually get something going?
JimAndConnie(NC): WE saw a house advertised with an assumable loan… we thought they were long gone… are they available???
Mike Summey: sal, I’d look for as much owner financing as possible. Owners that can finance have much more flexibility than banks do.
Mike Summey: Hi RJ
Ralph Roberts: welcome RJ
sal: ok
RJ: hi
Dean-nc: Thanks Al, I only have a little cash in the bank but will be debt free in about 5 months.
Mike Summey: J&C, VA & FHA loans are still assumable.
Roger Dawson: BobJ: Just like anything else, some people think about investing and never do anything. For some people a seminar turns their life around. They just take off and run with it.
Al Lee: some builders have their own mortgage operations and offer good deals
Al Lee: Dean: is yoru credit good?
cnote: i have a question. my friend and i are trying to get started in real estate investing and we are tying to figure out how. we are young and do have a lot of money so how do purchase our first property?
JimAndConnie(NC): Mike… are you talking about the older loans, or are the newer VA & FHA loans assumable too????
Mike Summey: cnote, have you read our book yet?
[Investment Chat]: walt has entered (8:28 pm)
cnote: i going to start today.
Al Lee: I just did my weekly radio show and did the whole shwo on the FICO score and its importance and how to improve it.
cnote: but i have read other books
Mike Summey: J&C, the newer ones are assumable too.
cnote: i read dolf’s book
Mike Summey: Hi walt
Dean-nc: Al, Yes about a 680 but Im on workers comp right now .Broke my neck.
Al Lee: cnote: READ MIKE’S BOOK! It’s better by far
Roger Dawson: Hi Walt!
cnote: and a few others as well
Anna: Question: Since Mike & Roger are doing so well, won’t it be the Millionaire craze be ev. where soon and then homeowners will beware of ’sharks’ who make hi profits off thier situations? I have to get my finances together for a couple years till I can participate but hope the mkt wont be saturated then.
Mike Summey: Read our book. It tells you step-by-step how to get started.
JimAndConnie(NC): Cool… we thought the assumable loans had gone for good
RJ: newer fha loans are assumable? did’nt know that!!
cnote: is that that weekend millionaire book
JimAndConnie(NC): cnote… get Mike & Roger’s book… It will be one of the best investments youwill ever make!!!
Mike Summey: cnote, yes. We also have the audio companion for the book. Both are available on this website.
RJ: i assumed that they wern’t!!
sal: Im concerned that if the market bubble breaks it will take a long time for it recover and I wont be aroiund to enjoy it
cnote: that is the weekend millionaire book, correct?
BobJ (Md): Many “non-assumable” loans can also be assumed with the lender’s permission, sometimes just for a filing fee.
Al Lee: RJ , they are not Non-Wualifying Assumable, though
Al Lee: Qualifying
Mike Summey: Anna, I’ve had people telling me for over 20 years that the market was going to get saturated, but the deals are still there and always will be.
Roger Dawson: Anna: the amazing thing about real estate is that millions of houses sell every day. And for every one, there was a seller who didn’t want the property and a buyer who did. That’s never going to change.
[Investment Chat]: cindy has entered (8:31 pm)
Mike Summey: Hi Cindy
RJ: anyone like to buy subject to?
Roger Dawson: Hi Cindy!
JimAndConnie(NC): I have heard that word saturation somewhere else….
Al Lee: RJ, NO!
cindy: Hi Roger
BobJ (Md): When a market goes soft, the deals are still there - the numbers just change
RJ: why not Al?
cnote: what does the audio campanion provide in addition to the book?
Mike Summey: Right Bob.
Anna: Mike & Roger yr comments are reassuring
JimAndConnie(NC): More than reassuring…
Mike Summey: cnote, the audio program gives you the ability to listen to what you are supposed to be doing while you are actually doing it.
Al Lee: Get it in your name.
BobJ (Md): Sometimes different things get hotter - for instance, REOs would be easier to buy in a down market
JimAndConnie(NC): good advice!
[Investment Chat]: MiltonB has entered (8:32 pm)
Mike Summey: Plus some people just learn better by listening than the do reading.
Mike Summey: Hi Milton
walt: Hello guys, I was wondering what do you think of interest only loans, to increase cash flow with rental properties?
RJ: Mike have you ever bought subject to?
Dean-nc: Its getting crowded in here. whats the record Ralph?
MiltonB: Hi Mike - How do I see the previous posts so I don’t ask similar questions?
sal: good question walt
Anna: What amount, payment or condition is minimum to get started (admitedly just beginning CDs)
BobJ (Md): walt - dangerous for the long term - no equity paydown - might be good for short term if you’re fixing a problem and rents will increase
Roger Dawson: Tapes versus books: I think the big advantage with audio programs is that you listen to them over and over. A book you probably only read once.
cnote: true
Mike Summey: Walt, sometimes interest only loans can serve a purpose, but I personally like to stick with 15 year loans if at all possible.
walt: thanks
cindy: Anybody have any deals in the last couple of weeks?
Al Lee: I recommend 30-year fixed-rate, especially with rates still pretty low
Mike Summey: Milton, maybe Ralph can answer that. I guess you scroll back up but there’s quite a lot to look at.
JimAndConnie(NC): MIke… do you try to stay away from deals with a baloon after a time period?
Ralph Roberts: Milton, I post a transcript after the chat is over.
Mike Summey: J&C, No I have many deals with baloons after 5-10 years.
Al Lee: Interest-only or adjustable rate loans might be good when rates are very high since you will be refinancing soon when rates drop
Mike Summey: As long as you pay the note timely, you should have no problem renewing them.
BobJ (Md): J&C - just make sure you have an exit strategy for when the balloon comes due
Dean-nc: Ralph, whats the most people here at one time?
Ralph Roberts: Please note, everyone, there is now a separate chat transcript area to make finding them easy and convenient.
RJ: where is it Ralph?
MiltonB: Ralph - can I scroll back to the posts prior to me logging in?
[Investment Chat]: res78ekb has entered (8:37 pm)
Mike Summey: Ralph just consolidated all the chat transcripts this week.
Al Lee: Ralph, you are a busy guy. I wish you were maintianing my website
Ralph Roberts: I don’t know, Dean., since we got the new server… used to be enough to crash the old one 
BobJ (Md): Al - true, but rates are still way low now - not a good time for ARMS or Interest-only, IMHO
Mike Summey: Hi res78
JimAndConnie(NC): Mike… why do you prefer a 15 yr -vs- a 30 yr loan???
Roger Dawson: In today’s market I’d recommend a 15 fixed loan. The payments are not that much higher than a 30 year when interest rates are this low. Fixed because I don’t think rates will go any lower.
Al Lee: BobJ: I agree
MarkN: Question: I was interested in purchasing a few multi-family row houses in lancaster PA. The area is working class with a significant amount of I would guess subsidised housing. The numbers work well with a 20 to 30% ROI according to Al’s formula. Does this area make sense? There is nothing that makes sence financially where i live in Massachusetts
Mike Summey: J&C, no particular reason other than I like to pay off properties as soon as possible.
sal: Same here mark Im fron NY
Al Lee: MarkN, if the numbers work it sounds promising. Just find a good, trustworthy proeprty manager FIRST
JimAndConnie(NC): Good reason
Mike Summey: I agree with Al, Mark.
BobJ (Md): If you have the discipline, you can get ARMs or other low-interest notes, and make extra principal payments in the early part of the loan - that will retire the note quickly also
cindy: Mark.. I personally have purchased houses outside of where i luive also
JimAndConnie(NC): Roger/Mike… any thought of where interest rates are headed? ANd what those rates might be 1 yr/5yrs from now?
MarkN: Thanks AL, I have, but I was pondering the future of Lancaster a suitable place to invest
zert: What are some key points in selecting a trustworthy Prop Mgr
BobJ (Md): I don’t want to own rental property more than an hour from home
Al Lee: BobJ: I never try to pay off the principle as I like using other people’s money (the bank’s) to meke me money
Mike Summey: J&C, when I first got started, I used a lot of 30 year financing, but as I began to build equity and cash flow I started financing over 15 years.
MiltonB: Read Al’s book - don’t be afraid of properties outside of your home state.
Roger Dawson: Jim and Connie: I don’t think you’ll see rates go up in an election year. Look for a slight increase next year if the economy continues to improve.
Roger Dawson: Jim and Connie: I don’t think you’ll see rates go up in an election year. Look for a slight increase next year if the economy continues to improve.
BobJ (Md): Al - agreed - depends on your overall strategy - I like to pay down the principal and use it to finance future property acquisition
Mike Summey: zert, that is covered in Chapter 6 of our book.
Al Lee: BobJ: I live in Texas. That would limit me to buying only close neighbors’ houses.
MarkN: Cindy, how is the distance working for you with distance property?
[Investment Chat]: JJ has entered (8:40 pm)
Mike Summey: Hi JJ
walt: Al, I was wondering what you thought of Grapevine, Texas, as an area to purchase rental properties?
MiltonB: Bob - why not? You like to fix toliets?
J: hello everyone
Al Lee: walt: I like Grapevine
sal: Mike as I told uou Im 55 years old what type mortgages should I look for?
cindy: i have a house in montana w/ excellent prop managers and i purchased a house through the Tortoise CLub with al and so far I’m impressed..
JimAndConnie(NC): Mike, so startng out, go with 30 yr loans and then after getting a good financial footing, go to 15 yr loans????
Al Lee: sal, I woeul get 30-year fixed-rate
Mike Summey: sal, at your age, I would try to make 15 year mortgages work if possible.
Roger Dawson: Grapevine, California is the gateway to Bakersfield, which is, I’m told the gateway to Fresno!
zert: Thks, this goes to the point of listening over and over as opposed to reading the book once
Al Lee: OK, I guess we all agree on the mortgages. Ha!
sal: thanks
Mike Summey: sal, see we don’t all agree which is waht makes these chats interesting. You get different perspectives.
JimAndConnie(NC): Well, Fresno is VERY close to the armpit of the planet
[Investment Chat]: Simon has entered (8:42 pm)
Mike Summey: Hi Simon
Roger Dawson: Hi Simon!
Al Lee: Grapevine, Texas is between Dallas and Fort Worth and is growing!
MiltonB: Al, what areas in DFW are hot right now for rental properties?
sal: I hear ya Mike, At least I have company and you always learn
BobJ (Md): Milton - I’m a control freak. I like to be able to touch it, if I need to.
Mike Summey: sal, I’m older than you.
Al Lee: Milton: I am focusing on the areas in and around Fort Worth where a lot of new workers are moving in to work at Lockheed, Bell, etc. etc.
JJ: Mike…i know you have to have a maintenance reserve every year…but if at the end of the year the property still looks great, do you just pocket the reserve as extra profit, or do you no matter what always use the maintenance reserve to fix up something in the property to keep it as nice as possible (as rentable as possible)
JJ: ?
sal: I feel better now, lol
MiltonB: Al - can you give Bob some advice in regards to this point?
Al Lee: BobJ: I own houses that are less thatn an hour from me and I have NEVER seen them. Not even wehn I bought them.
Ralph Roberts: I am older than you, too, Sal
sal: thanks Ralph
JimAndConnie(NC): Al Lee… is buying property through the tortoise club not a big deal from here in little old north Caroline?
Roger Dawson: If you toured Mike’s properties with him, you can almost pick out the ones he owns. He’s invested money to put on new siding, etc in order to maximize the rents.
MiltonB: Al - can you be a little more specific?
Mike Summey: JJ, you may go years and not spend much on maintenance, but even if you buy new properties, from the day you buy them the carpet, paint, roof, heat & A/C units and more are wearing out.
Al Lee: Bob, the secret to success is finding peopel you can trust and then letting them do their jobs. All you can do by “tuching ” is to brealk something.
BobJ (Md): Al - I wish I could get that going here, but they seem to be a bit “high-touch” when you’re just getting them going - aqt least for me
JJ: so always use the maintenance reserve then
Al Lee: Also, there are a myriad of liability issues involved in managing rentals and you wnat to stay far away
JJ: to fix something
BobJ (Md): Also haven’t found a property management co that is worth a spit, yet
sal: What fee does a manager of property get
MiltonB: Al - agreed I have broken a few things in my day…
Al Lee: Bob: lots of them aren’t, but you need to find a good one.
BobJ (Md): Sal - 8-12% of the rent rolls here
cindy: sal about 10%
Mike Summey: JJ, just let it build up. When you think you have more than you need, you can use some of it to make improvements that will increase rents…like adding A/C.
Al Lee: Milton, sounmds like you agree with Mike and me about professinal management
MiltonB: Hands down - yes!
[Investment Chat]: Biff has entered (8:47 pm)
sal: So the fee is probably neg?
JJ: yes, thats what i was going to say next, to just let it build and them make a large repair or somethnig if needed, thanks
Mike Summey: Hi Biff
BobJ (Md): Mike - do you try to buy newer (60’s, 70’s) housing, or do you also buy older stock
MarkN: Cindy, how do you liike the tourtise club? have you used them for any purchsases?
cnote: mike or roger, does your book explain how to obatin financing for beginner investors. for example, i understand lenders will may provide up 100% financing for owner occupied housing while possible only 70%-80% for non-owner occupied housing. so what do you do if you do not have the remainder 20%-30%? or do you recommend living in your first house for awhile so you can get the 100% financing?
MiltonB: Al - where specifically in DFW are you seeing the best deals?
Mike Summey: Bob, I like properties built since the mid 70s. That keeps me away from lead paint & asbsstos problems.
Al Lee: Milton: Scrollup if you can, I wrote a long message about that. Fort Worth is the shrot answer.
JimAndConnie(NC): REally old houses mya have copper pipes too
JimAndConnie(NC): *may
Mike Summey: cnote, the book will give you many ideas about how to finance without banks.
BobJ (Md): cnote - you can find 90-95% financing for non-owner occupied, if you have good credit
Roger Dawson: Cnote: It makes sense to get owner occupied financing if that’s the way you get started. With FHA financing it must be owner occupied. After a year you can move on and turn it into a rental.
cnote: i have great credit
cindy: Mark I am currently purchasing a property with the Tort. Club…The strategic partners have been professional and right on the money so far…
BobJ (Md): cnote - however, if you don’t have some cash reserve, I’d concentrate on building that up before getting into rentals
MiltonB: Al - sorry - since I logged on late I cannot scroll up that far. Would you mind doing a cut and paste?
Al Lee: cindy, I thought you might be THAT Cindy
JimAndConnie(NC): cindy… do you purchase long distance???
cindy: I am THAT Cindy w
cindy: Yes I do…
MarkN: Cindy, in Texas?
cnote: i have some cash reserve but not huge amount
Mike Summey: I’m afraid to ask what “That Cindy” refers to.
cindy: Yes.. DFW to be exact
JimAndConnie(NC): be nice mike
Dean-nc: How much cash reserve ? Bob
Al Lee: Milton: there are al lot of workers, engineers, managers, etc. movingin to Fort Worth for Lockheed, Bell, Pier 1, Motorola, etc. and I like to buy where they want to live.
Mike Summey: cindy, were you at the event where I spoke in Dallas last month?
JimAndConnie(NC): where do you live, Cindy?
cindy: The Cindy that joined the Tortoise Club… I live in Miami and haven’t been to Dallas in a couple of years
Al Lee: Mike, nothing off color here, “that Cindy” is the Cindy who recently joined the Tortoise CLub
JimAndConnie(NC): cool
walt: Guys, I have a rental property in Durham, NC with $30,000 left in payments, which I could probably sell for 85-90,000. If I don’t want to sell it, What do you think would be the best way to get my equity out, if I wanted to purchase another rental property in Texas?
JimAndConnie(NC): I know… i was just kidding
Mike Summey: me too
JimAndConnie(NC): ha ha
Al Lee: walt: re finance while rates are low
Dean-nc: Al earlier you spoke of houses for 135k. What would that rent for?
cnote: bob, where do you get the 90-95% non-owner occupied financing?
BobJ (Md): Dean - enough to cover vacancies, replacing a roof or a heating system, or other problems that might pop up with your property
MiltonB: Al - when I asked about specifics, I meant areas like, Addison, Plano etc.
Al Lee: Dean, a $135k house rents for $1400-1550 or thereabouts. Our best was$1700 for a house that cost $135, but that was a little luck, too.
Dean-nc: Bob, do you recommend a reserve for each property you own?
Dean-nc: Thanks Al
MarkN: Al, first of all, I bought your book after listening to your talk with my friend Lyndsy Parker on WPLM AM in Massachusetts. What is your thought on buying multi’s and forclosures in the DFW area?
sal: Here in NY you can’t anything form less that 250000. You guys are fortunate
Al Lee: Milton, Arlington, Saginaw, Fort WOrth, any of the mid cities
BobJ (Md): cnote - talk to a good mortgage broker. be careful about their claims - some investors swear by them, many swear at them - they may not have actually done such a deal before
cnote: okay
oger Dawson: Al, that ratio is fantastic. I use a .75 factor as an eyeball figure. If it sells for $200,000 you can make money renting it for $1500.
BobJ (Md): Dean - I mix mine in one working account for my rentals, but I have a checking for operations, a savings for operating capital, and a second savings for escrows
MiltonB: Al - I am interested in what your thoughs are about multi-family, apt. buildings in DFW.
cnote: bob: and what kind of cash reserve do you recommend having before starting in on rental property?
MiltonB: Al - I am interested in what your thoughs are about multi-family, apt. buildings in DFW.
cnote: bob: and what kind of cash reserve do you recommend having before starting in on rental property?
Dean-nc: Thanks Bob
Al Lee: Mark, thanks for listening. I love the interviews with Lindsey, she is a pro. I like single-family houses until you have about 10 under your belt. Then I will introduce you to a commercial borker for apartments. Build a stable source of income first
[Investment Chat]: gary has entered (8:55 pm)
Mike Summey: cnote, I’d like to see you have 3-4 months reserve.
Mike Summey: Hi gary
BobJ (Md): cnote - I’d suggest you have at least as much as the biggest expense that you can envision - such as replacing a roof
JJ: al lee…what is your website again?
Al Lee: Roger: I keep telling people that I have the only areas in the US where you can REGULARLY get over 1%. We get it on nearly 100% of the poroperties–sometimes 1.25%
BobJ (Md): cnote - by the way, just getting started, you could get a HELOC on your residence, don’t pull money out, but use it for an emergency fund
Roger Dawson: As you progress, you should develop a mix of single family and multi family. Multi family for cash flow and single family for liquidity.
Al Lee: jj: www.RentHouses.org is the Tortoise CLub site
Mike Summey: Gary who just entered is a CPA so maybe he can answer some of those earlier tax and entity questions.
JJ: thanks
Roger Dawson: Hi Gary!
MiltonB: Al - I have over 10 sfh’s in Florida. Is DFW a good market for apt. buildings?
cnote: bob, i currently don’t own any property; i rent.
Al Lee: Milton: It is right now becoming a very good opportunistic area. Apartments have suffered low occupancy here and we will see a lot of bargains as soon as some of the owners throw in the towel–THEN start buying
Dean-nc: Milton , where in Fla?
Mike Summey: Milton, there are a number of considerations when you get into apartments that you don’t have with single family homes. Things like common area maintenance, grounds maintenance, utilitiels etc.
cnote: do you suggest buying your own home 1st and then work on obtaining rental properties?
sal: how do you find vacancy rates
MiltonB: Mostly Orlando - one in Miami.
Al Lee: Milton: Apartment occupancy goes up and down like a yo-yo, SFH occupancy is really stable and stays close to 100%
Roger Dawson: cnote: I suggest you buy a modest home right away. A year from now buy another and turn the first one into a rental.
Dean-nc: I grew up in st pete
Mike Summey: cnote, I’d recommentd that. Otherwise your buying a property for someone else while you look for investments for yourself.
MarkN: Al does the Tourtise Club deal with forclosures or rental property?
BobJ (Md): cnote - depends on whether you want to be a homeowner. Owning your own home is a personal decision, not a financial one. You could live in a 1BR apartment or buy a single-wide, to conserve cash, and invest - you decide
Al Lee: Mike, Milton: I hae a management comapny here that does apartment buildings and deals with the problems
JimAndConnie(NC): WE have several SF houses we own free & clear in calif… any advice on how BEST to invest/reinvest the equity??? O r should we keep them for cash cows?
Mike Summey: Hi John
MiltonB: Al - I need to start thinking about multi - unit buildings. Can your club help?
Al Lee: Mark: Sometimes we do deal with foreclosures, but lately we are buying mostly brand new constructin from major builders and making our numbers without the headaches and repairs (warranty, you see)
Ralph Roberts: welcome John
Al Lee: Milton, Yes, it can
John_Hoecker: Evening… sorry I’m late
Mike Summey: J&C, you could always keep the CA homes and use them to obtain the funds to purchase more.
Al Lee: John_H: I think I recognize that name
MiltonB: Do your partners have experience with MF’s?
MiltonB: Do your partners have experience with MF’s?
Al Lee: Milton, the management company that I referred to manages 700 doors
zert: al always great information - thanks everyone
MarkN: Al, what do you get for rent on one of your 135K homes?
Al Lee: Mark: 1400-1550
cnote: mike and roger: the reason why i rent is because i have roommates in a 4bed house and our rent is really cheap but i could move them with me
MiltonB: AL - on MF’s what kind of cap rate can you expect now adays?
Roger Dawson: Jim and Connie: I’d need to know much more about you to advise you. If you’re still agressively investing, pull some equity out and buy more. If they’re generating all the income you need to live well, stay with what you’ve got.
Mike Summey: cnote, what if you woned the property and let them pay rent to you?
Al Lee: Milton, I weoul have to refer you to an expert as I persoanlly only buy SFH
[Investment Chat]: twitch has entered (9:03 pm)
Mike Summey: Hi twitch
Ralph Roberts: welcome twitch
cnote: mike and roger: that would work but i thought i might be able to jump right into rentals
Roger Dawson: Hi twitch!
twitch: hey guys!
JimAndConnie(NC): Roger, we are looking down the road for the income to live comfortably AND stay ahead of inflation.
MiltonB: Al - thanks - I have to be going - I will be in touch.
Al Lee: Kinda makes mah fingers hurt…name that song
Mike Summey: cnote, if you buy a property and rent to your roommates, you will be starting with rentals.
sal: Al where do you buy sfh for 135k and get 1500 a month…please advise me
Al Lee: Milton, see ya
Ralph Roberts: night, Milton
Al Lee: sal, DFW, Texas.
Mike Summey: goodnight Milton, thanks for joining us.
JimAndConnie(NC): cnote you wil be able to ride herd on your roomates to keep the place up
twitch: Be careful renting to fiends and family
John_Hoecker: Al: You guys may have already covered this before I logged on, but Turnkey will also be investing in Multi unit bulidings?
Mike Summey: good point twitch.
JJ: mike and roger, when is your second book coming out?
John_Hoecker: Are we eding at 9pm EST?
JimAndConnie(NC): make the roomates sign an agreement in writing
sal: thats great you can’t get a 1 room studio here for 125k
sal: thats great you can’t get a 1 room studio here for 125k
Al Lee: John, Right. we have a commercial borker for a partner and Classic manages 700 doors of apartments already
Mike Summey: JJ, we’re currently working out the details with McGraw-Hill for three more books.
JJ: o ok
JJ: cool
[Investment Chat]: guesswho has entered (9:06 pm)
JimAndConnie(NC): names of the books MIke???
Mike Summey: Hi guess who.
Al Lee: John: I expect that good deals on apartment buildings will start popping up in the next few months.
JJ: do you mind splling the beans on what the forst one will cover?
Roger Dawson: JJ: we’re in negotiations with our publisher now. Judging by how far about we are, it’s going to take a while. Maybe early next year.
cnote: mike and roger: the books i have read recommend buying a home every year or two, living in it for one year and then turning it into a rental. but this seems like a very slow process while the seminars i have attended make it seem like there is a much faster way.
Dean-nc: Al, whats the cash flow on that with minimum down?
JJ: ok roger
Investment Chat]: guesswho has entered (9:06 pm)
Mike Summey: John, we scheduled the chat from 8-9 but since there are so many people here, I’ll stay for a while longer.
guesswho: greetings Mike
BobJ (Md): cnote - this is a great get rich slow scheme - if you buy low and sell high - it’s a way to completely tax-shelter the increase in equity
JimAndConnie(NC): Al, those good deals you talk about… are they in DFW or everywhere?
Al Lee: Dean, ask John_Hoecker, who has a house he bought for $135 and leased for $1650 or so
cnote: bob: so do you think this is the best way to get started?
Dean-nc: Dear John what cah flow are you seeing?
Mike Summey: cnote, if you only buy one house a year, in a few years they will make you wealthy.
BobJ (Md): cnote - it’s a good way to build a bunch of equity, which you can use for investing - but, you can own a home free and clear within 10 years doing that -
Al Lee: Dean if you put 20% donw the cash flwo is really good, like $400/month. With 10% down it is less, but still good
Roger Dawson: It’s amazing how to purchase price to rental value varies around the country. Some markets are very condusive to buying rentals, others are not.
John_Hoecker: Al: Multi units will be a slightly different invesment philosophy, and may be best referred to a future duscussion. Will you maybe describe the differences at a later discussion?
Mike Summey: Just one good purchase, held for 15+ years will probably pay you maore than Social Security that you work your whole life for.
JimAndConnie(NC): Al, the good deals on apts… is that in DFW or are you talking in general???
Al Lee: John: Lots of differences. Mostly, different class of tenants and much more management needed
JJ: im sorry, but what does DFW stand for?
JimAndConnie(NC): Dallas Ft Worth
Mike Summey: JJ, Dallas/Fort Worth
JJ: i thought it was that, just wanted to make sure
Al Lee: John: Dean was asking you about the cash flow on a house that you buy at $135k
cnote: mike: do you recommend setting up a business such as a partnership or LLC to purchase the house? how does that work? i have heard never to accquire lots of debt in your name.
cindy: Good night all… Great chating with everyone.. Will join you guys next time
Dean-nc: I know I should be patient but I feel I should make up for lost time.
JimAndConnie(NC): g’nite cindy
Mike Summey: Goodnight Cindy
Al Lee: Bye cindy
Ralph Roberts: good night Cindy
sal: I’m with you Dean
JimAndConnie(NC): learn to walk, then learn to run
Mike Summey: Dean, you can’t make up for lost time, you can only be smarter from here on. Be wise not impatient.
BobJ (Md): cnote - you’re going to be acquiring debt in your name when you buy property - the LLC provides protection of your identity, making it harder to find who owns it - and can save you money when you resell if you’re rehabbing
Al Lee: Dean, I have a Cd with my book that includes a spreadsheet that computes the ROI with whatever down payment you want to use. Youcan donwload if from my website, too. It will answer your question better than I can.
[Investment Chat]: Clarice has entered (9:13 pm)
Mike Summey: Debt on appreciating assets is “good debt”
Mike Summey: Hi Clarice
Dean-nc: Bob, how would it save money?
Mike Summey: We’ve been waiting on you all evening.
John_Hoecker: Dean - NC: I’d have to go to my accounting program and look at the last year’s numbers… Accounting is not my strong point, but with 10% down, I was about $1K profit, but slightly cash negative given the principal paydowns. I own 4 SFH rentals, 2 in Fort worth, and they are my best performers on a cash-flow basis
Dean-nc: Thanks Al
Roger Dawson: Hi Clarice!
Al Lee: Mike, I agree about the debt. I collect as much as I can. I want to die owing a billion dollars on real estate
BobJ (Md): dean - you can assign beneficial ownership of the LLC, which actually owns the property - avoids all sorts of RE closing costs
Clarice: Hi, Mike, just listening for now, thanks everyone’s input
Dean-nc: Thanks John
MarkN: Bob, is there a downside of using a LLC?
cnote: bob: so should i purchase the property and put it into a LLC
sal: Wats LLC
Mike Summey: Al, I don’t want to die owing a billion or not.
cnote: bob: or is there a better structure to put property? what is a land trust?
BobJ (Md): Mark - some states are hitting you with big fees - $350/year in MD now
Roger Dawson: Dying sucks!
Al Lee: Mike, I meant IF I were to die.
Clarice: Hi Roger!
BobJ (Md): cnote - depends on your overall strategy - rentals, yes - buy/sell - maybe
Mike Summey: Mark, I don’t know of any downsides, but you should talk with you attorney and CPA regarding your particular situation.
JimAndConnie(NC): Kime, Roger, or Al…do you recommend staying away from getting LLCs through the web and going through an attorney, or are the LLCs avaiable through the web OK?
Mike Summey: sal, Limited Liability company
cnote: bob: yes, i want to accquire rentals
sal: Thanks Mike
Al Lee: Downsides of entities liek LLC, etc–can;t get best loan terms and rates, can;t get liability insurance easily
BobJ (Md): There are a lot of claims about what a LLC or other structures will/won’t do for you. This is lawyer ground, get a good one and listen to them.
JJ: mike im 20, so do you think getting 30 year loans would be better for me…and cant you buy more houses with 30 year loans since it makes the mortgage payment lower?
JJ: just curious to see what you think
Roger Dawson: JJ, it doesn’
BobJ (Md): Some people say to save the money and make sure you have darned good insurance
Al Lee: BobJ: Better talk to a lender and insurance broker and CPA, too
Mike Summey: jj, at your age, I wouldn’t worry about it. 30 years loans work fine.
Roger Dawson: JJ, It doesn’t lower the payment much when interest rates are this low.
JJ: o ok
BobJ (Md): jj - it’s hard to get 30 yr loans on investment property - 15 or 20 is the norm
JJ: ok, thanks for info
Mike Summey: Bob, you’re right.
JJ: al, you help ppl acquire properties in DFW?
Mike Summey: You may be able to get loans with a 30 year amortization and a 3-10 year baloon.
Al Lee: BobJ: Most of these folks can get 10 good 30-year loans before they have to go to other sources.
BobJ (Md): Al - absolutely - there are tax and accouting issues related to the business structure that’s “under” the LLC, also
Al Lee: JJ: Yes, that is pretty much ALL I do now.
JJ: so if i join the tortiose club, ud help me out a bit?
JimAndConnie(NC): Al, do you own Tortoise CLub?
Roger Dawson: I have to leave you now. Thanks and good night.
JJ: thanks roger, byebye
Dean-nc: Night Roger
Mike Summey: Goodnight Roger.
JimAndConnie(NC): thanks for all the good advice, Roger Cheers!
Al Lee: JJ: I help all members with whatever problems I can. Sometimes it goes too far, but I am just that kinda guy
Penny: Goodnight Roger, rest well!
BobJ (Md): Al - expand please, where do you find 10 30-yr loans for non-owner occupied property - commercial lines are the only ones I know that would do this, and they’re not doing 30-yr loans now
sal: Thanks Roger
Ralph Roberts: see ya Jim and connie
Mike Summey: I’ll stay until 9:30 and then I’m going to have to get out of here also.
cnote: mike: what do you know about owner will carry mortgages? do you know where to get more info about this?
JimAndConnie(NC): Hey we’re still here!
Mike Summey: I’ll stay until 9:30 and then I’m going to have to get out of here also.
cnote: mike: what do you know about owner will carry mortgages? do you know where to get more info about this?
JimAndConnie(NC): Hey we’re still here!
JJ: lol
Ralph Roberts: then I won’t say good-bye when you really leave
Al Lee: BobJ: FannieMae and FreddieMac are now imposing (for over a year) a limti of 10 loans, but you can get ten really good loans through the lenders I use with 30-year terms at rates just a hair about owner-occupied rates and with 20%, 10%, or 5% down
Al Lee: BobJ: FannieMae and FreddieMac are now imposing (for over a year) a limti of 10 loans, but you can get ten really good loans through the lenders I use with 30-year terms at rates just a hair about owner-occupied rates and with 20%, 10%, or 5% down
[Investment Chat]: markg has entered (9:21 pm)
Ralph Roberts: hi Mark!
Mike Summey: Bob, I think waht Al is talking about is the point when you start being considered an active investor rather than a passive investor. Your loans are treated differently by the federal regulators afer you get 10 of them. It used to be just 5.
Mike Summey: Hi mark
markg: Hello, great to be here
JimAndConnie(NC): Al, are those lenders the one who would help us if we go through using th Toroise Club?
Al Lee: BobJ: These are for SFH, not apartments (duplexes, OK)
sal: I’m new to this site, Is there a chat every night?
Al Lee: J&C: Yes, everythign I do is thrugh the club.
JJ: al lee: can u help members buy with very little down, like 5% ior less?
JimAndConnie(NC): OK
Al Lee: JJ: Yes, but the rate is a bit higher
JJ: ko
Ralph Roberts: informal ones every night, Sal… formal ones like this as announced
JJ: ok
JJ: thanks for the info everyone
sal: Al what about piggyback mortgages with a sellers concession
JJ: goodnight
Mike Summey: sal, the chat is available allthe time. We have established 8:00 PM eastern as a regualr chat time, but roger & I are only here occasionally. If you register on the website you will get email notice when we will be in the chat.
Al Lee: JJ: I personally got a 95% loan at 7% and that is with me being way over the 10 loan limit so I had to get a non-conforming loan
Mike Summey: Goodnight JJ
JimAndConnie(NC): Non-conforming??? explain
JJ: thanks everyone, al ill check out ur site, thanks for the help mike….goodnight
sal: Im registered and this is a great cahat room and site im learning alot thasks to you Mike
Mike Summey: Even after Roger & I leave the chat, everyone else is welcome to stay and talk as long as you want.
markg: Anybody have any experience renting to college students. I am in Boone NC, 12000 residents and 13000 students so the rental market is dominated by them.
Mike Summey: Thanks sal.
Al Lee: sal: I just finance the whole thing and do not do any creative financing. That is a difference between my method and Mike and Rogers. The reason is because we can buy good houses so cheaply here and they rent well, so the cash flow naturally.
sal: Thats great!
Dean-nc: I’ve checked in on occasion but haven’t found anyone here. Yet
Mike Summey: mark, If you rent to college students, be sure to have the leases guaranteed by the parents and check out their credit before renting.
Al Lee: Daean: I log in to the chat room form time to time at about this time of evening (7pm Central time, 8pm Eastern) and have nto foudn anyone here.
JimAndConnie(NC): Mike…every time I see a KingAir, I think about you… getting any closer to getting one?
Dean-nc: AL, why don’t more people buy in you area instead of rent?
Mike Summey: J&C, I’m still looking. I’ve got the Duke flying very well right now so I’m not pressed for time yet.
Dean-nc: buy instead of rent
Mike Summey: J&C, I’m still looking. I’ve got the Duke flying very well right now so I’m not pressed for time yet.
Dean-nc: buy instead of rent
[Investment Chat]: smasho has entered (9:28 pm)
markg: Mike we do that and have had good success so far. We have one rental now and are trying to expand but it is a tough market to find a deal where the numbers work.
Al Lee: Dean: lots of people buy, but renting is convenient for upwardly mobile people who wnat to be able to take advantage of job opportunities elsewhere, or transfers. Many of our hosues are rented by the employers who lease the hosues and let employess live there so they won;t buy a house and get tied down
Mike Summey: Al uses conventional bank financing because it works in his area. If you have good credit and can make the numbers work, by all means use the banks. If you are in those areas where its difficult to make the numbers work then you have to look at unconventional financing.
Mike Summey: Hi smasho
Dean-nc: Sounds really good
smasho: Hi Mike
JimAndConnie(NC): Mike, last week you said you heard the rental market was good in the Tri-Cities area… did you mean SFHs or multi-units?
Al Lee: I believe there is a macro trend toward leasing over buying homes among people who can afford to buy.
Al Lee: Our tenants are professionals, business owners, managers, engineers, etc. etc.
Mike Summey: J&C, I was talking about SFH, but small multifamily units are good also.
JimAndConnie(NC): are the rents better in Tri-Cities than the Asheville/Hendersonville area?
Al Lee: I have authored articles about the false benefits of owning yoru own home. Many people are figuring it out.
Mike Summey: smasho, you’re a bit late tonight, I’m going to have to leave in a minute…anything you want to ask before I go?
Dean-nc: Gotta go. Thanks for all the help. See ya next time.
markg: J&C what Tri-Cities are you talking about?
Al Lee: So long, Dean
Ralph Roberts: good nite, Dean
sal: Bye Dean
smasho: Mike, the book refers to seller own finiancing, is it possible that a sample offer be available on this website?
Mike Summey: Goodnight Dean
Mike Summey: I’ve got to go as well. I just had company arrive.
markg: Good Night Mike
sal: Good Night and Thanks Mike
Mike Summey: Thanks everyone for participating tonight and I’ll let you know when we will have the next scheduled chat.
smasho: Goodnight
JimAndConnie(NC): good night Mike
JimAndConnie(NC): Thanks so much
Al Lee: Yeah, and my kids want me to play a game with them befor ethey go to bed
Mike Summey: Night all!
Ralph Roberts: nite, Mike
Al Lee: I had better log off now, too. It was fun.
John_Hoecker: Ciao, folks, till next time…
JimAndConnie(NC): markg the tri-cities area of tenn/NC
sal: Thanks Al
JimAndConnie(NC): AL thank you too for all your good advice/info
Al Lee: J&C you are welcome. check out the website for lots more free info.
JimAndConnie(NC): thank you too, Ralph!!!!
JimAndConnie(NC): We will be in touch, AL
Ralph Roberts: no problem… enjoy it
sal: Good Night all Ill be back again, thanks
JimAndConnie(NC): Ralph, this will be availabel as an archive later???
Ralph Roberts: yep… in about 5 minutes
markg: Good Night
Ralph Roberts: nite, mark
JimAndConnie(NC): okey dokey… have a good evening …. Thanks again for all… PS are you an investor too???
JimAndConnie(NC): (Raalph?)
Ralph Roberts: yes… but mostly in the book publishing biz
Ralph Roberts: for a living, that is
JimAndConnie(NC): great! i have a couple of books i have written..
JimAndConnie(NC): i need to try to get published
[Investment Chat]: Mark has entered (9:36 pm)
Ralph Roberts: check us out … aBOOKS.com … we’re right heah in Buncombe County
Mark: greetings!
Ralph Roberts: and I’m taking off now… will post the chat first…. good night all!
JimAndConnie(NC): okay…. goodnite, Ralph…. good nite all
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