Chat, 11-08-04
Posted on November 8, 2004
Welcome to the chat, Ralph Roberts!
[Investment Chat]: Ralph Roberts has entered (7:55 pm)
Ralph Roberts: hi Al!
[Investment Chat]: Honor has entered (7:55 pm)
Al Lee: Hi, Ralph. We are the early birds this time.
Ralph Roberts: yep… hi Honor
Ralph Roberts: finally getting a little chilly here… just came in from outside, my breath was smoking 
Honor: Hello
Ralph Roberts: hello, Honor … welcome
Ralph Roberts: I am in North Carolina, Al is in Texas… where are you located?
Honor: Thanks. Sorry for the delayed response. It took me awhile to figure it out
[Investment Chat]: Mike Summey has entered (7:58 pm)
Al Lee: Yo, Mike
Mike Summey: Hi guys.
Ralph Roberts: hi Mike!
Honor: I am in Washington, DC area, Northern VA actually
Honor: Hello Mike!
Mike Summey: Hi Honor
Ralph Roberts: no problem, Honor…. glad you made it
Mike Summey: tonight should be a great chat.
Mike Summey: There may even be a surprise or two.
Honor: mmmm! I’m looking forward to it
Al Lee: Yeah, I love surprises–except from the IRS!
[Investment Chat]: Dean has entered (7:59 pm)
Mike Summey: IRWhoooo?
Mike Summey: Hi Dean
Al Lee: I wish I didn’t knwo who!
Dean: Hi guys
Ralph Roberts: hi Dean!
Mike Summey: We’ll actually get started about 8:00. We’re a ittle early.
Al Lee: Spelling doesn’t count, either. right?
Mike Summey: Roger will be joining us shortly.
Mike Summey: Right
Al Lee: Mike, how was the hurricane damage to your properties?
Mike Summey: Al, I just received my first check today from the insurance company. $190,000
Mike Summey: Three more to come.
Mike Summey: I had two buildings that were damaged by flooding.
[Investment Chat]: fukun80 has entered (8:00 pm)
Mike Summey: One got about 15″ of water the other about 3′
Ralph Roberts: welcome fukun80
Al Lee: Wow! I once had a claim for a roof damaged by hail and it was about $3000. That is my largest single claim, I believe
Mike Summey: Hi funkin
[Investment Chat]: Rob has entered (8:00 pm)
Mike Summey: Hi Rob
Ralph Roberts: welcome Rob!
fukun80: Thanks ralph, mike.
fukun80: hi rob.
Rob: Hi! Good to see you all here…
Mike Summey: Al, I had a building hit by a tornado in SC a few years back. Over $400,000 damage.
Mike Summey: More to come, Rob.
[Investment Chat]: Roger Dawson has entered (8:01 pm)
Mike Summey: funkin80, where are you from?
Ralph Roberts: Roger! Welcome!
Mike Summey: Hi Roger
fukun80: mike, san diego, CA
Roger Dawson: Hi Mike and Ralph!
fukun80: Hi Roger
Mike Summey: Wow, that’s a long way from me. Closer to Roger.
Al Lee: Hi, ROger.
Roger Dawson: Hi fukun!
Mike Summey: How about you Dean, where are you from?
fukun80: yes mike, hey i saw you on Carleton’s video the other day..
Dean: Weaverville
Mike Summey: Really, which one?
Roger Dawson: Hi Fukun80. My sources tell me that the market in San Diego is cooling off a little.
Mike Summey: The one in the course materials?
fukun80: yes roger, surely a bit.
Mike Summey: funkin, I have a surprise for you a little later.
Honor: Roger,have you heard of that in the Wash, DC area? cooling off market - that is?
fukun80: yes mike. the one they labeled you as “Mike S.”
Al Lee: Roger, I will be in San Francicsco tomorrow doing a 3-hour seminar. Will you, by chance, be anywhere near?
Roger Dawson: I did a negotiating seminar in Warsaw, Poland on Wednesday. The Poles are very eager to hear how Americans make money.
fukun80: Mike, any time, i love surprises.
Roger Dawson: Al, I’m speaking Wednesday at the Ritz Carlton, Laguna Niguel, which is just south of Newport Beach.
Mike Summey: All of the former East European countries are hungry to learn about how Americans make money. The Hungarian translation of our book is now the best selling book in Hungary.
Al Lee: Roger, I don;t know CA geography. I assuem that is nto near enough for us to meet, expecially with our speaking engagements at the same time.
[Investment Chat]: mitch has entered (8:06 pm)
Mike Summey: Hi mitch
Al Lee: Spelling (typos) doesn’t count here–Mike said!
Roger Dawson: Al, no I don’t think it will work. It’s about an hour and fifteen minute flight between the two cities. Next time you’re in LA or I’m in Dallas, let’s get together.
Mike Summey: Al, we’re real estate investors, not typists.
mitch: hi to all
Al Lee: OK, ROger, I just thought I’d give it a shot since I am flying out tomorrow morning.
[Investment Chat]: MarkNC has entered (8:07 pm)
Mike Summey: Roger, you know Mitch! He’s from CA
Al Lee: Mike, that is true in SPADES
Mike Summey: Hi Mark
Roger Dawson: Mike, you’re a publisher author, for goodness sake! You should be able to type good!
fukun80: hi mitch, mark
[Investment Chat]: Carleton Sheets has entered (8:07 pm)
Mike Summey: SURPRISE
Al Lee: Roger, you spell good, too
Rob: I have been doing A LOT of reading and studying about renovations. I have my first rehab coming up and I am nervous about what to expect.
Mike Summey: funkin, there’s your surprise.
Mike Summey: Say hello to Carleton
fukun80: (*0*) hi Carleton, Thanks Mike.
Mike Summey: Hi Carleton
mitch: hi carlton!
Ralph Roberts: Al, your spelling is all right, we grades you on th’ curve
Rob: Hi Carelton. Can I have your autograph 
Roger Dawson: Hi Carleton, your majesty, thanks for joining us tonight.
Al Lee: Hi, Carleton. I guessed you were Mike’s surprise tonight.
Ralph Roberts: Hi Carleton
Mike Summey: He’s shy
Mike Summey: Carleton, the message panel is at the bottom of the window.
Carleton Sheets: Rob, just don’t forget there are other expenses other than the direct fix up costs…like insurance, taxes, utilities, interest etc.
Al Lee: Mike, once he’s had a little success in real estate he’ll come out of his shell.
mitch: mike and roger, the book is doing great out here in ca. it’s always on the front table at b&n
Carleton Sheets: Hello everyone!
fukun80: mitch, where in CA?
mitch: in LA — there’s a big bn at the grove mall
Roger Dawson: That’s great Mike. I did quite a few book signings for Barnes and Noble when the book first came out and the attendence was usually good.
Carleton Sheets: …and especially hello to Mike and Roger!!!
fukun80: Carleton, saw you again last night on TV…!
Mike Summey: Carleton is still licking his wounds from direct hits by two hurricanes. The eyes went directly over his house.
Carleton Sheets: Thank goodness.
Roger Dawson: Carleton how did you fare in the hurricanes?
Carleton Sheets: Where are you fukun?
fukun80: san diego
Carleton Sheets: Out of approx 70 rental prop. 11 badly damaged. Home had about $150,000 in damages. Whew.
Al Lee: Carleton, are your properties in FL?
Mike Summey: I have a builder here who is planning to build 136 new homes in a subdivision. I told him I would take 20 if he will get the price right.
Roger Dawson: Fukun80, what does your sign in name mean? Are you 80 years old and can’t believe it?
Carleton Sheets: But I’m alive and living in my home and no one I know had any injuries, unlike 2600 dead in Hatii
fukun80: born in 1980, fukun is my japanese name (chinese tho)
Carleton Sheets: Al, yes all properties in Florida
Mike Summey: Does anyone see the real estate market beginning to soften?
Al Lee: I am all in Texas where we don;t get hurricanes–tornatdo, though. Never had one hit anything of mine yet.
mitch: good question
fukun80: mike, our local investment club had a lender spoke 2 months ago, and he said it’s buyer’s market.
Honor: Not in the washington dc, northern va area - the market is still very hot
Al Lee: Mike, there is a glut of rent hosues in the DFW area now, but it is a temporary situation. A lot of vacancies still, but we are getting them filled.
Mike Summey: I don’t have any facts to back it up, but I just get a feeling here that the market is softening.
Roger Dawson: The heats off a little in California, but it needs to be. There’s a 1000 square house just the street from me that’s listed for $599,000 and two buyers are fighting over it. That’s $600 a square foot, which is absurd.
fukun80: Bruce Norris gave a speech also and he predicts 1500% in foreclosures going up.
Al Lee: I am starting to get into the lower-end market. proeprties for well under 100k. Those houses lease FAST always.
Mike Summey: The rental market here has definately taken a turn for the better.
[Investment Chat]: Penny has entered (8:16 pm)
Al Lee: My property manager has 14 years experience with Section 8, and that helps a lot!
Mike Summey: Hi Penny
Carleton Sheets: Mike, me too in the sense that it is stabilizing…not gong down just staying about the same.
Penny: Hi MIke.
Ralph Roberts: hi Penny!!!!!!!!
Penny: Hello Ralph!
Rob: Have you found that your 2/1 houses rent fast?
Mike Summey: I have 1/2 the vacancies now that I had this time last year.
Carleton Sheets: Penny, have we met???
fukun80: hi penny
Penny: You bet.
Penny: How are you?
Al Lee: Mike, the upside is that I can get VERY good prices on hosues, especially new construction. That is somewhat because of the current market conditions.
Roger Dawson: Hi Penny!
Penny: Hi there Roger!
Penny: Hope everyone is well!
Carleton Sheets: We have incredible demand here because of the hurricanes. I feel sorry for the people who are still living in RV’s.
Carleton Sheets: I’m fine. Penny…and you?
Mike Summey: Al, my bottom line cash flow is triple what it was last year due to the improving vacancy situation.
Penny: Great. Thanks. Just in to watch the pros talk realestate.
Penny: Carry on.
Al Lee: Mike, all that cash flow might make you too lazy to finish that second book
Mike Summey: Dean, what do you think of the rental market here?
Mike Summey: Al, it is almost finished.
Ralph Roberts: not Mike, Al…. he’s a pro
Dean: Mike I’m still learning.
Al Lee: lol, Ralph
Mike Summey: Anyone have any buring questions?
Mike Summey: burning
Al Lee: Interest rates WILL go up soon and that is good for the rental market
Ralph Roberts: do houses with fireplaces rent better? …. seriously
[Investment Chat]: Jason has entered (8:21 pm)
Mike Summey: Higher interest rates make for both a better rental market and lower prices on purchases.
Rob: Since we have master negotiators here, do you negotiate with every subcontractor for a rehab? LIke if a painter says it’ll cost $X per room or a carpeting company says $1000 for the whole house, etc.
Mike Summey: Hi Jason
Jason: Hey
[Investment Chat]: MarkNC has entered (8:21 pm)
Al Lee: Ralph, I consider my bread-and-butter property to be a 3/2/2 with fireplace and about 1800 sq ft.
Ralph Roberts: thanks, al
Mike Summey: Rob, I negotiate everything. Learned that from Roger.
Honor: Sorry what’s 3/2/2 - 3 bd/2 ba and 2 ?
Dean: Will foreclosures follow int rates going up? And whats the lag time?
Al Lee: 3-bedroom / 2-bath / 2-car-garage
Roger Dawson: Regarding the effect of the hurricanes, we had a parallel situation in Calif last year with the forest fires in the mountains. Hundreds of homes destroyed. I thought that the value of my mountain home would drop because people were scared to live there, but scarcity forced prices up. My mountain home jumped in value about 80K.
Mike Summey: As Roger says, you make more money per hour negotiating than you’ll ever make working.
Al Lee: What’s “working” ?
Rob: For subcontractors that give you a “set” price, what technique(s) would you use? I have the weekend millionaire book…
[Investment Chat]: Ty from NY has entered (8:23 pm)
Mike Summey: Hi Ty
Roger Dawson: Hi Ty, sorry about the Yankees.
Ty from NY: hello everyone
Ralph Roberts: They still got Babe Ruth, Roger
fukun80: roger, what tends to be working more effective in CA when the market shifts to Buyer’s market?
Ty from NY: that is OK about the yankees we have 26 world titles
Penny: Is everyone still here? Or did I get kicked out?
Roger Dawson: Fukun, keep a close eye on foreclusures. They happen fast here because of our trust deed system. 111 days and they’re out on the street. Also look for properties that have been listed for several weeks without offers.
Dean: Mike, do you own any trailers or parks?
Mike Summey: I think we will see foreclosures begin to rise by spring.
fukun80: Carleton, I got your course recently. Thanks for making available.
Mike Summey: Dean, yes I own a park, but not the trailers.
Roger Dawson: I think you can make money on parks, but let consumers lose money on owning the trailers.
fukun80: roger, on REOs or FSBOs?
Mike Summey: Carleton, is the Toolkit part of the course materials now?
[Investment Chat]: Penny has entered (8:28 pm)
Dean: Ive got four acres and thought about trailers. Do you recommend just renting out the dirt?
fukun80: I got the tool kit ver 7.0 with the course.
Carleton Sheets: I just received a call from one of my students in Illinois (by phone) and a call frim my wife (verbally) so I am signing off. Good luck to all of you. Mike, inclosing, the
Mike Summey: Carleton’s Toolkit, which is available on this website is one of the best real estate tool I know of for people who are serious about investing.
Roger Dawson: Fukun, REO’s mean that the foreclosure is over and the bank owns the property, so that comes later.
Roger Dawson: Thanks Carleton!
Penny: Goodnight Carleton.
Al Lee: So long, Carleton. I’s like to meet you some day.
Penny: Good to talk with you again.
fukun80: good night Carleton.
Mike Summey: Thanks Carleton. Hope you get off the island tomorrow.
Carleton Sheets: Toolkit is a premium item but it is so good, I can’t tell you. If you don’t like, send it back for a refund. It’s under $100.
mitch: yes thanks and bye!
Honor: Thanks, I’ll check it out!
Roger Dawson: Dean, I would think that develop the land into a trailer park, putting in slabs and utilities, would maximise your return.
Mike Summey: Carleton, say hi to Galina for me.
Dean: Thanks Roger
Penny: Yes, for me too.
Mike Summey: Ty, did you attend the Real Estate Expo last month?
Ty from NY: yes I did
Mike Summey: What did you think of it?
Mike Summey: Did you attend any of my sessions?
Ty from NY: It was great
Roger Dawson: Mike’s too shy to tell you, but he was the big hit at the Expo in NYC last month.
Ty from NY: was you there on Sunday because I wasn’t able to attend on Saturday
Mike Summey: Yes, I did two session Sunday.
Rob: Mike, what do you plan to do to capitalize on your growing foreclosure market?
Mike Summey: Rob, I plan to watch and wait and pick off the good deals when they come along.
Dean: Mike, is your vacancy much higher in county compared to city?
fukun80: Thanks roger, where in CA?
Mike Summey: Dean, no, if anything, it’s better in the county than the city.
Ty from NY: I meet a girl on the train the fellowing Tuesday and I was reading your book and she started talking to me because she had attend the Expo as well and said the only person she purchased a course from was you (Mike) because you wasn’t only trying to sell your course but was giving great info. as well.
Rob: How do you get those deals that “come along” these days? People are probably bringing them all to you without any marketing, right?
Roger Dawson: Fukun, I live in La Habra Heights. It’s ten miles north of Disneyland, up in the hills.
Mike Summey: Thanks Ty. I’m glad to hear that.
Ty from NY: I am still looking to find my frist property. It is very very hard to find something in NYC so I am currently looking at Syracuse and Philly.
Roger Dawson: Do we have anyone who heard Mike on the radio this afternoon, in New Jersey?
Mike Summey: Rob, you’re right. After 30 years in this market, I know a lot of people and have a number of deals brought to me. If I were starting over again now, I’d be out beating the bushes like everyone else. That’s what I did when I started.
Mike Summey: Ty, you will probably find better deals outsice the NYC area. That market is very tough to make the number work.
fukun80: mike, when the monthly payments way exceeds NOI, is that mean that you don’t want that as rental?
Mike Summey: funkin, you got that right!
fukun80: no rogert, is the radio channel available on the internet?
[Investment Chat]: TT has entered (8:41 pm)
Mike Summey: Why would you want to buy a property that was going to eat up poart of your earned income just to own?
Mike Summey: Hi TT. Where you been?
Roger Dawson: Mike, do you know if they streamed your radio show on the internet? And I guess it was MA not NJ.
[Investment Chat]: Wilbur has entered (8:42 pm)
TT: Hi
Mike Summey: You’re right, it was MA and it wasn’t streamed.
Mike Summey: Hi Wilbur
Roger Dawson: Hi Wilbur and TT!
fukun80: so you tend to deal with lower to median price homes? since the more expensive the house, the slower it goes up in rents proportionally.
Wilbur: Hi there!
Mike Summey: funkin, thats correct. That is covered well in the book.
Roger Dawson: Yes, Fukun, as we say in the book we believe in investing in blue collar homes in conforming working neighborhoods.
MarkNC: Geez, between the phone and kids I haven’t been able to keep up tonight but I have a question. How mant SFHs should I start looking into Multi family or commercial deals?
fukun80: Thank you roger & mike.
MarkNC: that is should I own before I start
TT: I’m about to lose a good cash flow deal because of a last minute problem
Roger Dawson: I’d say 8-10 SFR and then look for a multi family that won’t be more than 30 of your dollar portfolio.
Mike Summey: Mark, I’d recommend that you buy 5-10 SFH before moving into multi-family or commercial. that will give you good experience that you will need to deal with the larger properties…also will give you some cash flow.
mitch: rogre, would you say LA is a difficult e market, in the sense that blue collar does not exist here as elsewhere. so many people are free lance, yuong, entrepreneurs, etc
Roger Dawson: 30 percent
Roger Dawson: Yes, Mitch, LA is difficult. You need to look in the towns further out. Chino was great once, but now you need to go further out.
MarkNC: OK thanks, I guess I’l keep plugging away, I think I’m close to a deal on my third SFH
Roger Dawson: Remember, that these are homes that you’d never want to live in. Got to get into neighborhoods where you wouldn’t normally go.
fukun80: roger, what do you think about the lease option strategy?
Mike Summey: Mark, it was 6 years after I bout my first SFH before I bought a multi-family
mitch: that’s very interesting.
mitch: thanks roger
Honor: Mike, how long did it take you to buy your 1st? I’m still trying to buy my 1st
Roger Dawson: Lease options: if the seller will lease and option at a fixed price, and the rent will cover the outlay, it’s a good deal. Optioning at market value doesn’t make any sense for an investor.
TT: the prop is in a subdivision fed by city water but not individually metered, and the developer who caused this problem has been paying the water bills(2-3,000) late. No way to put in a well. This is in Asheville off Leicester HWY.
Al Lee: Roger, when I started out 30 years ago, I bought houses and leased them with the option to buy. Nobody ever bought, but I believed that they might take better care of it if they THOUGHT they MIGHT buy it.
Mike Summey: Let me give you an interesting thought that I have observed over the years. When the market is hot, like it has been the past couple of years, many people want to get into real estate. Problem is they find it very difficult and most of them give up. Then when the market begins to cool and deal start to pop up, only the investors with patience are still in the market and they get to=he good deals.
Roger Dawson: Good point Al.
MarkNC: So Al I take it you don’t still do that? Why not?
Mike Summey: TT, where is this property…which subdivision?
Ty from NY: I heard as interest rates strart raising more deals will become available
Mike Summey: That’s true TY
Al Lee: Roger, I did not watn to sell anyting, but the options gave the deal a different feeling. Like I said, nobody ever bought. I don;t know of any investor who actually sold a hous on a lease with option, but we all used to do it.
Roger Dawson: For one thing Ty, tenants won’t be able to qualify to buy a home as easily.
fukun80: it just occur to me that if the interest rate goes up and it’s harder to get financing, there will be a demand in Creative financing?
Mike Summey: funkin, you’re starting to catch on.
TT: Briarcliff Terrace near Windy Hill Farms off Mckinnish Cove Rd
Mike Summey: TT, I’m not familar with that area. Why can’t you drill a well?
Roger Dawson: When interest rates go up, investors can get higher returns, so creative financing is less attractive to sellers. But it
Al Lee: I had one tenant lease form me for 9 years that way. When hi moved out he said “Hell, I think I’ve PAID for this house already” — he pretty much had!
Roger Dawson: But it’s offset by them finding it harder to sell.
TT: It is on too small a lot only .23 acre and too close to sewer lines.
TT: Ive had 2 well contractors look at it.
Mike Summey: But there is no city water, right?
fukun80: Al, my friend had the same thing going on after his tenant rented for 11 years (with 4 times option money…)
Al Lee: fukun: that is a good way to make money.
mitch: i have to feed my small two-legged investments but this is an excellengt chat, see you all again
Mike Summey: goodnight Mitch.
TT: yes the developer put in the line through his adjoining sub but city water is not extended far enoufgh down the road to connect to it myself
mitch: bye
fukun80: and you know what, the tenant bought the unit right across at the end and paid full market price!
Al Lee: fukun: there is no explaining the things people will do.
Mike Summey: TT, if that is the case, I would probably pass on the purchase unless you made an offer contingent upon getting water.
Al Lee: water is pretty important.
TT: Thanks Mike, thats what I was about to do just wanted confirmation.
Al Lee: I read about a high-rise building in Cleveland that was erected with no bathrooms. They had to use one of the elevator shafts to install bathrooms as an afterthought. I’ve never heard of a developer not including water, though.
Dean: good night guys, see you next time. Thanks
Mike Summey: Goodnight Dean
Roger Dawson: Thanks, Dean
Honor: I have to go. This was an excellent chat. I just have to be patient for the right deal to turn up. Mike, when I get discouraged, I just read your book again and get remotivated. Thanks and goodnight.
Mike Summey: Roger, why don’t you tell us about your speaking engagement last week in Poland?
Roger Dawson: Mike, did you tell Honor that you wrote the book?
Mike Summey: Thanks Honor, I’m glad you could join us.
Al Lee: Mike, Roger, everyone, I need to go tend to kids. It’s bedtime for them. I have enjoyed it, as always.
Mike Summey: Honor, don’t forget to thank Roger too!
fukun80: bye Al.
MarkNC: Good night Al
TT: Thanks and good night, I look forward to the transcript!!
Al Lee: Goodnight, all.
Mike Summey: Goodnight Al
Roger Dawson: Poland was great. 140 business leaders in a first class hotel. They had each paid $700 to attend.
Mike Summey: How do they feel about American ways of making money?
Roger Dawson: Got to go now, folks. My son is offering to buy us dinner. Can’t miss that!
Mike Summey: Which son?
Penny: Goodnight Roger.
Ralph Roberts: good night, Roger… thanks
MarkNC: Good night Roger
Penny: Enjoy dinner for me too!
Roger Dawson: Mike, they are very eager to learn. I think we should do a seminar in Hungary to support our book there.
fukun80: good night roger.
Penny: Goodnight everyone, I’m out of here also.
Ralph Roberts: nite, Penny!!
Mike Summey: Roger, you book it and I’ll go!
fukun80: me 3.
Mike Summey: Night Penny
MarkNC: I’m leaving too. Good night and thanks.
Jason: I’m out also…thanks for the useful info
fukun80: good nite everyone
Jason: bye
Mike Summey: I guess it is past 9:00 so I’ll be signing off as well.
Mike Summey: Thanks everyone for joining us.
Ralph Roberts: nite, Mike… everyone
Mike Summey: Nite Jason
Ty from NY: goodnite everyone.
Ralph Roberts: chat transcript will be posted momentarily
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