Chat 11-29-04
Posted on November 29, 2004
Welcome to the chat, Ralph Roberts!
[Investment Chat]: Ralph Roberts has entered (7:56 pm)
[Investment Chat]: Mike Summey has entered (7:57 pm)
[Investment Chat]: Roger Dawson has entered (7:58 pm)
Ralph Roberts: hi guys!
Roger Dawson: Hi Ralph!
Ralph Roberts: within a minute of each other!
Mike Summey: Ralph, what’s the language choice option on the entry screen.
Mike Summey: We’re getting better.
Ralph Roberts: English
Mike Summey: Can you choose another language?
[Investment Chat]: Barbara has entered (7:58 pm)
[Investment Chat]: TomB has entered (7:58 pm)
Ralph Roberts: but there are other languages as well, I think
Ralph Roberts: ja! si! oui!
Roger Dawson: Hi Barbara and Tom
Mike Summey: Hi Barbara, TomB & myplace.
[Investment Chat]: Jun has entered (7:59 pm)
Mike Summey: I was just curious if there was an option that did translations.
Mike Summey: Hi Jun
TomB: Hi all
Jun: Hello Mike. I met you in NY at the Learning Annex Expo
[Investment Chat]: RIcardo-FL has entered (8:00 pm)
Ralph Roberts: by the way, weekendmillionaire.com is getting a new chat system…. one that, should you get bumped off, remembers everything so that you do not lose a single WORD of the chat, even if you are off for five or ten minutes … will be live for next chat
Mike Summey: Everyone let us know where you’re from.
TomB: So did I. Great lecture
Roger Dawson: Welcome Ricardo
Mike Summey: I remember Jun
Mike Summey: Hi Ricardo
Jun: Really?
Roger Dawson: I’m from Southern California
[Investment Chat]: kamal has entered (8:01 pm)
Ralph Roberts: Alexander, North Carolina
RIcardo-FL: Hello everyone
Mike Summey: Hi kamal
TomB: NYC
Barbara: Alabama
Mike Summey: Looks like were getting the country well represented. That’s great because it brings different perspectives to the chats.
Roger Dawson: The Orange County (CA) market has been red hot for the past two years, but now it’s moderating in the $400 and up areas.
Barbara: This is my first time in any chat room. I’m green at this…
[Investment Chat]: Craig has entered (8:02 pm)
Mike Summey: That’s okay Barbara, you’ll get the hang of it shortly.
Mike Summey: Hi Craig
Jun: Not to worry, I am green too.
TomB: The NYC market is insane and not really moderating
[Investment Chat]: Jason in NYC has entered (8:02 pm)
Ralph Roberts: we would never have known Barbara… you are doing great!
Craig: Hi Mike w
Roger Dawson: The Orange County Register is predicting a 20% drop in prices, which is good for investors.
Mike Summey: We love to talk to green people…so long as they’re from this planet.
Mike Summey: Hi Jason
Jason in NYC: Hi Mike.
Mike Summey: I’m ready for you’re questions. Let’s get started.
Jason in NYC: Hello everyone
[Investment Chat]: Penny has entered (8:03 pm)
Mike Summey: Hi Penny
Roger Dawson: Hi Penny!
Penny: Hi Mike and Roger!
Ralph Roberts: hi PENNY!
[Investment Chat]: Kim-OH has entered (8:04 pm)
Penny: and of course Ralph!
Roger Dawson: Mike, where do you see opportunities in this market?
Jun: I’ll go w/ the first question
Mike Summey: You’ve got Roger & me sitting here waiting to answer your questions.
Mike Summey: Hi Kim
TomB: I’ll Start. How can I invest in other areas with a limited amount of time to travel?
RIcardo-FL: Mike and Roger, I have a question about finding deals
Kim-OH: Hi Mike
Jason in NYC: I’m wondering about how much capital I need to get started. I’m new the real estate conversation and have a lot of friends who are flipping properties to gain some capital first.
myplace: hi everyone
RIcardo-FL: do you advertise in any way
kamal: hi,mike & roger first time in a chat room.hello every one.
myplace: hi kamal
Mike Summey: tom, you will need to find a property manager you trust in the area where youwant to invest.
TomB: will the propoerty manager help me find properties?
Roger Dawson: Tom, even though we recommend professional management, I still think it’s a two idea to invest within a two hour drive of where you are.
Roger Dawson: Not a two idea — a good idea!
Mike Summey: Jason, make offer that will work with the money you have. Don’t worry about what you don’t have. In the beginning you have to make offer that work for you.
myplace: w
myplace: I just bought my first investment property
Mike Summey: kamal, glad to have you.
[Investment Chat]: Barbara has entered (8:06 pm)
myplace: a solid well taken care of two-family for 98k
Jun: tell us about it myplace.
[Investment Chat]: Jim FletcherNC has entered (8:07 pm)
TomB: Two hours away from NYC is still very expensive.
Mike Summey: Great myplace, what did you buy?
Roger Dawson: Tom, the property manager will help you find properties but won’t do it for you.
Mike Summey: Hi Jim
Jim FletcherNC: hello Mike
Penny: Whow, thats great myplace!
myplace: This is what works best for me in my current situation
Penny: Is it rental ready?
Jun: tell us about the deal myplace.
myplace: I bought this place from an older couple who have lived here for 30 years
Jun: how did you find them?
TomB: may I ask where?
myplace: yes actually there was a tenant already here but unfortunately he just passed away
myplace: Schenectady, NY
Mike Summey: Tom, you need to look in the blue collar areas. The communities where there are a lot of renters.
myplace: you know, I found an awesome realtor who really looked out for me
[Investment Chat]: Jim FletcherNC has entered (8:08 pm)
myplace: she even paid for my real estate lawyer!!!
TomB: Schenectady sounds good.lol
[Investment Chat]: Jim FletcherNC has entered (8:08 pm)
Kim-OH: Hands Jim some duct tape
myplace: Schenectady is a tricky place
Roger Dawson: Most of us don’t know about these blue collar areas because we don’t normally drive through them.
myplace: it has cheaper houses but a lot of high taxes
myplace: so you have to be careful
TomB: how do we find them?
Jim FletcherNC: (hi speed cable is acting up)
Mike Summey: myplace, where are you?
myplace: i’ve seen taxes here as high as $6,000/year
Roger Dawson: In the final section of the book — how to get started –we tell you how to identify these neighborhoods on a map.
myplace: I’m in Schenectady, NY about 5-10 min from Albany
Jun: whicvh book Roger?
Roger Dawson: June, the Weekend Millionaire book.
Jun: is that one of mike’s books?
myplace: I have to say I’ve been very lucky my first time
myplace: everyone has been so nice and my closing felt like we were having a big party
Roger Dawson: Jun: Mike and I wrote it together.
TomB: nothing wrong with that
Jason in NYC: It’s a great book Roger and Mike. Thanks
myplace: but its been a very good learning experience
TomB: can’t wait for the sequel
[Investment Chat]: bsaint has entered (8:11 pm)
Mike Summey: I have so many people tell me that they can’t find properties, when what they are actually saying is that they are afraid to make offers that work for them and would prefer to listen to the bankers and realtors thell them what they shoul do.
Mike Summey: Hi bsaint
Roger Dawson: Thanks Jason. Anybody who doesn’t agree can have their $15 back.
myplace: there are rental properties up here that only need minor work for about 69-100+k
bsaint: Hi Mike and Others. Thought I’d listen in and get some smarts……….
Jun: I in my area 100K gets you nothing anymore..
Craig: I agree Mike.I made the mistake of listening to bankers and realtors, and that has actually hindered my real estate investing career
myplace: I hope to get my property online soon
TomB: me too. 100k is a small down payment
myplace: its very cheap up here
Jun: I spoke to a realter the other day. I got nothing but a bunch of slick talk.
Jason in NYC: Once you own your first, how long until you can pull more money out of it to reinvest in others?
Mike Summey: Craig, the buyer’s broker that I work with has accused me of being crazy a number of times.
myplace: and these are big older houses up here
myplace: like this one was built in 1890
Roger Dawson: I have to tell you that of all the properties I’ve bought, the ones that did best were the ones that I didn’t think were bargains.
TomB: I look at other areas and 100k is a down payment on 5-10 properties
Craig: Mike,he must be afraid of losing business! r
myplace: but its in such good condition, 2,666 sq ft, slate roof, hardwood floors, steam heat, 2 car garage
bsaint: Mike, property managers with whom I have spoken want a “finder’s fee” of 75% of the first month’s rent. I’d not read about that anywhere. What do you think?
Mike Summey: jason, that depends on the deal you make. Sometimes, all you will see in the first few years is enought to make the payments and pay down the mortgage.
Roger Dawson: The free market is a wonderful thing. Properties sell for pretty much exactly what they’re worth.
[Investment Chat]: jimmy has entered (8:14 pm)
TomB: Mike, do you recommend a buyers broker?
Mike Summey: Hi Jimmy
Jun: I understand that typically the going rental for a 3 dbrm is $2K. For the NOI to work, I can’
Mike Summey: bsaint, find another one!
Penny: Roger, and those deals we think are too good to be true are usually not the bargains we think, right?
myplace: oh hmmmm I don’t know if it would help to say what I paid up front
TomB: jun, for that to work you need to put down alot
Roger Dawson: Penny, the same factors that made others shy away from the property stop it from going up in value.
Mike Summey: Tom, I absolutely recommend a buyer’s broker. Not for every deal, but having one that will work with you gives you several options.
Barbara: Is it posssible to buy properties when you have no money to put down?
[Investment Chat]: bsaint has entered (8:16 pm)
myplace: but I paid $1000 earnest money, $350 for my inspection, $450 for FHA inspectin and $1500 at closing
Jun: If I have $100K cash to work with, are there any particular techniques I should stick too?
Mike Summey: Jun, there is no “typical”
[Investment Chat]: Ty from NY has entered (8:16 pm)
Penny: gottcha Roger.
Mike Summey: Hi Ty
TomB: make the numbers work. NOI
Ty from NY: hello mike
Penny: Which in the long run decreases your equity value and your borrowing power against that property, right?
Roger Dawson: Barbara, no money down doesn’t mean that the seller doesn’t get cash. Read Robert Allan’s book “No Money Down” and you’ll see how it works.
Mike Summey: Barbara, absolutely, but you have to be careful. Read the chapter in our book about nothing down deals that work. It is easy to buy properties with no money down that you can’t afford to own after you buy them.
bsaint: So great that you have these real time chats. Thanks for your time guys.
Jun: I am joining a real estate club to build a team. I am working on getting a knowledgeable lawyer and buyers agent that nows NOI.
Roger Dawson: Penny, that’s right. The Weekend Millionaire program says you never sell the property, but you want it to go up in value, so you can borrow against the equity.
TomB: Your equity will be built up over time anyway
Mike Summey: Jun, use your 100K wisely. make offers that utilize the smalest amounts necessary to put deals together.
Jun: ok
[Investment Chat]: Jim FletcerNC has entered (8:19 pm)
myplace: I think someone asked me if my place was ready to rent and I don’t know if I responded
myplace: it is
Roger Dawson: Jun, real estate clubs are great. You get to hand around people who are making it happen.
myplace: I just have to do some painting I like to do
[Investment Chat]: Jim FletcherNC has entered (8:19 pm)
myplace: cause I want to offer custom paint jobs on my apartments
Roger Dawson: Hi Jim, welcome back
[Investment Chat]: zert has entered (8:19 pm)
Jim FletcherNC: Bouncing around here in cyberspace………
Jim FletcherNC: thanks, Roger
Penny: myplace, that was me. Thats great that its ready to rent. You don’t have to put any more more any to it right now.
Kim-OH: wb Jim
Jim FletcherNC: ty
myplace: yes
myplace: w
Ralph Roberts: just a little turbulance, Jim… please fasten your seat belt
Mike Summey: myplace, find a pain you like and use it in all your rentals. That make it easier to toudh up after tenants move out and you can use the same paint everywhere.
myplace: that helped me pick the place
Mike Summey: Hi zert
Jim FletcherNC: you got it, Ralph
[Investment Chat]: Ty from NY has entered (8:20 pm)
myplace: thanks mike
Penny: turbulance, thats cute Ralph!
Kim-OH: wb Ty
zert: hi Mike and everyone
myplace: I was going to use Bher paints all the time
Roger Dawson: Most property managers use landlord off white paint.
myplace: I started with my own place
Mike Summey: myplace, that was supposed to be paint
TomB: what can I expect to gain from an investment club?
Mike Summey: Fingers don’t work too well tonight
myplace: I came in here and I took up all the carpet from the hardwoord floors myself
myplace: hahah I gotcha mike
Penny: Bher, ey? got stock in HD?
[Investment Chat]: Ty from NY has entered (8:21 pm)
Penny: thats the paint I use too!
myplace: I painted my apartment in shades of orange, white and red
TomB: myplace, its great that you’re candy. I wish I was
Mike Summey: myplace, pick not just a brand, but a color as well. I use an egshell color.
Jun: who said that the market may drop 20%?
Jim FletcherNC: Re: Paint… go with a semi-gloss on both the walls and the trim… it is much easier to keep clean
myplace: looks like a sunburst
myplace: cool Penny
myplace: Beher is awesome!
[Investment Chat]: JIMMY has entered (8:22 pm)
RIcardo-FL: Mike, If you can’t find a reputable property manager. Do you use adds to find deals or do you just look for listed properties and make offers based on NOI?
Mike Summey: Hi Jimmy
[Investment Chat]: Cliff J has entered (8:22 pm)
Roger Dawson: TomB: real estate clubs will bring in speakers (like Mike Summey) but the best part is hanging around with investors who know the local market and will give you encouragement.
myplace: I gotcha mike but I’m kinda trying something new
Mike Summey: Hi Cliff
kamal: mike in ny I WAS ABOUT TO CLOSE A HOUSE 3 DAYS BEFORE CLOSING SELLER NOTIFIED HE IS GOING THROUGH DIVORCE & THERE IS A COURT ORDER RESTRICTING THE SALE.HUSBAND WAS SELLING & TITLE IS ON HIS NAME.NOW THEY ARE DELAYING CONTINOUSLY.PLEASE ADVISE.
myplace: I got a domain name called www.myplacemyspace.com
Cliff J: Hi there.. sorry to jump in late
myplace: and I’m offering apartments with color themes
Mike Summey: kmal, as they say &%#@ happens!
Mike Summey: No problem Cliff, glad you made it.
Roger Dawson: Kamal, in our book, Mike describes a story of a divorce situation like this, and how he handled it. It will really give you some creative thinking suggestions.
myplace: like this one is called “The Sunburst” and the one downstairs when I’m done painting it, will be called “The greenhouse” I will do it in lovely shades of greens
Mike Summey: kmal, those kinds of things happen occasionally. Don’t let it get you down.
myplace: hey if it doesn’t work, I’ll go with eggshell hahahahah
JIMMY: HI MIKE AND EVERY BODY
Jim FletcherNC: myplace…. what color will the “doghouse” be????
Kim-OH: kamal I have a similar situation here lol
TomB: kmal, if this one does not work, move on
Penny: my place, that sounds really neat. Is it increasing your showing and renting?
Kim-OH: lol @ Jim
[Investment Chat]: dean nc has entered (8:25 pm)
Mike Summey: myplace, lovely will get you in trouble as a landlord. Don’t get emotional.
Mike Summey: Hi dean
Jun: Kim, Kamal, tell me how you found these homes..
myplace: its not emotional mike, its gemicky business
dean nc: Better late than never hi everyone
Kim-OH: Jun, the one I found is listed on the MLS and then when I make an offer the parties won’t agree to sell lol
myplace: I’m a writer, I use emotinal words to pull people in
Jim FletcherNC: how you been, dean nc?
Jun: you means adds in the paper?
Jim FletcherNC: you back doing better?
Roger Dawson: Myplace: be sure that you rent for premium prices when you customize like that. You need it to offset renters who won’t like what you’ve done.
Kim-OH: Jun, sorry the multiple listitng service
myplace: well I will stick to business in here
dean nc: getting better
myplace: w
myplace: I understand Mike
Jun: so you guys are going thru the MLS and still getting deals where the NOI works?
myplace: I mean roger
myplace: lol
kamal: JUN:I JUST BOUGHT & HAD NO IDEA ABOUT THEIR SITUATION.
Mike Summey: myplace, the difference between retail and wholesale in real estate is emotion w
Cliff J: MIke and Roger, how’s the new book coming ?
TomB: Jun, how many properties have you looked at?
Jim FletcherNC: where you guys getting those happy faces?
Penny: yes but Mike, with alot of young renters, emotion is envolved, they want womething neat and unique as their first place!
Jun: one…just, finished mike’s book and got business cards made.
Mike Summey: Cliff, its about 2/3 finished. It would get done quicker if I could get Roger to work.
myplace: I understand what you mean mike but I think you are getting the wrong impression about my use of words and my attempt to creatively market my properties
myplace: w
Cliff J: Give him time.. his parts were valuable additions to book 1.. hahaha
RIcardo-FL: Roger, maybe you can answer my question. I can’t find a reputable PM in my area. I was wondering how you would find deals, do you just look for listed properties and make offers based on NOI, or would you use adds to attract sellers?
TomB: Jun, a friend of mine looked at 35 before he found one that worked
Roger Dawson: RE sellers refusing to sell. The listing contract is an employement contract. If the broker brings a buyer who is ready, willing and able to buy, the broker has earned his or her commission. The seller cannot be forced to sell, but can be forced to pay the broker.
[Investment Chat]: JIMMY has entered (8:28 pm)
myplace: That’s true penny
myplace: or the folks who don’t want to pain
myplace: or coordinate
Mike Summey: I once made over 50 offers in a row that were rejected, but then when one was accepted, 6 of the next 10 were. Its a numbers game.
Kim-OH: Roger I know but I’m wondering if the agent even presented the offer lol
myplace: my sister is an interior designer, I’ve even thought about teaming up with her in the future to offer her services to renters
Cliff J: Mike, in the North East, rent increases have lagged behind sale values.. Do rents traditionally get closer, in your experience, as rates go up ?
Kim-OH: It has been relisted at 5K less than first listing with same agent and now only 1K more than I offered
Jason in NYC: Aren’t agents required to submit offers?
TomB: yes jason
Mike Summey: myplace, what I’m talking about is making the properties look as nice as possible, but doing so in a way that will maximize profits.
Kim-OH: Jason yes they are but this one said he couldn’t find his sellers lol
TomB: myplace, you have to appeal to the masses
Mike Summey: Cliff, that’s been a national trend and it has more to do with the unusually low interest rates than with the area.
Roger Dawson: Ricardo: Here’s what I suggest in order of importance: 1) Call for sale by owners FSBOS. 2) Pass out business cards and post signs “I buy real estate” 3) Talk to brokers about listed properties.
Jason in NYC: that would present a problem w
Craig: Kim,sounds to me like the agent didn’t really want to present your offfer and used that as an excuse
myplace: I have to appeal to the masses
myplace: now dont we all here that all the time
myplace: lol
Penny: Thats good advice, thanks Roger.
myplace: interesting
RIcardo-FL: Thanks Roger!
myplace: I understand mike
TomB: Mike, now that int rates are rising, will this trend change?
Mike Summey: myplace, appealing to the masses means your properties appeal to more potential renters.
Jim FletcherNC: Mortgage rates are lower now than a year ago
Mike Summey: Interest rate will be going up…count on it!
[Investment Chat]: Thayes has entered (8:33 pm)
Mike Summey: How quickly I don’t know, but they will be going up.
Penny: Thanks!
TomB: Greenspan already said it.
Roger Dawson: Higher interest rates mean that fewer blue collar workers will qualify to buy their homes. That
Mike Summey: Hi Thayes
Jim FletcherNC: i know they will go up…. lately, tho, they have stayed low
Roger Dawson: That’s good for investors.
Kim-OH: Craig could be but I checked with the police department and sure enough the two parties are not permitted any contact
Mike Summey: Jim, that’s only a temporary situation.
Jim FletcherNC: If they cannot afford to buy, they will become renters?
Thayes: Hi
[Investment Chat]: Doug in CT has entered (8:35 pm)
Roger Dawson: That’s right Jim, they become renters.
myplace: I’m aware of the benefits of appealing to the masess and also of appealing to certain types of people. I think there is room in my situation for both
Mike Summey: Hi Doug
Doug in CT: Hey all. Good to be here.
Jim FletcherNC: yo Doug
TomB: yes, and if they cannot afford to pay their adjustable rate mortgages they will become sellers
Jun: as interest rates rise, I guess multi units will be in more demand.
Mike Summey: Where you been?
Jim FletcherNC: WHo dat?
Jun: just listening..
Doug in CT: Caught up in Dinnner
Doug in CT: Big Game for Green Bay Tonight.
Cliff J: I read recently that Greensboro and Raleigh areas are undervalued in real estate, you agree Mike ?
Mike Summey: As interest rates rise, you will see numerous motivated sellers as adjustable rate mortgages start to adjust.
Jason in NYC: what is the main topic of the next book?
Jim FletcherNC: Does anyone know what the percentage of homeowners who have ARMs versus fixed rate mortgages?
Jun: listening to you guys gives me some hope. …so thanks to Mike/Roger..for hosting this.
Penny: oops
Mike Summey: Cliff, I think those areas are good for investors. Good, but not necessarily easy.
TomB: especially those with interest only payments who have to start paying principle
Doug in CT: I set a “google alert” on the words “median price” and I got a ton of interesting articles about pricing all over the country.
Mike Summey: Thanks Jun
Cliff J: NOt easy because not enough business nearby to draw renters ?
Roger Dawson: Jun, remember that you don’t have to buy a house a month. One a year will make you very rich in time.
Thayes: I’m looking to get into investment property. I currently have an in with foreclosures. Any advice?
dean nc: Mike, are you still buying in greenville area?
Jun: In my area (central/northen NJ) the prices are outrageous. The gap between emotion and NOI seems so great.
Mike Summey: Cliff, NO, because you will still have to look for the deals. That may mean making numerous offers for each purchase.
Roger Dawson: Jason, the next book (out in the Spring) in the Weekend Millionaire’s Mindset. How changed the way you think can make you wealthy.
TomB: mike, do you buy outside of NC? if so where?
Roger Dawson: Changing the way you think.
Jason in NYC: Looking forward to reading it.
Jason in NYC: Thanks
Jim FletcherNC: Mike… get that KingAir yet???
Mike Summey: Thayes, just always remember to make offers that work for you, not the banks or sellers. You are the one who will have to pay for the properties.
Doug in CT: I found out about an organization called “Fiserv CSW, Inc.” that tracks Since CSW began forecasting home prices in 23 metropolitan areas more than 5 years ago, its predictions and the actual change in home prices have been within 2 percentage points of each other, CSW says. To track housing performance, CSW researchers look at repeat sales data for a sample of houses in each zip code, a method they consider more accurate than simply looking at changes in an area’s median home price.
Mike Summey: Tom, I also own properties in SC.
Mike Summey: Jim, not yet, the Duke is still down with an engine overhaul.
Thayes: Mike, I too am in NC. Do you have luck with rental property
Jim FletcherNC: I C
Roger Dawson: Mike, this computer you made my buy keeps going to sleep. Is it getting old like me?
Doug in CT: Does Mike have luck with rental Property? Is the Pope Catholic?
Jun: some people blame the computer..
Jason in NYC: That’s one way to put it.
Mike Summey: Doug, don’t rely on averages! If you have one foot in boiling water and one in ice water, on average you should be comfortable.
Jim FletcherNC: Are you old, Roger?
TomB: I dont think mike has luck with rental property
Mike Summey: Thayes, where are you?
TomB: just kidding
Roger Dawson: I’m only 64, but some days . . .
Thayes: western nc
Penny: No Roger! It probably just needs a little cleaning out! And you are not getting old!
Ty from NY: jason what part of NY r u from?
Thayes: hickory area
Doug in CT: Roger…You are getting better!
Jim FletcherNC: Thayes…. Fletcher here
Jun: Mike, in your book you recommend single fam homes as the best investment. Since the prices for them are so high in my area, what is y our thoughts on condos?
Penny: Only the morror tells us that, but it just shows our shells, not the young person inside, right?
Jason in NYC: Manhattan. Hells Hitchen area
Mike Summey: Thayes, that’s where I am and I’ve done quite well here. Welcome to the area.
zert: just like a fine wine!!
Ty from NY: I am from Riverdale in the Bronx
Jason in NYC: Bronx in the house!
Jim FletcherNC: Gahgettaboutit!
Ty from NY: how long have you been REI Jason?
Mike Summey: Jun, stay away from the condos. Too many variables that you can’t control.
dean nc: Mike, are you still buying in greenville area?
Thayes: Mike thanks, lived here all my life. looking for something to supplement the income of two public servants
Jason in NYC: just started
Roger Dawson: If I were looking at a new town for investment potential, the first thing I’m do is compare rental rates to purchase rates. If you can buy property for 120 times the monthly rental, you can make a fortune.
Jun: Mike, what are some of the variables beyond condo fees?
[Investment Chat]: Penny has entered (8:44 pm)
Jason in NYC: good advice roger. thanks
Mike Summey: Dean, not Greenville, Anderson.
TomB: nyc is more like 250 times the monthly rent
Jim FletcherNC: Roger, that is a problem for a lot of us (Rents -vs- purchase price) do you see a change in that ratio with interest rates rising?
dean nc: My mistake, are you doing better there than asheville?
Jun: Mike, please tell me more about condo variables…
zert: Roger - is 120X the maximum
Mike Summey: Thayes, building wealth takes time. It won’t happen overnight. Just be patient and keep making offers that work for you. If you only buy one property a year, that will make you wealthy over tiem.
Ty from NY: r u planning to invest in the city (one of the five boroghs) or outside Jason?
Mike Summey: Dean, the markets are similar.
Penny: Jason in NYC, did you make theRealestate Expo last month?
Roger Dawson: Mike hates it when I do rules of thumb like 120 times the monthly rental. It doesn’t give you the whole picture but it gives you a quick look at potential. It varies a lot by community. Some places purchase prices are reasonable. Some places they are outrageousl.
Mike Summey: Jun, condo variables are regime fees, regulations and developer incentives.
Jason in NYC: I sure did Penny. I met you with my girlfriend Michelle. Thanks for tipping me off to the website. w
Thayes: Mike, I haven’t purchased yet. I work with an agent that deals in foreclosure so I see some good deals before others. Just waiting to get the nerve.
Doug in CT: Mike, when you get owner financing do you seek to go for “substituion of collateral” when you refinance?
Doug in CT: Thayes…get the nerve …Man….You are in an excellent position.
Jason in NYC: Ty, I’m looking outside of NY. It’s more in my price range and I’m originally from PA. Thinking of starting there first. How about you?
Mike Summey: Thayes, don’t get overly focused on foreclosures, there are good deals there, but there are also many more opportunities that have nothing to do with foreclosures.
Thayes: Mike, ok
Jun: foreclosures seemed to be hyped up..
Mike Summey: Doug, I always put that in my offers. Sometimes I get it sometimes I don’t. I’ve only have to use in once in my career.
Jim FletcherNC: Roger, Rents -vs- purchase priceis a problem for a lot of investors…. do you see a change in that ratio with interest rates rising?
Penny: Jason, thats what I thought! You guys stuck in my mind! Hope everything is working well with both your indeavors!
Ty from NY: I was looking in syracuse, but I decided to stay close to home and invest in the bronx
[Investment Chat]: Barbara has entered (8:49 pm)
Doug in CT: Thanks Mike.
Jason in NYC: Mike, would you say the majority of deals you’ve made are from people you’ve met on the street? Just shaking hands and asking for opportunities?
Penny: Tell Michelle good luck with her new business!
Roger Dawson: Many brokers advertise foreclosures because it sounds like a bargain. If it really is in foreclosure, the brokers doing the seller a disservice by listing it.
TomB: what part of th Bronx ty
Thayes: What is my best bet for financing on my first?
Jason in NYC: Thanks Penny. You too. So far so good.
Mike Summey: Jason, many have been made that way, but I wouldn’t say the majority.
Jun: Mike, does Carlton’s real estate toolkit include tools to help in making offers of differing terms (interes rates)?
Mike Summey: Thayes, ask for seller financing. You may not get it, but it doesn’t hurt to ask.
Thayes: ok
kamal: MIKE/ROGER:FOR MAINTENANCE,MANAGEMENT,VACANCY WHAT % OF RENT TO ALLOCATE & FOR N.O.I 15 YEAR OR 30 MORTGAGE YOU ADVISE.ARM IS EASIEST TO QUALIFY FOR.
Ty from NY: Not sure yet still searching areas have any info to share TomB?
Jim FletcherNC: Jun… yes… Carleton’s toolkit is very good for Multiple-term calculations
Mike Summey: Jun, absolutely, Carleton’s toolkit has a very easy to use financial calculator that will let you compute offers in many different scenarios.
RIcardo-FL: Roger, using your rule of thumb - a 230K multi-family property would need to bring over 2k in rental income. The tenants would need to pay for their utilities - right?
TomB: no info ty. just what I read in the Times
[Investment Chat]: Marty has entered (8:52 pm)
Mike Summey: kamal, the %s vary from area to area. A good property manager can help you with the numbers for your area.
Mike Summey: Hi Marty
Roger Dawson: Kamal, allocate 3% for vacancies. 10-15% for management. Maintenance depends entirely on the condition of the property.
Marty: Hi Mike
Mike Summey: Welcome to the chat
Jim FletcherNC: Take care everybody…. talk to you again at the next chat… HAPPY INVESTING!
Marty: It’s great to be here!
Mike Summey: See you later Jim!
dean nc: take care jim
Mike Summey: Where you been?
Jim FletcherNC: Later, Mike… take care Roger…. C’ya Ralph
Jun: Mike/Roger, in my area homes go or 400K to 500K. Yet the rentals are approx 2K range. To make NOI work, I need to buy homes at half price…what a challenge this is going to be.
Doug in CT: Ricardo–I have a contract on a 245K 4-Plex, current rents are $2,620, but I think I can move them up.
Jim FletcherNC: been off doing other things
Roger Dawson: Ricardo, that’s right. Multi family units usually produce a higher cash flow but don’t go up in value like single family residences. Cash flow is harder to get in single family residencces than multi family but there are offsetting benefits.
Jim FletcherNC: would love to talk to you sometime, Mike
TomB: multi families safeguard against vacancy problems
Roger Dawson: Doug, that sounds like a good deal to me, but Mike will kill me for making a snap judgment.
Mike Summey: kamal, I’d use a higher figure for vacancy right now…maybe 8-10% until the interest rates begin to climb again.
Doug in CT: In my deal I got two good things going. Owner financing at 7.5% and the appraisal came in at $17,000 over the selling price.
Mike Summey: Jim, maybe coffee one morning.
Marty: Has anyone ever written an offer with a subject to acquiring a renter within 21 or 28 days?
Roger Dawson: Single family houses go up in value faster because they are more potential buyers out there and those buyers make decisions emotionally. Investors of multi family properties just run the numbers — there is no emotion.
Mike Summey: Everyone, don’t be afraid to ask for 0% financing from owners. All they can do is either say NO or counter with some interest rate.
TomB: doug, is the property in CT?
Penny: Mike and Roger,your book talks about buying one property a year to put you on your way to financial freedom.You guys also talk about being patient. Do you think its wise to keep waiting for everything to line up in the rest of your life before making a move, or do you think sometimes you just have to take the plunge and make things happen?
Doug in CT: Yes, TomB in Manchester, CT
RIcardo-FL: Doug that sounds good to me too, but I’ve been making offers in FL for the past 4 months and no one wants to do financing or zero interest payments?
Mike Summey: Penny, take the plunge, but look first to see if there’s water in the pool and if you’re diving into the deep end.
TomB: some markets are tough to do owner financing
Roger Dawson: Penny, the first few properties feel like you’re taking a big risk. Once you’re experience you feel more confident, you know the business, and you’re really not taking big risks.
Doug in CT: Yeah, no water in the pool sounds like it might hurt.
Mike Summey: Ricardo, have you offered more than the asking price with 0% financing. Only slightly more!
Jun: Doug in CT, why is 7.5% a good deal?
Jun: Is it because you can’t get your own financing at the bank?
Penny: ‘m really looking forward to the next book. I think I need it to get me motivated.
Doug in CT: Jun, because I don’t have to qualify with a bank, I pay no orgination fees (pts. and other junk fees) and it does not appear on my credit report.
RIcardo-FL: Mike, I haved offered 6 to 10% higher. No one has showed any interest. They want their money now
kamal: MIKE/ROGER:MORTGAGE 15 OR 30 TO CALCULATE NOI.OPINION ON COFFEE,ARM MORTGAGES.
Penny: Actually, I’m motivated now,just still very scared to take that step. Thanks for th advice Roger.
Roger Dawson: Kamal, try to make it work on a 15 year pay off if you can. If not go for a 30 year amortization and refi when you’ve built up equity.
Jun: Doug, I’m scratching my head cause 7.5 look really high.
Mike Summey: The next book will show you why so many people fail to achieve financial independence and why nearly everyone should be able to do so.
Doug in CT: No Jun: 15% from a hard money lender is really high.
TomB: 15% and 5 points
Marty: When can we expect the next book?
Penny: GreaT!
Roger Dawson: Jun, 7.5 is not high if you can make an 8.5% return. It’s too high if you can only make a 6% return.
Mike Summey: Doug, all good reasons, but I think what Jun wants to know is did you ask for a lower interest rate.
Mike Summey: Tom, may 2005
Jun: since the going rate is only approx 5.5
Roger Dawson: Marty, we’re about half way through on the book. Look for it in the spring.
Marty: I can’t wait!
Jun: Penny, I find that if I think too much…I can’t move.
Jason in NYC: Jump in Penny! I’ll join you in the water soon.
Roger Dawson: Jun, you’re not thinking like an investor. 15% and 5 points is not too high if you can make a 20% return.
Doug in CT: Well, I was so happy to finally get some owner financing that 7.5% sounded good. I have one house with a Mortage from a bank higher than that.
RIcardo-FL: Mike, how do you make the seller feel comfortable owner financing - the objection I get is, how do I know you are not going to trash the place and default on the note?
Jun: Got it Roger…not an investor yet.
Penny: Withmaking offer with 0% interest, can’t you use the fact that the seller will not have to claim interest income on taxes at end of year, and therfore as cash in pocket at that time and could view that as interest income?
Roger Dawson: Penny, the antidote to fear is education. I was terrified when I made a parachute jump, until they explained it all to me and I knew how to do it.
Doug in CT: Richardo, if you are giving them a 10 or 20% downpayment they are covered as well as any bank.
Penny: Yes Jun, I do that a lot in my everyday decisions.
Penny: I tend to over analyze things.
Mike Summey: Ricardo, both owner financing and bank financing get easier when you ahve a track record. Until then, you have to do a sales job.
Ty from NY: go to go guys see you next week!
RIcardo-FL: Doug, if you put down 10 to 20% on every deal. You will run out of funds quick?
Jason in NYC: bye Ty
Roger Dawson: Penny, that’s a complicated question that a CPA would have to answer. The IRS expects you compute some interest into the sale.
Penny: Roger, oh whow! Thats an awsome comparison.
Ty from NY: later
[Investment Chat]: Cliff J has entered (9:06 pm)
Jun: I’ve thought about Ricardo’s questio too. If I were a seller, i’d be very uncomfortable financing someone for 30 years.
TomB: Ricardo, you have to keep building cash reserves
RIcardo-FL: Mike, are you going to write a good salesman book or should we buy Roger’s w
Doug in CT: I have notice that. But If I wait a couple of years, appreciation lets me refianance out the downpayment to use again.
Roger Dawson: Buy Roger’s!
Mike Summey: Penny, the IRS will imput interest on your 0% payments, but unless the seller has taxable income greater that $94,250 after all deduction, the tax rate for capital gains and ordianry income are the same.
Roger Dawson: Damn, that Mike is smart!
Jun: I wish I know what imput means.
RIcardo-FL: Yeah, I’ve read Roger’
RIcardo-FL: It is pretty good w
Mike Summey: Ricardo, don’t pay any attention to Roger. He’s self promoting.
Jun: this thing about refinancing to get cash out. When interest rise, payments are higher too so the new numbers are hgiher.
RIcardo-FL: I guess I need more practice Rog!
Penny: Thanks Mike. Whow, thats complicated! and I feel like I have my very on CPA!
Jason in NYC: Dumb question, but what’s the difference between percentage interest and points on a loan?
Mike Summey: Jun, input! Sorry
Roger Dawson: Jun, the IRS charges more taxes on interest income than they do on capital gains. So a seller could say, I sold it for more but didn’t charge any interest on the loan, and save taxes doing that. So the IRS doesn’t allow you to show no interest when people are repaying you.
zert: how does closing costs and everything figure into the equation?
Mike Summey: Sorry again, “impute” They will consider part of the payment to be interest which is taxed at ordinary income rates.
Roger Dawson: I believe that closing costs are a direct expense, whether buying or selling and would be a direct deduction from income.
Mike Summey: zert, I estimate closing costs and consider them as part of the purchase price. They have to be expensed over the laife of the loan, much like depreciation.
Penny: Man,my question proviked some very difficult answers! I’ll have to reread that chat after Ralph list it to grasp all this!
Penny: provoked
Penny: wine getting to my head!
Jun: the thing about building cash reserves, when you refinance when interests are higher, your payments are going to go up and you’d better have the rent to cover new payments. I’m I understanding this right?
Penny: sjdfkljadfkf and my fingers!
Roger Dawson: This technical stuff is interesting but don’t let it stop you from buying real estate.
Mike Summey: The whole issue of ordinary income vs capital gains tax is an issue which everyone should seek professional tax advice on before making decisions. I know how it works, but I’m not a tax advisor.
Penny: wouldn’t payments only go up if you are on adjustable morgtage
Penny: Thanks Roger for the encouragement.
RIcardo-FL: Mike, when buying properties and you are breaking even before taxes. How will the picture change roughly, meaning how will uncle sam help the situation?
Roger Dawson: Yes, June, if you have an adjustable rate, you’re vulnerable. You’ve got to keep increase rentals a little bit every year to protect yourself.
Penny: I’ll make my first purchase within the next few years and you’ll beONE of the first to know!
Mike Summey: Jun, you want to build cash reserves to cushion you against any increasing expenses, be they increasing loan payments, unexpected expenses or prolonged vacancy.
Roger Dawson: I need to leave you now. Thanks for your participation.
Jun: yes, I understand that. I am just wondering how the numbers work out. I guess I’d better get Carlton’s toolkit for this.
RIcardo-FL: Thank Roger, Good night!
Mike Summey: Ricardo, although it is not always the case, in about 99% of the cases, if you are breaking even you will probably not have any tax consequences.
dean nc: night roger
kamal: MIKE/ROGER:SHOULD WE WAIT TILL PRICES COME DOWN BECAUSE VERY HARD NOW TO FIND PROPERTIES WITH POSITIVE NOI.
Jun: thank you Roger.
Penny: Thanks Roger for the great chat, (and for the encouragement) Take care!
zert: thanks Roger
Doug in CT: Me too. Packers just scored on a funble return for TD…Go Green Bay!
Jason in NYC: Thanks Roger. This has been a really informative.
Mike Summey: Jun, I strongly recommend that you get the Toolkit.
kamal: THANKS,ROGER.
Penny: Mike, and it is okay to just break even. Just not working with rent less than the calculated NOI?
Mike Summey: kamal, don’t wait for prices to come down, just make offer that work for you. I’ve bought propeties at 50% of the asking prices in the past. You have to ask before you will find out what a seller will actually do.
[Investment Chat]: hushpup27 has entered (9:17 pm)
Jun: Mike, I think if I had your southern accent, I would be able to make more deals.
Mike Summey: Hi hushpup, you’re late!
TomB: I gotta go. Thanks everyone! Goodnight
hushpup27: my apologies..
Penny: can’t catch any fish unless you fish, right Mike?
Mike Summey: Penny, if you can break even in the beginning, the margins will increase as the mortgage pays down and the rents go up. Patience, patience, patience!
Kim-OH: Goodnight All thanks for the chat
Mike Summey: Right
Ralph Roberts: goodnight, Kim
Penny: Gottcha Mike, I’ll not forget that.
Mike Summey: We will have another chat next mMonday evening and I’m going to try to post a schedule for chat through the end of January on the website calendar.
RIcardo-FL: I have to go Mike, it’s time to read a book to my kids. Thank you again!
Jun: what a guy that Ricardo!
Penny: I’m signing off also. Great fun tonight, and wonderful information. Thanks to all, see you all next time!
Ralph Roberts: night, Penny
Jason in NYC: night Penny
Mike Summey: Goodnight all! Thanks for joining us. It’s now Monday night Football time so I guess everyone is off to watch the ballgame.
Jason in NYC: Thanks again for your time Mike. Thanks everybody. See you next week.
dean nc: night guys
Mike Summey: We’llb e back her next monday at 8:00 Eastern/5uacific.
Penny: Goodnight Ralph, JasoninNYC and everyone!
Jun: thanks, Mike, Ralph.
kamal: THANKS A LOT MIKE
Mike Summey: Goodnight Penny
Penny: Goodnight MIke, thanks!
zert: thanks everyone - I need to re-read this chat that’s for sure!!
Mike Summey: Everyone, join us again next Monday and bring a friend. This has been a great chat.
Mike Summey: I spoke with Roger earlier and we’re going to try to post a schedule of chats for several weeks ahead so everyone can plan better.
Mike Summey: Goodnight all!
zert: sounds good
Ralph Roberts: good night …. next time, a NEW improved chat software … chat transcript will be posted shortly.
» Filed Under Uncategorized
Comments
Leave a Reply