Chat 8-02-2004
Posted on August 2, 2004
Welcome to the chat, Ralph Roberts!
[Investment Chat]: Jim-FletcherNC has entered (7:57 pm)
[Investment Chat]: Rick has entered (7:57 pm)
Ralph Roberts: hi Jim!
Ralph Roberts: hello, Rick
Jim-FletcherNC: Yo Ralph…. hoaw are you?
Jim-FletcherNC: how*
Rick: hello ralph
Ralph Roberts: Mike just called… he just got into the airport and is driving home now (lots of storms)
Ralph Roberts: doing good, Jim
Ralph Roberts: glad I was not flying in it 
Jim-FletcherNC: Yeah… I live near the Asheville airport… lots of thunder outside right now
Jim-FletcherNC: in fact… I may have to shut down the computer if it keeps up
Ralph Roberts: yep … you been flying lately?
Jim-FletcherNC: can’t afford to have a computer fried by lightning.
Ralph Roberts: urk! … big thunder here too
Jim-FletcherNC: yes, Ralph… I flew today
Ralph Roberts: one of the big jets?
Jim-FletcherNC: Charlotte to Pittsburg, Pittsburg to New Orleans, New Orleans to Charlotte
Jim-FletcherNC: An AIrbus 319
Ralph Roberts: nice round trip
Jim-FletcherNC: 120 passengers
Jim-FletcherNC: easy day trip
Ralph Roberts: I like the Airbus
[Investment Chat]: Testut has entered (8:00 pm)
Jim-FletcherNC: the airplane Mike flies requires a lot of consideration for bad weather
Ralph Roberts: his Testut
Testut: Hello
Ralph Roberts: yes, he said he diverted down through Alabama to miss the worst of it
[Investment Chat]: Roger Dawson has entered (8:01 pm)
Ralph Roberts: Roger! Welcome.
Ralph Roberts: Mike’s on his way home from the airport.
Jim-FletcherNC: that’s good that he has a deep respect for the weather… the cemetaries are full of people who had “get home-itis” in an airplane
Roger Dawson: Hi Testut, Rick and Jim!
Ralph Roberts: so you da man, Roger.
[Investment Chat]: Al Lee has entered (8:02 pm)
Jim-FletcherNC: Hello Roger
Testut: Hello Roger. Quick question for you. Do you recommend a property manager with the very first investment property I purchase?
Al Lee: Hey, Mike. I made it!
Ralph Roberts: definitely rocks in the clouds hereabouts, Jim
[Investment Chat]: Aaron has entered (8:03 pm)
Roger Dawson: Yes, Testut, get a manager. It’s going to cost you ten percent or so because it’s worth it.
Ralph Roberts: Mike’s not here yet, al… but he’s on his way.
Rick: hello roger
Al Lee: Ralph, that’s great. I beat him here this week.
Roger Dawson: The number one reason why people quit being real estate investors is problems with tenants.
Jim-FletcherNC: Hello Al Lee…. good to have you back
Ralph Roberts: welcome, Aaron
Al Lee: Hi all, Hi Jim.
Aaron: Hello and thank you
Roger Dawson: That’s why you find bargains in real estate. Small investors get tired of the hassles with investors.
Al Lee: I’ve intended to make these chats for the past few weeks and something has always come up.
Roger Dawson: Welcome Al!
Jim-FletcherNC: “A house is a man’s hassle”
[Investment Chat]: resourceone has entered (8:04 pm)
Al Lee: Hir Roger
Jim-FletcherNC: I understand, AL Lee
Ralph Roberts: welcome resourceone!
Ralph Roberts: I like that one, Jim.
Al Lee: Roger, I don;t think peopel understand the potential legal liability they expose themselves to by self-managing a property.
Testut: Roger, thanks. By the way…in the mail today arrived your Power Performance and Power Persuasion CDs. Looking forward to listening to both and then get your Power Negotiating.
Ralph Roberts: albeit blatant paronomasia
Roger Dawson: I think this is particularly true with out of town owners. I owned a rental house in Tucson once because somebody owed me some money. I never saw the house and finally got rid of it at any price because dealing with tenants from a distance is murder.
resourceone: hi, i’m new member here
Jim-FletcherNC: Roger… I talked to an investor who told me that Fresno/Clovis, CALIF is the fastest appreciating city in the US right now
[Investment Chat]: Doug in CT has entered (8:06 pm)
Ralph Roberts: hi Doug, welcome!
Jim-FletcherNC: Roger, you shoulda kept that house in bakersfield … ha ha
Doug in CT: Hi Ralph, et.al.
Roger Dawson: Jim, I can’t think why unless it’s equity emigrants cashing out in LA.
[Investment Chat]: Mark in NC has entered (8:06 pm)
Ralph Roberts: welcome, Mark
Mark in NC: Hello everybody
Roger Dawson: I should have kept a lot of properties. That’s what I like about Mike’s method that you buy right and hold for ever.
Jim-FletcherNC: i dunno either…. but i know my rents are going up like crazy
Roger Dawson: The problem with these people cashing out and moving to cheaper places is that it’s a one way ticket. There’s no coming back.
Jim-FletcherNC: that’s true
Al Lee: I subscribe to a lot of financial and economic newsletters and I believe that inflation, higher interest rates, and rising property values are coming soon.
Roger Dawson: Higher interest rates take the bloom off the market.
Al Lee: I view infaltion as my best friend
Jim-FletcherNC: i would like to do 1031s on all my claif property after things settle down and purchase multiple properties here in NC using the cash from the sales in calif
Al Lee: Higher rates means more people will be leasing instead of buying
[Investment Chat]: Mike Summey has entered (8:10 pm)
Al Lee: Hey, Mike.
Ralph Roberts: The eagle has landed!
Roger Dawson: Hi mike
Mike Summey: Whew! What a ride!
Mark in NC: Hello Mike
Doug in CT: It appears to me that the relationships among the Inflation Rate and Interest Rates and Housing Values defy a simple description based on a positive or negative correlation.
Doug in CT: If the Inflation Rate is low, as it is now, Interest Rates tend to be low, as they are now, which leads to increasing Housing Values, as we are experiencing now.
Mike Summey: I left Nashville at 6:00 PM Eastern and after a detour over Northern Ala, GA & Upper SC, I’m finally here.
Doug in CT: If Interest Rates are high, as they were a few years ago, it is largely because the Inflation Rate is high, which causes Housing Values to increase.
Jim-FletcherNC: Did you see the news that the Speaker of the House (Hasstert) says that the Bush administration wants to try to eliminate the IRS? I saw the article on the DRUDGEREPORT.COM website
Doug in CT: I may be wrong, but it would appear that the investors in real estate, particularly single-family housing, benefit from growth regardless whether Inflation is high or low.
[Investment Chat]: BrytonK01 has entered (8:11 pm)
Roger Dawson: Jim, 1031s defer your taxes but don’t help much if you’ll always be in a higher tax bracket. There’s something to be said for paying the taxes when you sell.
Al Lee: Doug. Housing is a major component of the calculation of the “inflatin rate”, so wehn inflation is up, so are housing prices
Mike Summey: Hi everyone.
BrytonK01: hello all
Ralph Roberts: Hey, I’ll vote for eliminating the IRS!
Mike Summey: That’s the best idea yet.
Al Lee: I second that vote
Mark in NC: I have heard that higher rates drive rents up as fewer people are in a hurry to buy. Any of you veterans experienced this?
Roger Dawson: Jim, I’ve always thought that income tax is stupid. They’d be much better off to tax us when we spend it. And we will spend it.
Jim-FletcherNC: true
Jim-FletcherNC: Hello Mike
Mike Summey: Sorry about being late, there is a lot of weather between Nashville & Ashville.
Jim-FletcherNC: Re: the bad weather… you need a JET!!!
Jim-FletcherNC: Go over the WX
Ralph Roberts: Gulfstream V
Roger Dawson: Mark, higher interest rates mean that buyers entering the market can’t qualify for the loans. That turns them into renters.
Mike Summey: Jet or not, you still have to come down through it & it’s all around Asheville.
Al Lee: Jim, you need to get over 60,000 to top some of the WX in Texas
Jim-FletcherNC: Gulfstream is the Rolls Royce of personal jets
Jim-FletcherNC: I know
Roger Dawson: Move to LA. The weathers always good here
Mike Summey: I was at 19,000 so I could see most of the big stuff and go around it.
Jim-FletcherNC: I lost a battle one time at 56,000 feet in a fighter…
Al Lee: Wow!
Doug in CT: I have a family in a single family house. They seem by all measures to be salt of the earth folks. But they have not been able to get me their first months rent. We have a section in our lease that provides a $5 per day penalty as extra rent. They assure me that the rent is coming with all the penalties attached. When do you pull the plug?
Mike Summey: Doug, I file eviction notices after 10 days.
Roger Dawson: Doug I’d red flag this one. If they can’t get the first month’s rent on time, you’re going to have problems.
Mike Summey: If they want to stay they have to pay the rent plus the cost of the eviction papers.
Jim-FletcherNC: It’s strictly a business decision… cant let emotions dictate
Doug in CT: Gotta Ya.
Mike Summey: If they don’t have one months rent after 10 days, what make you think they will have 2 months rent 20 days later?
Al Lee: They shoudl not be allowed to move in before they have paid the first month’s rent plus deposit
Jim-FletcherNC: good point, AL Lee
Mike Summey: When you let them ride you, all you are doing is allowing them to transfer their problem to you.
Mark in NC: Not to interupt you fly boys but i have a REI question, what is the quickest way to learn about the rental market in a new area?
Jim-FletcherNC: ha ha
Roger Dawson: Don’t forget to check their last two landlords. Their current landlord may want to get rid of them.
Mike Summey: Mark, ask some of the property managers in the area.
Al Lee: Mark, I would go to the NARMP website and find a few property managers there and ask them
Mike Summey: Mark, ask some of the property managers in the area.
Al Lee: Mark, I would go to the NARMP website and find a few property managers there and ask them
Al Lee: NARPM- National Association of Residential Property Managers
[Investment Chat]: Penny has entered (8:18 pm)
Mike Summey: They are usually very good about telling you market conditions, rents etc.
Mark in NC: Thanks.
Jim-FletcherNC: NARMP.COM?
Doug in CT: I was about to get a nice bread and butter house under agreement Saturday with an 80/20 nothing down offer.
Ralph Roberts: Hi Penny!!!!!!!
Al Lee: Jim, Yes, www.NARPM.COM
Mike Summey: Phone book works well also for quick reference.
Penny: Hi Ralph!
Mike Summey: Hi Penny
Roger Dawson: You could also take a day and check out half a dozen properties as a prospective tenant. That would quickly give you a feel for the market.
Penny: Hello Mike.
Al Lee: What’s a “Phone book”? This is the computer age
Jim-FletcherNC: Thanks, Al Lee
Mike Summey: Good idea Roger.
Jim-FletcherNC: Good way to find properties that way too, Roger
Roger Dawson: Doug, did you get it accepted?
Doug in CT: Yes. It is very difficult here as the market is white hot!
Doug in CT: We had put offers on 5 other houses and found ourselves in multiple bid situations on all five occasions and had to back away.
Jim-FletcherNC: cool
Doug in CT: Finally we found ourselves a “ready seller.”
Mike Summey: I received a nice email from Testut, who is usually in the chats with us advisint that he has just made his first two purchases.
Jim-FletcherNC: the “numbers game”
Roger Dawson: Testut was with us earlier Mike
Jim-FletcherNC: Yeah, he was
Jim-FletcherNC: wonder what happened to him
Doug in CT: I have found a couple of mortgage brokers here who are offerring 100% financing on investment property.
Mike Summey: Doug, at one point, I made over 50 offers and had them all rejected, only to have 6 of the next 10 accepted. Jim is right, it’s a numbers game.
Mike Summey: What happened to Testut?
Jim-FletcherNC: Mike, in one of the cahts, you mentioned doing a 30 yr loan with the 1st 10 yrs interest only. Is that a goo idea to do generally, or only in a limited numbers of purchases? what do you use for your criteria for that type of loan?
Doug in CT: This will be my first “no money down” deal. My others started with 20% then down to 10% and now I am down to no money down, if this all flies as I think it will.
Roger Dawson: A good idea is to call every ‘house for rent’ ad in the paper. Find out if it’s an out of town owner. They may want to sell or lease option to you.
Jim-FletcherNC: good call, roger
Al Lee: Jim I just closed on 8 houses–every one using the type of loan you described. I think you should do as many as you can get like that.
Mike Summey: Jim, I was talking about financing that some people in the Northeast are using. I’ve never done one of the 30 yr/10 int only loans.
Jim-FletcherNC: look for an out of town area code in the rent ad
Rick: doug, could you explain a 80/20 zero down offer — thx
Doug in CT: I have done a couple of 30 yr/10 int only loans and they are very good for your cash flow. But building equity will depend on appreciaion.
Jim-FletcherNC: Al Lee or Mike… is it difficult to get 100% financing on a loan like the one I described above?
Mike Summey: I just closed a $2,200,000 revolving line of credit loan using a piece of real estate to secure it. I can now use this line to purchase properties for cash and then put permanent financing on them when it suits my purpose.
Al Lee: Jim, I do 80% financing, but I think you coudl get 100% if yoru credit is good enough (FICO score) and you paid a higher interest rate.
Mike Summey: It’s much easier to get 90-100% financing on properties you already own than to get it to purchase with.
Doug in CT: Rick, I just kept calling mortgage brokers until I found one focused on investors and they are telling me that 80% down on a first and 20% on a second will work all day with them and there will be no PMI. Now I am testing them to see if they are telling me the straight story.
Rick: got it - thx
Mike Summey: Doug, it sounds like you have been doing your homework.
Jim-FletcherNC: I have a couple lines of credit (Not NEARLY as huge as Mike’s). So, what you are saying is get a good price and pay cash, then get financing once you own them?
Mike Summey: Right Jim.
Doug in CT: Yeah, I have the Weekend Millionaire Tape series pretty well memorized by now.
Roger Dawson: Rick, remember that the seller gets cash even though the buyer doesn’t put any up. they get it from the 80% first.
Jim-FletcherNC: OK… thanks, Mike
Jim-FletcherNC: Mike… you look great on that video…
Mike Summey: Having the line of credit let’s you negotiate for cash with the ability to close very quickly, which is where you can often get great deals.
Doug in CT: The mortgage broker did tell me that your credit score has to be above 680 to do the 80/20 100% deal.
Jim-FletcherNC: I see
Mike Summey: Jim, what video?
Jim-FletcherNC: carleton’s
Mike Summey: When you can make offers for cash with no contingencies and close in a week, you would be amazed at what some sellers will do.
Roger Dawson: Cash really talks in a foreclosure market. No many foreclosures out there now, but when the market turns there will be.
Jim-FletcherNC: whne you say no contingencies, what are you referring to?
Mike Summey: Jim, I’m going to Hawaii next month to shoot some more stuff with him and some test footage for Weekend Millionaire.
Jim-FletcherNC: Roger, you say cash is a good tool in foreclosures???
Roger Dawson: Contingencies; subject to obtaining financing or subject to selling another property.
[Investment Chat]: Liam has entered (8:32 pm)
Mike Summey: Jim, no contingencies primarily means no “subject to obtaining acceptable financing” or “subject to selling another property” etc.
Jim-FletcherNC: Cool, Mike… his new course is really an improvement over the earlier one. If your vidoes are going to be done by the same team, I will DEFINITELY have to get you and Roger’s videos
Mike Summey: Hi Liam
Roger Dawson: Jim, I mean that when people are in foreclosure you have to be able to move quickly to get them out of their problem.
Mike Summey: I just received a call today from a bankruptcy attorney asking for my email address so he could send me notices of problem properties he was working with.
Doug in CT: I went to a forclosure on Saturday and found myself among 100 interested parties bidding on a $395,000 partially finished home with a wet basement. It turned out the forclosing bank’s opening bid of $325,000 was the only bid that day.
[Investment Chat]: rixdumps has entered (8:34 pm)
Jim-FletcherNC: i am working on a foreclosure. it is in bancruptcy and the atty’s office has no info for me because of the bancruptcy… i will just have to make grequesnt calls
Mike Summey: He is trying to help people in financial trouble and wanted to see if I was interested in looking at real estate that may soon get tied up in a bankruptcy.
Mike Summey: Hi rixdumps
Roger Dawson: Foreclosing on a trust deed the way we do it in California is a swift and brutal process. 3 weeks of filings plus 90 days. 111 days total and they have lost the property.
rixdumps: greetings all
Jim-FletcherNC: hi rix
Mike Summey: Jim, the time to get to a property owner is before the property goes into foreclosure or bankruptcy.
Mike Summey: Rix, where are you from?
Doug in CT: This McMansion I went to didn’t even have a furnace installed. All the 100 bidders I talked to think the bank was a bit nutty, bidding $325,000 on a partially finished (no back door yet) mansion.
Jim-FletcherNC: Mike/Roger - I was thinking of asking the atty for the finance company who owns the first mortgae if they would be interested in a short sell on the property that is in foreclosure
Mike Summey: Doug, the bank probably bid the amount they have in the property at the time of sale. that doesn’t mean they will get that much when they sell it.
Roger Dawson: Jim, that makes sense to me. Most financial institutions will do anything to avoid owning the property.
Doug in CT: I am finding better opportunites working with realtors and buying just a bit below appraisal and then finding a way to hang on.
[Investment Chat]: MarkN has entered (8:38 pm)
Roger Dawson: Doug, sometimes the bank buys back the first. That eliminates the second. Then they can resell to the owner.
Mike Summey: Jim, the time to negotiate on foreclosures is either just before the foreclosure is initiated or after the bank acquires the property.
Al Lee: I bought a house from a bank for 88% of what they had foreclosed on it for.
Jim-FletcherNC: MIke… I understand what you are saying about getting to the seller B4 it goes into foreclosure… i was a little late… but there is some potential to make about 30 - 40 thousand in equity on the ppoperty and get a nice + cash flow up front too
Mike Summey: Hi Mark
Doug in CT: Yeah, I heard that Fleet has a $75,000 second that went up in smoke on this deal.
Roger Dawson: To a bank an REO (real estate owned) is carried on their books as a liability, not an assett.
[Investment Chat]: Penny has entered (8:40 pm)
[Investment Chat]: jimk has entered (8:40 pm)
Roger Dawson: Hi Penny!
Mike Summey: I have purchased propertied after the banks have foreclosed for a little at 45% of the amount they originally loaned on the property.
Mike Summey: Hi jimk
MarkN: Hi Mike. I have a question about doing no money down financing using a HELOC loan.
Mike Summey: Shoot!
Jim-FletcherNC: Roger, if I buy the house from the bank and the second mortgage holder wants their money, dont they have to buy it from me to get their money out of the property?
[Investment Chat]: zert has entered (8:42 pm)
Mike Summey: Jim, if the bank bids in their loan and are the high bidder, the second mortgage holder is SOL.
Mike Summey: Hi zert
Roger Dawson: Jim, foreclosure wipes out any secondary loans. That’s why the holder of the second should consider bringing the first current and then foreclosing on the second.
zert: hi everyone, sorry I’m late - son’s last soccer game
MarkN: Assuming I priced the home based on current financing rates and I wish to refinance after a couple of years using a traditional loan what if the loan rates go up so much that the NOI no longer works? Do you hold on to the HELOC loan or do you refinance using an ARM to make the numbers work?
Jim-FletcherNC: Mike, what does SOL mean?
[Investment Chat]: jimk has entered (8:42 pm)
Jim-FletcherNC: Just kidding, Mike
Roger Dawson: SOL, that’s the technical term I was groping for!
Mike Summey: Zert, did he win?
zert: 6 yr old — they always tie and then get a snack!!!
Mike Summey: S*&# out of Luck
Doug in CT: SOL is a technial real estate term for Out of Luck.
Al Lee: Jim– Poop-Outtta-Luck
Ralph Roberts: if they get a snack, they WON!
Mike Summey: That age is fun to watch.
Mark in NC: Mike, does your son still play for a snack?
Jim-FletcherNC: Wow… what an informed group we have regarding those pesky acronyms
Roger Dawson: I don’t know what a HELOC is, but it sounds like you’d hang onto it.
zert: fun to watch and coach so I am a little tired
Mike Summey: Jim, it seems everyone knows SOL but you. At least you’ve learned something from this chat.
zert: Home Equity of Credit
MarkN: Sorry Home Equity Line Of Credit
Mike Summey: Roger Home Equity Line Of Credit
Jim-FletcherNC: I was just kidding…. i have a million acronyms you DON’T EVEN WANT TO HEAR ABOUT LOL
Jim-FletcherNC: BOHICA
Mike Summey: Roger learned one too!
Jim-FletcherNC: ha ha
Jim-FletcherNC: lots of pilots know that one
Mike Summey: No comment
zert: what RE information did I miss tonight?
Jim-FletcherNC: I meant as a figure of speech
Mike Summey: Has anyone had an offer accepted this past week?
Doug in CT: I am thinking that if I find the 80/20 works as promised, and if I can make cash flow at 100% financing, I may have found the silver bullet.
Ralph Roberts: none! … transcript will be posted afterwards, Zert
Jim-FletcherNC: AL Lee what are your thoughts about where mortgageinterest rates are headed
Mike Summey: zert, the text will be up about 10 min after the chat.
Jim-FletcherNC: and how will that affect the RE mkt
Al Lee: Jim, they may flounder around for a few more weeks, but the ong-term (months) outlook is UP! Buy now, grab as much cheap mney as you can get.
Al Lee: money
Mike Summey: I think we are in for a period of very high foreclosures and great opportunities for investors.
Roger Dawson: The growth figures were down last month, so inflation won’t be a problem, so interest rates should stay low.
MarkN: Has anyone ever bought a property sight unseen trusting a 3rd party to find the right deal for you? If so how did you screen said property?
Al Lee: long-term
Jim-FletcherNC: Somebody mentioned that foreclosures will creep higher along with int rates
Al Lee: Mark, I do it all the time.
Doug in CT: I had to work like a dog, offer near or over asking, just to find my first “no money down” deal.
Al Lee: Mark, you have to have propel you can trust to do the legwork.
Al Lee: people
Doug in CT: I added a 2% seller concession on a couple of my offers, but had to get it out of the last one to get it accepted.
Mike Summey: Doug, we’re not big advocates of no-money-down deals. In reality, very few of them actually work.
MarkN: How did you find such people? What kind of screening process did you use?
Doug in CT: I did this one will a renter ready to go– that organization that ministers to the needs of the mentally disabled. It was a no brainer for me.
Al Lee: Years of experience adn personal references from trusted associates
Jim-FletcherNC: Mike… if you dont do “no-money-down”, where do you get the cash to make an offer?
Roger Dawson: For cash you might check your insurance policies. Sometimes you can borrow against the cash value at a very favorable rate.
Mike Summey: So many new people have been able to qualify for home loans with these very low interest rates that you are going to find a lot of them in foreclosure in a few months or years. People who have never owned a home don’t realize all the other financial responsibilities that come with ownership.
Al Lee: You can borrow agians a 401k, too. And, the interest goes to YOU
Al Lee: against
Jim-FletcherNC: then, once you have property, get financing and “pay yourself back”?
Al Lee: Sure
Roger Dawson: Jim, that’s right
Jim-FletcherNC: I see
Doug in CT: Jim–I think the answer is patience, patience, patience. I had a property we bought two years ago appraised last fall at $154,000 and last week it appraised at $159,000. It was the easiest $5,000 I ever made.
Jim-FletcherNC: Percentage wise, how much more desireable is an all cash offer over some of the other techniques for purchasing?
Mike Summey: Jim, getting started in not always easy. If you don’t ahve any money it is hard, but can be done. What I believe in is steady investing wo that you can build up some equity/cash and when you do this things get easier.
Jim-FletcherNC: I have access to cash/credti/etc… I just want to get the most bang for my bucks
zert: can someone talk to the point of taking money out of a home my redoing the financing?
Roger Dawson: Jim, it depends how much time pressure the seller is under. In some cases being able to pay cash makes a big difference.
Al Lee: Gettin money out of yoru home is cheap and a tax-deductible expense. It is a good way to get cash to by investment property.
Jim-FletcherNC: So, use the same principles in your book, even when you are offering cash…
Doug in CT: If you buy a steady stream–one or two a year, they will tend to ripen in the same staggered pattern. So you refinance them one a two a year, once the fruit gets ready.
Jim-FletcherNC: I know when people see a wad of money in your hand, it speaks volumes
Roger Dawson: Zert, you get a new loan, which pays off the old loan. Then any surplus is cash to you.
Mike Summey: Jim, the best way to get the most bang for your bucks is to get yourself in a position where you can negotiate cash offers with quick closings. These can often be bought for 5–70% of apprasised value. Then get your financing after you have purchased the property based on appraised value.
zert: roger - when is it advisable to do so?
Jim-FletcherNC: Mike… just so long as the NOI covers the mortgage payment, right?
Mike Summey: Right!
Roger Dawson: Zert, start thinking about it when you have a 20% equity in the property.
Mike Summey: Buying alligators is a good way to go broke.
zert: ok thanks
Jim-FletcherNC: Right now, an ILS to an autoland in zero.zero wx sounds easier to me… i just need to get out and find/evaluate/make offers
zert: that is also assuming rates are comparable and the NOI still works right?
Roger Dawson: I want explain that I’m leaving for four weeks in Spain and Italy next Monday, so I won’t be in on chats for a while.
Doug in CT: MIke I think you had a typo it was 50-70% of appraised value right.
Mike Summey: Things were very slow for me when I started. It was not until I could refinance some properties and pay off others that things really began to take off for me.
Rick: keep the questions coming - this has been real helpful tonite
[Investment Chat]: jimk has entered (8:59 pm)
Mike Summey: Doug, right!
Ralph Roberts: hi JimK
Mike Summey: What did I say?
Mike Summey: Rick, what questions do you have?
Doug in CT: I am going out west for two weeks on Wedenesday. Going to show my family the great Rocky Mts.
Jim-FletcherNC: Roger, earlier you mentioned some downsides to 1031s… what is wrong with selling one property I own free and clear and buying multiple properties?
Mike Summey: Roger & I were just out there last week…in Scottsdale, AZ
Jim-FletcherNC: (LEveraging the properties I buy after the 1031)
Rick: mike - no questions at the moment just absorbing this info
Doug in CT: Who can really tell when a property is really up. It seems up now… but boy you will kick yourself when you see how high it is in 5 years.
Roger Dawson: 1031s are fine Jim. You delay having to pay capital gains taxex by transferring the gain to the new properties. I was just making the point that you have to pay the tax sooner or later.
Jim-FletcherNC: As I understand them, you only pay taxes if you sell them outright (Not using a 1031 exchange for other property)
Al Lee: Roger, maybe not. If you have a trust set up for when you die you can pass the property on without the capital gains tax EVER
Roger Dawson: And if the Democrats get in taxes will be higher later.
Doug in CT: Now if you hold them til you die and have them in land trust that gives beneficial interest to your children….then you really don’t have to EVER pay tax on their sale.
Al Lee: If the Democrats get in taxes will be the least of our problems.
Mike Summey: Jim, I’ve been asked several times why I don’t do any 1031s. My answer is simple! Why sell something that is making money, why not just buy the others and let them make money too. Fortunately, I can now do that.
Roger Dawson: But you have to die first!
Jim-FletcherNC: That’s what I understand, Al Lee… I read where a property can be transferred to heirs through a trust, and as long as that individual(s) do not seel the property, they pay no cap gain taxes ever
Doug in CT: That’s not too hard to do!
Al Lee: Roger, but you wil have deferred the tax until you die, then avoided it when you die
Roger Dawson: Being of sound mind, I plan to spend it all before I die.
Mike Summey: I have never had anyone give me a good reason to sell a profitable property.
Al Lee: Jim, Right! It gets valued at Fair MarketValue to yoru heirs
Mike Summey: Roger & I have different ideas about money if you haven’t figured that out yet.
Doug in CT: But Roger–What about a legacy? Don’t you want to hear them say on PBS “The following program was made possible by the Roger Dawson memorial trust …..for the next 50 years or so?
Jim-FletcherNC: Mike, I have several houses and some land in Calif… I am a little paranoid at what is going on out there… the tree-huggers and granolas are in control of the state govt and I would feel better if I could do 1031s and get property out of that place (this, coming from a 3rd generation Californian
Al Lee: For the record, my policy is to use Other People’s Money to make mmoney as much as possible.
Roger Dawson: Doug, I like your sense of humor!
Al Lee: Jim, You are wise to be paranoid about CA properties
zert: Mike - any upcoming speaking engagements?
Jim-FletcherNC: The Terminator can only do so much … Reagan turned things around, only to have it all go down the drain with subsequent (liberal) governors
Al Lee: Bu doing a 1031 on an old property with lots of equity, you can buy several newer properties that will produce MORE income and more depreciation allowance
Mike Summey: Jim, that’s your call. I know just enough about California to be very happy living in NC.
Roger Dawson: Al, California’s okay. But the prices people are paying today are crazy
Jim-FletcherNC: Mike, I DO NOT REGRET moving here (Fletcher)
Doug in CT: We typically say that things travel from west to east,, maybe California prices are coming our way eventually.
Al Lee: Roger, yes, that is right! You shoudl get that money out an dput it whre it will byuy several times as much proeprty and income
Jim-FletcherNC: this is home now
Mike Summey: Jim, we need to get together for lunch one day.
Mike Summey: I need to sell you an airplane.
Jim-FletcherNC: california prices are fine… just keep the california loony ideology out west
Al Lee: I love to visit CA, but wouldn’t buy there at those prices
Jim-FletcherNC: I would love to get together… you have my e-mail address still?
Jim-FletcherNC: or I can e-mail you
Mike Summey: NO
Mike Summey: JIm, send me you phone number via email.
Jim-FletcherNC: ok
Al Lee: do you believe in soul mates?
Al Lee: Oh, wrong website
Doug in CT: Mike and Roger do you want to come to The CTREIA group and hawk your book? We have about 150 people at the monthly meetings.
Mike Summey: Bryton, any questions?
Jim-FletcherNC: Nice try, Al Lee
Roger Dawson: Doug, where is CTTEIA?
Jim-FletcherNC: Mike, do you belong to any investor groups in the area?
Jim-FletcherNC: I need to hook up with an investor club
Doug in CT: Check out the fine website of our group at ctreia.com. It means near greater Hartford in a town called Cromwell.
Mike Summey: Jim, no I don’t, but I’ve spoken several times at CREIA meetings here.
Mike Summey: Everyone, check out the investment clubs on our website. There is probably one near you and the contact infromation is there too.
Roger Dawson: Doug, Mike does a terrific seminar. You should put it together so that you can afford to pay him what he’s worth.
Jim-FletcherNC: Mike/Roger/Al Lee… how do you deal with an agent or borker who is hesitant to tell you what their client’s current loan amount, equity, etc?
Jim-FletcherNC: broker*
Doug in CT: I am willing, able and ready….after I get back from my trip out west….How much is he worth anyway?
[Investment Chat]: jimk has entered (9:14 pm)
Jim-FletcherNC: that is info i need to put together an offer
Roger Dawson: wbjimK
Doug in CT: Roger going off with those acronyms again
Jim-FletcherNC: dont go there, Doug
Mike Summey: Doug, will you be attending the Learning Annex event October 16 & 17? It will be a huge real estate event. Donald Trump, Rudy Guillani, Suze Orman, Robert Kiosaki, Al Lowery, Dolph DeRoos and many more will be there…including ME!
Jim-FletcherNC: lol
Roger Dawson: Doug if you got 150 members to pay $99 each, you’d be getting close.
Al Lee: Jim, I don;t focus much on the seller’s loan. I have bought houses for as much as $35,000 below what the seller owed. He had to bring cash to the closing to give me the house.
Ralph Roberts: it’s Welcome Back jimk
[Investment Chat]: Eddie has entered (9:16 pm)
[Investment Chat]: Eddie has entered (9:16 pm)
Mike Summey: Hi Eddie, where have you been?
Doug in CT: They do something where they bait you at the meeting and then offer the one day seminar on the following Saturday for $79 each.
Doug in CT: But I ain’t about to begin negotiating with Dawson.
Jim-FletcherNC: Well, that brings up an interesting question, Al Lee, how would you structure an all-cash offer on the situation you just described?
Jim-FletcherNC: If you get MIke to go up there, Doug, make him pay for your lunch!
Mike Summey: Jim, make your offer and let the seller worry about how to make it work for him.
Jim-FletcherNC: OK
Al Lee: Jim, I also never do all-cash. I just offer what I want to pay and let the seller figure out how to make it work. I almost always put 20% down to get the best possible loan rate and terms.
Roger Dawson: Remember to explain why you’re making a low offer, so they see the reason for it.
Mike Summey: Al is right! I’ve bought several properties where the seller had to bring cash to the closing to make the dael work.
Doug in CT: I can go lunch with Mike, but I am afaid Roger would spit the difference with me a dozen times before we got to the cash register.
[Investment Chat]: Eddie has entered (9:19 pm)
Roger Dawson: This has been great folks, but I’ve go to go.
Jim-FletcherNC: I guess there are people with their backs against the wall
Eddie: Working late
Eddie: Working late
Mike Summey: Doug, Roger will have you buying his lunch and thinking that he bought yours.
Jim-FletcherNC: Get Roger to negotiate the price, and then let Mike pay for it
Doug in CT: Goodnight Roger…Thanks for the thoughts.
Jim-FletcherNC: thanks Roger
Jim-FletcherNC: ooooooooops 2 late
zert: have a great trip Roger
[Investment Chat]: Eddie has entered (9:20 pm)
Mike Summey: Roger bailed out on us.
Eddie: Sorry, having problems staying logged on
Jim-FletcherNC: as they say in aviation lingo, “he’s a dot”
Al Lee: Jim, I have a rule that lets me value any property anywhere. I cal it ALIVE on my radio program. It means AL Lee’s Intrinsic Value Estimate. It is simple. That the amount of rent a property will bring for a month on the market and multiply it by 100. That is my “top dollar”. It has worked for me for 30 years.
Rick: Mike - could you give one brief example where a seller may have to bring cash to the table to settle
Doug in CT: Mike, I will check out the Annex event in Oct. Maybe I can meet you there and we can talk about a way for you work the CT REIA group — we are the largest in New England according to the website.
Mike Summey: I’m going to have to go also in a few minutes. I rushed to get here from Nashville and haven’t had dinner yet. I just ordered a pizza. UMMMMM.
Ralph Roberts: that ain’t on yer diet, Mike!
zert: I’ll take a slice with pepperoni
Jim-FletcherNC: Thaks, AL Lee… I am trying to sponge up all of this good info
Al Lee: Mike, I need to go too. The kids are in the pool and I need to join them. Lets talk offline soon.
Doug in CT: Thanks for the imput and rushing to make the chat Mike.
Jim-FletcherNC: What do you wash that pizza down with, MIke?
Jim-FletcherNC: Thanks SO MUCH Al Lee
Mike Summey: Yeah, my pizza just arrived. I ordered it about 30 min ago.
Mike Summey: Diet Coke
Jim-FletcherNC: I would like to talk to you in person some day
Jim-FletcherNC: diet coke and ?????
Mike Summey: Goodnight everyone.
Doug in CT: Ordering Pizza while typing — not a bad trick.
Al Lee: Jim, I just posted an article on July 25 about the loans you asked about. If you go to www.Renthouses.org you can read the article free.
Jim-FletcherNC: G’Night Mike
Mark in NC: Good night all. Time to put the kids to bed.
Jim-FletcherNC: Ok… thanks, Al Lee
Mike Summey: I’ll send out an emial about the next chat.
zert: thanks Mike
Jim-FletcherNC: ok i’ll send you an e-mail, Mike
Doug in CT: Thanks…. Will look forward to it.
Eddie: Also the Raleigh info
Doug in CT: Goodnight Friends.
Mike Summey: Great
Rick: thanks Mike
Mike Summey: Goodnight
Al Lee: So long. I’ve enjoyed it as usual. I’ll try to make more of these.
Ralph Roberts: good nite, all
Jim-FletcherNC: Am signing off too… it was a GREAT chat as usual
Jim-FletcherNC: good night
zert: does anyone come on here at other times ?
[Investment Chat]: Wajaba has entered (9:26 pm)
Ralph Roberts: it’s always available… we encourage people to get together any time and chat
Ralph Roberts: it’s always available… we encourage people to get together any time and chat
zert: I’ve have tried other times - no one on
Eddie: Are these chats usually on Monday nights
Ralph Roberts: now I’m off to post tonite’s chat… see you guys!
» Filed Under Uncategorized
Comments
Leave a Reply