Chat 3-21-05
Posted on March 21, 2005
Jeff:FestusMO: Hello, Mike
Mike_Summey: Hi Jeff, I’m just here with Jim for a quick test.
Jeff:FestusMO: OK, I’ll wait until 7:00
Mike_Summey: We’ll get with you at 8:00
Mike_Summey: Well, I guess it’s 7:00 your time.
Jeff:FestusMO: Yes. See you in a few.
Jim_Hitt: Mike thanks for the invite to your chat tonignt
Jim_Hitt: Looking forward to an information filled evening.
Jim_Hitt: test
Jim_Hitt: color test
Jim_Hitt: color test
Jim_Hitt: color test
Mike_Summey: :>
Mike_Summey: ;>
DaveO: good evening!
Mike_Summey: Hi Dave, I’m just conducting a test with Jim
Mike_Summey: *evil*
Mike_Summey: Jim & I will be back in 7 minutes to get started. We’re
going to take care of some necessities before the chat starts.
Al_Lee: Hey, Mike, everyone. How are you all tonight?
DavidV: Hello all
Al_Lee: Hi, Ralph
DavidV: Hey Al
Jeff:FestusMO: Hello
Ralph_Roberts: Hi Big Al! Hi all.
Al_Lee: Howdy
DavidV: You have a web site and books on real estate, correct?
Mike_Summey: Hi everyone, I’m back now and ready to get started.
Ralph_Roberts: Hi Bruce!
Mike_Summey: Hi Bruce
Mike_Summey: y
Al_Lee: David, I presume you are talking to me??? answer is Yes
gray101: Hello Mike!
Bruce: Hi Ralph, Mike
Mike_Summey: Hi Gary
Gary: Hi Mike
Mike_Summey: Hi Carol
DavidV: Yes I was…ok. Just wondered if you were the same person I
thought.
Ralph_Roberts: hi Roty
Mike_Summey: everyone, welcome Jim Hitt. He is our IRA expert tonight.
Mike_Summey: Roy
Ralph_Roberts: er… Roy
Gary: Hi Jim.
Al_Lee: Oh oh! I fear he might know me !
Bruce: Hi Jim
Jeff:FestusMO: Hello, Jim
Jim_Hitt: Hi, everyone
Al_Lee: Hi, Jim
Mike_Summey: Jim says he talks faster than he types. I told him these
chat would help with that problem.
Ralph_Roberts: yes, excellent typing practice
Al_Lee: You wi9ll learn to type faster and to forgive other people’s
typos
Al_Lee: will
DavidV: So do we just barage him with questions?
Mike_Summey: Don’t be basheful! Let’s get the questions started.
Ralph_Roberts: wat! wee nuvur mak typoes
Jim_Hitt: Lets give a try with some questions
Bruce: Jim, what is your background?
gray101: How doews an IRA fit into these investments?
Mike_Summey: Hi shane
Jim_Hitt: 32 years in the real estate business broker, mortgage investor
and user of iras since 1982
Rob: I have heard of people say that the security deposit is not
refundable…maybe by calling it another name "option to renew". How
do you handle the security deposit?
Carol: Hello, everyone. My understanding is that RE in SD iras is much
simpler if only IRA money is used in the entire transaction. IS that right?
Shane: Hi Mike And everyone
gray101: I’m not Shane.
DavidV: I’ll take a shot. I have an IRA that only has a very small amount
in it. My retirement investing has been more in a defined Thrift plan (401K)
DavidV: how could I buy and put in a self directed.
Mike_Summey: Rob, a security deposit is refundable unless you back out on
the deal. Then you forfeit it.
Mike_Summey: i Michele
Jim_Hitt: carol, the ira can partner with you or anyone else and its not
hard at all
Gary: Jim, here’s a scenario I’m considering. I have a traditional IRA
with about $35K in it invested in mutual funds. If I decide to use part of the
money for a down payment on a 2nd home that I want to rent out, and take out a
note for the balance, can I handle all these transactions through a
self-directed ira? If so, can you tell me how your company would handle the fees
associated with this?
Rob: I refer to the security deposit as what the tenant pays me before he
moves in. I want to use that money to fix the place up when he leaves the
property.
Al_Lee: In Texas the standard contracts have an option period in which
you can back out and get your "earnest money" refunded.
Bruce: Jim, Can I transfer my company 401K into a Real Estate investment?
If yes, how
Jim_Hitt: davidv, is the defined thrift plan a company plan
DavidV: yes
Al_Lee: Oh, you are talking about the tenant’s security deposit.
Mike_Summey: Rob, that security deposit belongs to the tenant. You can
not use it. It must be put in an escrow account and returned to the tenant at
the end of the lease if the property is returned in good condition.
Al_Lee: I was on the track of thinking about making offers
Jim_Hitt: david you can roll over to a sd ira if the plan allows it or if
you are the boss and can change plan rules
Mike_Summey: Hi Kay
Mike_Summey: Hi bsalus
Gary: Jim, does your company serve as trustee for the SD ira?
Jim_Hitt: bruce, are you the company?
Kay: Hi Mike
gray101: Hello Mike — from your cousin Katherine
Jeff:FestusMO: Jim, I have a sep-ira through my small company. Am I able
to use this for investing in real estate?
Al_Lee: Jim, I understand that you can use only non-recorse financing to
RE in a SD ira. Do you have soruces for such financing?
Mike_Summey: Hi Katherine
DavidV: I have read very little about self directed using real estate.
What I have read says you have to be very hands off with the property
Jim_Hitt: gary, yes it does Entrust Carolinas.com
Bruce: Jim, Are you referring to where the 401K is located? Or where I
would invest?
Rob: Mike/Al, yes, it will be returned to tenant if he keeps the property
in the same condition as he left it. What if I need to change the carpet or need
a handyman to fix up the holes in the wall or I need to clean out the very dirty
bathroom, etc.
Jim_Hitt: davidv. true you can manage the ira but need aproperty mgr to
take care of the day to day
Rob: Can I use the security deposit to do all that cleaning that I would
pay a handyman or a professional cleaner???
Gary: Jim, please send everyone your company url so we can access it.
Jeff:FestusMO: Mike, my noi’s are coming out at approximately 50%+
discount from the asking price. Is this something to be alarmed about?
Mike_Summey: rob, you can keep all or part of these expenses, but only
the actual cost of the repairs.
Al_Lee: Rob, if you have reasonable costs and itemize them in a written
statement to the tenant, you can deduct for them from the security deposit
Jim_Hitt: entrustcarolinas.com
Mike_Summey: Jim, do you have a website that interested people can check
out after the chat?
Gary: thanks Jim.
Mike_Summey: You beat me to it Jim
Carol: Jim, thanks for the website.
Jim_Hitt: bruce where the 401k is located,
Mike_Summey: Hi Debbie
Bruce: Jim,
Mike_Summey: Hi Will
Gary: Jim, can you give us an overview of how your fee structure works?
Rob: Mike/Al, have you had a tenant challenge you and say he already
cleaned the place and demands his money ?
Bruce: Jim, With Fidelity,
Jim_Hitt: Mike, not at this time in developement
Shane: I have written in the contract so much for carpet cleaning and so
much an hr. for cleaning
Al_Lee: Rob, it happened once and I have polaroid pictures to prove he
was lying. We went to small claims court and I won
DaveO: hey all been away for a few weeks how’s it going?
Al_Lee: Rob, the secret is to document everything. Take pictures
(digital, nowadays) if you can.
Mike_Summey: Rob, that happens all the time. That’s why I use an
inspection form in which the tenant signs off on the condition of the property
at move in and then we go through it again when he moves out. It is a detailed
check list that covers the condition of most all items you would think of.
Mike_Summey: i Steve
Steve: Hey everybody!
Bruce: hey Steve
Al_Lee: These days my property managers handle all tenant relations, so I
don;t get involved at all
Shane: Hi steve
Jim_Hitt: bruce, IF THE 401K IS located IN A company plan, IT will depend
ON their policy IF IT CAN BE rolled over, IF YOU ARE THE company then YOU CAN
choose,
Mike_Summey: Dave, you shouldn’t have missed.
Debbie: Hey Jim, Haven’t seen you in a while. How is your developement in
Asheville going? Debbie Bucklaew
Mike_Summey: Hi Shaeley
Jim_Hitt: debbie, going great will BE renting IN late april
gray101: What do you have to do if you cannot obtain a management group
for maintenance in the beginning. I’m no handyman
Shaeley: Hello.
Carol: Jim, the follow-up question is how does your fee structure to
compare to the other majoy players in the market, and what sets you apart? I
have seen some that have a checkbook feature so that you don’t have to request a
check for every little thing.
DaveO: I know I shouldn’t have missed, just been working a lot of Monday
nights =(
roy: Jim, could you explain the consequences of mortgaging a property in
a SD ira? and the reprecusions of the ubt? Does that mean that all property must
or should be free and clear inside the ira?
Bruce: Jim, No I’m not the company, I work for a big company. So, if I
understand what you’ve written, this precludes me from using my 401K for RE
investments. Is that accurate?
Shane: I get the handiest tennent
Mike_Summey: gray, I recommend that you find a manager before you get
started. Managing the property yourself is a killer.
Al_Lee: Self-managing is also a hugh risk of liability. Leave it to the
pro’s
Jim_Hitt: bruce YES IT does until YOU leave THE COM
Debbie: I’ll back you up on that Mike. I never would have thought, but
after you get more than 10 units, you start to not have enough time to look for
property.
Mike_Summey: Jim, can an individual start as sd IRA
Al_Lee: roy, you can use non-recourse financing for real estate in an ira,
but it might be hard to find
Kay: Jim I’ve taken a home subject to, placed it in a Trust with my SD
Ira. I’ve used SD IRA funds for repairs. There is a mortgage on the
property…..what problems will I have since it still has a mortgage on it?
Bruce: Jim, If I leave in 6 months, then I can roll my 401K into a RE
investment in month 7? Is that on target?
Al_Lee: Jim, do you have soruces for non-recourse financing?
Mike_Summey: Debbie, you know how much of a headache managing can be,
don’t you?
Al_Lee: sources
Jim_Hitt: carol OUR FEE structure IS competitive, what makes USE
different IS when YOU call TO discuss A deal YOU GET TO talk TO A person (me)
that understands THE RE business AND CAN offer input that A customer service REP
IN A FAR away land can/t
Debbie: Absolutely
Carol: Thanks, Jim.
Gary: Jim, is your fee structure flat fee, or transactional based?
Bruce: Jim, do you give referral fees?
Debbie: Jim what is your website, I signed in late
Jim_Hitt: THE penalty FOR self managed mistakes IS 160% OF principal, BE
careful with these great claims OF check book control
Mike_Summey: Debbie, that’s the beauty of having our great webmaster
Ralph. He posts the chat transcripts within minutes of the chat being over so
that no one has to miss anything.
Debbie: thanks
Carol: Jim, so without a ready checkbook, how do have a check ready to
put down as earnest money so that a seller will accept your offer?
Jim_Hitt: kay, THE only probelm IS THE DUE onsale clause, other wise when
YOU sell THE property YOU will BE subject TO ubit taxes
Jim_Hitt: bruce, YES
Gary: Jim, I got an email from a company (GuidantFinancial) - they charge
an upfront fee of $4,000 to set up a SD IRA in an llc. Is that similar to what
your firm does?
Mike_Summey: Hi Eddie
Eddie: hey
Bruce: Jim, how would I register someone? On the above mentioned url?
Kay: Thanks, how are the Ubit taxes figured?
DavidV: what is ubit?
Jim_Hitt: bruce, WE ARE regulated BY IRS rules hard DO give referrals, I
CAN give credit ON account fees
Mike_Summey: Jim, you missed it earlier, but I asked if an individula can
set up their own sd ira?
Kim-OH: Greeetings all
Mike_Summey: Hi Kim
Kim-OH: Hi mike
Kim-OH: Hi Penny
Mike_Summey: Hi Penny
Kim-OH: Hi Ralph
Penny: Hi Mike
Penny: and Ralph!
Mike_Summey: You guy will have to talk fast tonight. Lots of people and
questions.
Penny: and Kim
Penny: Looks like a great chat!
Ralph_Roberts: Hi Kim
Ralph_Roberts: Hi Penny
Jim_Hitt: carol, IN THE offer YOU PUT your name OR assigns, write A check
, send USE AN instruction, WE send replacement check YOU GET yours back
DavidV: If I have self directed ira, can I invest money from the IRA into
a real estate company that I own?
Kim-OH: Jim sorry I’m late, who are you with?
Carol: Thanks, Jim.
Mike_Summey: Jim, what are the advantages of a sd IRA over simply owning
property individually or in an llc?
Mike_Summey: i Doug
Bruce: Jim, what about pension fund money that is with mycurrent
employer? Can that be used for RE investing?
doug195: Hi Mike, Hello everyone
Jim_Hitt: gary, I just opened AN account FOR A client WHO reviewed
guidant, they saved 2500.00 doing IT themselves with MY direction.
Gary: Jim - that sounds like quite a difference!
Jim_Hitt: mike, NO YOU need A qualified trustee approved BY IRS
Carol: Earlier, someone asked a question about taking a mortgage from a
property purchased 100% with cash from a SD ira. What are the implications about
that? I missed the response on that.
Shane: Whats the maximum you can put in a year
Mike_Summey: Jim, see my next question.
Mike_Summey: Jim, I told you this would speed up your typing.
Kim-OH: Mike who is Jim with?
Gary: Jim - how does your firm handle mortgage payments on properties
held within the SD ira?
Jim_Hitt: everyone, IF I DO NOT clearly communicate THE answers YOU need
tonight YOU CAN e-mail ME AT jimhitt@entrustcarolinas.com, THE questions being
asked ARE great I just want TO make sure they ARE acurately answered
Mike_Summey: Kim, did you read the email I sent out. It was all in them.
Carol: Jim, back to my earlier question about checks: I assume every
required check would work the same way, say putting money down to begin
insurance coverage.
Jim_Hitt: kim, entrust carolinas
Kim-OH: Jim entrust, good company
Kim-OH: Mike I must have missed the email
Gary: Mike, maybe you can bring Jim back next week after we’ve had a
chance to listen to all the questions tonight and then review his company
website this week.
Jim_Hitt: david, NOT IF YOU already OWN IT
Mike_Summey: Kim, you are registered on the website aren’t you?
Bruce: Mike, how do I get on your e-mail list?
Shane: Mike, How do you get the e-mail
Kim-OH: Mike I think so
Mike_Summey: Gary, Jim is welcome anytime he wants to join us.
Jim_Hitt: mike, when YOU sell THE property YOU have NO taxes IN A roth
AND deferred taxes IN traditional IRA
Shane: Bruce you beat me to it
Jim_Hitt: gary, YES
Gary: Mike - Jim - that’s great - this is a topic I’ve heard a lot about
and would really like to learn more about.
Mike_Summey: Everyone, if you haven’t already done so, just click on the
"new user" button on the website and register. That will put you on
the email list where you will get notices about the cahts, special guests like
Jim and other news.
Jim_Hitt: carol, yes, AT closing THE insurance IS usally paid BY THE
attorney, annuals would BE BY THE IRA
Bruce: Jim, Can I use my pesion fund money the same way as my 401K money?
Carol: Thanks, Jim. I forgot that insurance gets picked up within the
closing process.
Jim_Hitt: bruce, YES
Jeff:FestusMO: Mike, in doing my NOI analysis, they are resulting in
offering prices 50% or more discount from the listing prices. Is this something
to be alarmed about?
Kim-OH: Mike I’m on the email list, I must have just overlooked it
Kim-OH: bbbbbbbbbbbbbbbbb
Gary: Jim, is it a good idea to take out a mortgage on property held
within a SD ira?
b_: woohooo
Mike_Summey: Jeff, no it isn’t. You will find that you can make many of
those deals work with creative financing.
Mike_Summey: i b
Mike_Summey: Hi b_
Jeff:FestusMO: For example, I just offered $60,xxx on a home listed for
$120,000
Kim-OH: Mike I invited b here from another chatroom
DavidV: Jim, could I take SD money and put it in a refurb company that I
am not a part of, if I have other business dealings with the owner of the
company?
Mike_Summey: Great Kim. I’ll bet b_ will have fun here.
Kim-OH: Hi Doug
Mike_Summey: Hi doug
Kim-OH: I know he will Mike
Doug_in_CT: Hi Kim. Hi Mike.
Kim-OH: Hi Bill, good to see that you made it
Mike_Summey: Jim, Al has properties in Texas that are available for
remote investors. will they work for sd iras?
b_: hi mike
Mike_Summey: Hi Bill
Jim_Hitt: gary, IT IS great because IT gives YOU leverage, however there
ARE taxes that will need TO BE paid ON THE profit generated BY THE borrowed
funds, call unrelated business income taxes, ubit FOR short
b_: ey bill.;)
Jeff:FestusMO: Mike, I remember you stating a couple of weeks ago that
100 times rent is a rough estimate for the max to pay. I’m well below that and
without any seller financing, can’t seem to find a way to get anywhere near
that. Of course, I know that the lower the price, the better for me.
Kay: Jim, how are the ubit taxes figured?
Gary: Jim, that would be on any rental income over and above operating
expenses, interest expense, etc?
Jim_Hitt: david, that should NOT BE A problem
Al_Lee: Mike, I know the answer is yes because we have at least one club
member who has bought several properties in his SD ira.
Kim-OH: Jim how are the taxes accounted for when filing taxes?
Kim-OH: Hi David
davidSF: hola
DavidV: Hello
Mike_Summey: Jeff, remember that price is only one part of value. It’s
the combination of parice and terms that determines the true value. You can move
up the price by recucing the interest rate on financing and that is usually done
with seller financing.
Jim_Hitt: mike, yes, ira’s ARE perfect FOR joint investments
DavidV: ahh h good
Bruce: Jim, can you put your401k into a real estate business partnerhsip
or llc?
Mike_Summey: Hi David
Jim_Hitt: bruce, YES
bill-in: We buy homes in the Roth account
Doug_in_CT: I think it it not too late to start a Roth IRA for 2004 if
you haven’t filed yet right?
DavidV: Jim, so if I wanted to I could take SD money and put it in a
seperate company managed by someone I do business with on regular basis, and
they could do same with me. This would stay within regulations?
Jeff:FestusMO: Yes, I realize that. Many of the homes I’ve been looking
at are owned by young couples with little/no equity that are moving up to bigger
homes. I’m assuming there is little that can be done in those situations without
the seller accepting a greatly discounted price.
Gary: Bill, is your Roth self directed?
bill-in: not until the 15th of April is it to late to start the roth
Shane: Jim you can always buy multiple units
Al_Lee: Jeff, if you are interested in properties that you can buy that
will generate positive cash flow, but are in Texas, I can get you plenty.
Mike_Summey: Jeff, the less equity a seller has the less options both of
you have.
Jim_Hitt: kay, ubit IS based ON THE corp TAX rate less ANY expenses
incurred (this IS A complex subject TO TRY AND answer short form)
bill-in: Gary yes it is
DaveO: i can never figure out whether I need a traditional ira, a Roth or
a sep.. and I keep getting different advice from tyhe experts 
Jim_Hitt: doug, YES true
Gary: Bill, do you have a trustee handling the transactions?
Jeff:FestusMO: Mike, another home I was considering offering on needed
approximately $25,000 in repairs, which I would also finance. This led to an
offer price of around $35,000 for a home listed for $90,000.
Doug_in_CT: I am hearing it is the Roth IRA that real estate investors
should use right?
Kay: Thanks Jim, I’ll try for you tomorrow.
Jim_Hitt: bruce, YES
Shane: Sorry I meant Jeff
bill-in: dave if you are going to live a long time and have ways to
generate hugh profits go with the Torh
bill-in: Roth
DaveO: im 30 so I hope ill live a long time
Jeff:FestusMO: Al, I’m in Missouri and trying to focus there.
bill-in: Dave go only with Roth if you believe you can make great gains
in your account
Mike_Summey: Jeff, you will find that most of the deals you look at are
difficult to make work, but it only takes one a year to make you wealthy over
time.
DaveO: only thing is i can make a much bigger contribution in a sep, plus
I hopefully will be out-earning the roth limit in a couple years
Jim_Hitt: davido, email ME AND WE CAN discuss IT
Al_Lee: Jeff, OK. We have lots of club members form all over the US who
buy in Texas because they can get good cash flow
bill-in: I converted 150000 from a 401K and made it inot 700000 so far
with real estate
Jeff:FestusMO: OK, I just wanted to make sure this wasn’t out of the
ordinary. The offering prices seemed very, very low and I thought I remembered
reading in your book that 10-30% was more normal
DavidV: Mike, is there a price point below you won’t look at property? I
know that sounds crazy….but what kind of profit do you have to be seeing to
make it worth your time?
Gary: Jim - what is your email address?
bill-in: so is Texas a good market for apprecaition or just cash flow
Mike_Summey: Hi Mike
b_: texas is like 2@ i think bill
b_: %
Doug_in_CT: We got an appraisal on a property we bought here in CT just
less than 2 years ago. We bought it for $150,000 and now it is appraising for
$210,000. I want to Cash Out Refinance and put the proceeds in a Roth, How does
that sound?
Jeff:FestusMO: One other problem I have is that the agents we’ve been
working with seem to be very uncomfortable making these kinds of offers. Do you
ever have issues with agents not wanting to work with you?
Jim_Hitt: daveo, THE individual 401K IS better IN THE contribution dept
Al_Lee: bill-in In Texas you get both appreciation and cash flow, plus
higher depreciation allowance because of ower land cost–plus favorable laws in
case you have a dispute with a tenant.
Gary: bill-in - sounds like you’ve got a good strategy and execution
going.
Mike_Summey: David, if I can buy a property that will break even in the
beginning, I consider it a good deal. Rents go up, mortgages go down and
inflation pushes up values.
DaveO: pretty sure you can only put like 3k a year in the roth
bill-in: Doug may be difficult to just put that money in there as you
suggest
Jim_Hitt: gary, jimhitt@entrustcarolinas.com
Gary: Thanks Jim
b_: good popint on the depreciation al
Shane: Sounds like I need to move to Texas
Al_Lee: doug, go to http://www.TurnkeyInvestments.net and look at the
list of properties we currently have. Every one is already leased and producing
positive cash flow.
Bruce: Shane, or buy there
DaveO: what scares me about a property that I am only breaking even on is
at 1st is if the vacancy is higher than expected, all of a sudden I have a
negative cash flow
Carol: Ji, is there anything other gotcha that we should keep in mind,
especially if using only SD IRA $ to buy a property?
Mike_Summey: Jeff, I used to have that problem until I found a couple of
agents who were shocked to learn that some my unusual offers actually worked.
roy: Jim, do you lose the capibility to depreciate a property inside a SD
ira?
Kim-OH: b, I told you this was an excellent chat
Doug_in_CT: My plan is to put the maximum allowed in the Roth and then
invest the proceeds in the Roth and watch them grow tax free over time.
Al_Lee: b_, the tax benefits of real estate are among the most valuable
attributes. In Texas you get more than in almost any other state because land
cost is low and land is the only portin of your purchase that is NOT depreciable
Steve: Jeff, I’ve had the same problem until Mike gave me the idea to ask
the agent if I could help explain the offer to the seller.
MikeR: Is it possible to just put a few thousand in the Roth self
directed ira, and buy houses with that, without buying the whole house cash;
like taking subject to, with the Roth
Jim_Hitt: roy, yes, YOU pick UP TAX free with A roth AND TAX deferred
with A traditonal, IF debt financed YOU GET TO take depreciation before figuring
THE taxes DUE under ubit
Jeff:FestusMO: OK, well I’m working through my first month of making
offers and just wanted to make sure I’m doing the right things. It sounds as if
I am.
Al_Lee: b_, not only that. You can get positive cash flow on brand new
hosues from major builders with full builder warranty, new appliances that have
manufacturer warranty, etc.
Mike_Summey: Dave, that’s why I recommend that you always keep a cash
reserve.
b_: right al..ok
doug195: Al, i private messaged you
Al_Lee: doug, through my website?
b_: hmm
b_: <-ponders
DaveO: That’s the plan. to build up a reserve..
Jim_Hitt: doug, YOU ARE limited TO 4000 year contribution TO roth,
earnings ARE unlimited however inside THE roth,you CAN contribute TO A sep, AND
rollover however
Kim-OH: b, don’t make me get the trout
b_: ol
b_: l
Doug_in_CT: No Al, I am thinking I will purchase some more rental
property here in CT and when it grows I know it will grow tax free.
Mike_Summey: Hi zert
DavidV: Mike. I have a chance to buy a dup. about 15 miles from my home.
It’s not in the neighborhoods I have been looking, Not terrible, but not the
middle class type stuff I was hoping for. But I can buy it for mid 30’s fix it
up for 15 grand and rent each unit for 500. I’m not crazy about the
neighborhood, but the money is there, there’s tax credits as well and I don’t
see the money going down.
MikeR: What’s the difference in ability between Entrust, Equity Trust and
Guidant. Do they all do the same thing? Thanks, Mike
doug195: Al_Lee - no i double clicked on your name in the list typed in
the window it popped up
Jim_Hitt: miker, that IS A great plan, options ARE another WAY TO take
control without A LOT OF $ IN your roth
zert: good evening Mike , all. Wife is out of town - so I am playing Mr.
Mom!!
Mike_Summey: David, That sounds like a good deal to me.
bill-in: we have a guidant account and have check wriintg privileges, we
had Equity trust and it was good but without check writing avail
Mike_Summey: Hi neal
DaveO: I have a situation with my primary residence that I have to refi
in July, so I have to wait till after that to but any investements (can’t take
chances with my credit score and debt ratio) so right now I’m in the research
phase
DaveO: but I am finding that some seller financing is a definite
possibility
bill-in: Guidant seems to be much less expensive after starting but high
costs up front. Equity trust low cost to start but as account grows so do the
fees
Gary: bill-in, do you have an email address I can send additional
questions to about some of your SD IRA experience?
Bruce: Mike, who do you recommend to clean up credit?
Jim_Hitt: bill-in, HOW IS THE account working OUT FOR YOU AND WHO
oversees THE prohibited transaction THE carry A 160% penalty, I have been
curious
DavidV: I know my maintenance costs will be higher than my other rental
but the cash flow should cover it easily. Mike, I’m worried that since I will
have it managed, they won’t keep it up as much as I would. how do you handle
that kind of thing?
Mike_Summey: Everyone, do you realize that over half of the real estate
in the US is owned free and clear. That means that there are thousands of
properties that the seller could finance if they wanted.
Kim-OH: Mike I see the free and clears all the time in my area
DavidV: Kim, has it worked for you?
Mike_Summey: Bruce, you are the best one to clean up your credit.
b_: is that 1/2 the acreage or 1/2 the net value mike?
DaveO: luckily I have my Real Estate license now so I can go ahead and
make all the crazy offers I want on my own =P
DaveO: and discount my commission
bill-in: Jim guidant has my account. I do not do prohibited transactions
with family or realtives. I would hope that I never have those kind of problems.
We buy properties for cash
MikeR: I recieved a package from Equity Trust and Guidant. I’ll request a
package from Entrust, also. Guidant sets up an LLC for your funds. Is that how
you can write checks? It seems like an LLC and checks would break the rules.
Kim-OH: DavidV, haven’t tried to deal on the free and clears yet, mostly
I do short sales
DavidV: kim, bird dogging?
Mike_Summey: David, I set the paramater of what I expect from my managers
and the check to see that they are doing it. I’ve found that managers do what
you "inspect" not what you "expect."
Jim_Hitt: bill-in, thanks FOR THE feedback
bill-in: Jim have you had some experience with prohibited transactions
Mike_Summey: Dave, is some areas it is not leagle to take commission on
properties you buy yourself.
Steve: Mike, do you use multiple management companies in one area?
Jim_Hitt: bill-in, only what I read IN THE IRS regs AND cases
Kim-OH: DavidV, no I just find them when I am doing research on
properties and I keep a notation about the free and clears for future offers
doug195: Mike, I’m ready to start checking out houses in my area and was
wondering about making my first offers. Do I need to make these offers through
my own realtor, or can I do them myself?
bill-in: Jim wehre did you read about these cases is there someplace on
the web
DavidV: I guess that’s what I’m going to have to do. There’s a lot of
profit to be made in some of these neighborhoods, but I do not want to own a
property that degrades to slum level. Even if it means a leaner profit margin.
DavidV: Kim, I mean the short sales….is that forclosure short sales? or
is that different?
Kim-OH: David, yes properties that are going into FC or are in FC
DaveO: As far as I know it is legal in utah, but I dont want to take the
commission.. Im going to take give it up, sop the seller is only paying 3%
instead of 6%, to make my offer a bit more attractive
Mike_Summey: Steve, yes! I have 5 management companies that I use. 4 of
them are in this immediate area. One in in SC where I have several properties.
Gary: Kim, how do you find out about properties prior to them going into
FC?
Jim_Hitt: bill-in, WE have some good info ON OUR website, SO does equity
trust, THE swanson decision IS THE ONE that concerns ME, ITS about control
Carol: Jim & Mike, since you can’t take depreciation within the SD
ira, would that negate any of the advantage of having tax-free gains in a Roth?
bill-in: Jim how would I be able to read about that
Kim-OH: Gary, referrals
DavidV: Kim I wish I could find someone like you in my area. I have an
associate who has done very well with Rental and with some refurbs because he
has a birddog who he pays several grand to for each deal
Mike_Summey: doug, you can make them yourself if you feel comfortable
doing so unless the properties are listed with a broker, then you will have to
go through the broker.
Jim_Hitt: carol. ITS hard TO BE TAX free
Gary: Kim - do you run ads, or is this just word of mouth?
Kim-OH: Gary, word of mouth and networking
doug195: Thanks Mike. Thats all I needed to know.
Gary: Thanks Kim.
Jim_Hitt: bill-in, email AND I will forward YOU some info
MikeR: Jim, I know we’re supposed to be talking about ira’s. I want to
start one. I can go, I guess, with Entrust, Equity Trust, or Guidant. Can you
give me one points regarding Entrust, of why I should go with them? Thanks,
Kim-OH: David that’s excellent
bill-in: Jim are you saying that on this weekend millionaire site you
have info about prohibitive transactions.
Kim-OH: Gary, you are welcome
bill-in: btaylor966@insightbb.com
Carol: Ji, you’re right. I meant that the interest is not taxed in a
Roth, since you pay the tax before the $$ goes in.
DavidV: I’m making little inroads but it takes time. I have to develope
more sources.
Kim-OH: DavidV you will do that in time
Steve: Networking is a key in this business. I have contacted every
management company in my area and told them I am interested in any investment
properties that their clients may want to sell.
b_: does the roth shelter the income or just the realized gain when you
sell?
DavidV: Jim_hit, thanks for the expert info
Doug_in_CT: Good idea Steve, has it brought you any properties?
Gary: Steve, do you also contact realtors who dont do property
management?
MikeR: Sorry, I meant "some points", not "one points"
regarding Entrust. I want to find out more about it.
Steve: Doug & Gary, Yes and Yes. I talk to as many Realtors as
possible and always communicate my intentions and goals
DavidV: Steve that’s an Idea I havn’t explored yet. I’m hoping to hear
tomorrow from a realtor on the counter ofer I got from a bank. I met their
counter offer as soon as they sent it to me…but there is another offer on the
table. the joys of competition.
Jim_Hitt: miker, with AN entrust office, mine OF course BUT ALL IN
general YOU talk TO A person WHO HAS A vested financial interest IN their
business THE backing OF entrust corp, I have 32 years OF RE experience TO lend
TO A conversation with you, THE other companies have well trained customer reps,
WHO process paper work very well, WE AT entrust have cpa, attorneys, financial
planners, 1031 accomendators AS OUR affiliates.
Shane: Al_Lee How do I check on these properties in Texas
Jim_Hitt: bill-in, NO ON MY website entrustcarolinas.com
Gary: Steve, do you pay any kind of finders fees to the referring
companies?
Carol: Jim, what’s an accomendator?
Kim-OH: Jim, I know a number of folks in my area who are with Entrust
Steve: DavidV, I guess that’s the way it goes. My only advice in that
situation is to make sure you have your finances arranged and offer I quicker
close than the other guys.
DavidV: I offered cash, and put 10 grand up front
Mike_Summey: Several years ago I wanted to try out my idea that real
estate could be purchased with 0% loans from sellers. My realtor told me I was
crazy, but agreed to make the offers. After 4 were accepted, he said,
"Maybe this will work." He has since bought several himself with 0%
loans. Never say never until you try it out.
Steve: Gary, do you mean Realtors or management companies?
Jim_Hitt: carol, A 1031 accomendator holds THE funds IN A TAX deferred
exchange
DavidV: I think I’m gonna get it. This ones’ for a flip. I don’t like the
neighborhood for long term, but it’s great for a flip.
Al_Lee: Shane, you can use a licensed inspector, or come here to see for
yourself. Most of our mambers live elsewhere so they use the licensed
inspectors. Looj\k on the website and you will see that we deal only in positive
cash flowing properties.
Gary: Steve - either or
Mike_Summey: Hi edfrapid
Jim_Hitt: kim-oh, where ARE YOU from
Carol: Thanks, Jim.
Kim-OH: Jim Cincinnati
Shane: Thanks Al
DavidV: night all. time to rub my wifes feet.
DaveO: the 0% loans you got.. what % of the financing were they?
Steve: Gary, Realtors bring me opportunities to get commission from the
sellers. The management companies bring leads because they want to continue
managing the properties regardless of the owner.
Gary: Thanks Steve.
Bruce: Ralph, how would I cut and copy something written above?
Ralph_Roberts: Bruce, select it with the mouse, the Ctrl-V to copy and
Ctrl-P to paste
Mike_Summey: Dave, I’ve done some that were 100%, but most are 70-80%.
Some have third party financing at market rates for the difference.
MikeR: I don’t think my CPA understands these RE self directed ira’s. He
said that if I have one, I will have to have enough money in the IRA to purchas
the house 100% cash. Is that true?
Al_Lee: Well, it is time to help put the kids to bed here in Texas. I
enjoyed it as usual. See you all next chat.
Al_Lee: Goodnight
Ralph_Roberts: er…. nope, that does not work here… but it will in the
transript
Jim_Hitt: mike R, NO YOU CAN USE leverage IN AN IRA
Bruce: Ralph, I can’t get into the text to do that.
Jim_Hitt: al-lee, lets talk
Mike_Summey: Goodnight AL
Steve: I have to say goodnight as well. Have a good week everyone…….
DaveO: I wonder what a seller is thinking when they agree to that, but I
know they do it anyway
Ralph_Roberts: Bruce, actually, you can … click on the two little pages
next to the speaker symbol… you can cut from that transcript
Jim_Hitt: thanks everyone FOR having ME here
Shane: Thanks every one and goodnight.
Mike_Summey: Dave, I’ve never had a seller dissapointed with one of my
deals.
Carol: Thanks, everyone. This was my first chat. I’m still reviewing the
previous chats, but tonight’s topic was one I had questions of my own to ask.
MikeR: Jim, How do we contact you? Do we go to the Entrust site?
Kim-OH: Jim Thanks for being here
Bruce: Ralph, excellent, thanks,
Kay: Thanks Jim.
Jim_Hitt: jimhitt@entrustcarolinas.com OR 828-215-3345 cell
Mike_Summey: Jim, why don’t you give everyone your contact info?
Carol: Jim, thanks very much for being here tonight.
Ralph_Roberts: glad to help :>
Mike_Summey: Jim, you beat me to it again.
DaveO: hey that’s how I’m gonna make offers I’m with you on that
Jim_Hitt: mike S, sorry
Gary: Jim, Mike - thanks for putting together this chat program tonight.
Bruce: Jim, thank you for the info. I’ll try to send someone your way
tomorrow.
Mike_Summey: Jim, you typing has improved immensly tonight.
Jim_Hitt: mike S, thanks
Carol: Mike, thanks for arranging for tonight’s topic.
Bruce: Mike, he got peppered with a lot of questions. Great topic.
Doug_in_CT: Mike, How did you and Jim meet?
Kim-OH: Mike, thanks for the great chat
Gary: Jim, I will give you a call or send an email later in the week with
additional questions.
Jim_Hitt: gary, thanks
Mike_Summey: Our chats are supposed to last for an hour, but I usually
try to stay a little longer when there is a lot of interest. I can stay for
another few minutes.
Kim-OH: Jim, I am going to have a friend contact you
Jim_Hitt: ME TOO
Jim_Hitt: kim-oh, thanks
Mike_Summey: Jim, what do you think of this?
DaveO: Mike.. quick question.. I was thinking of buying Carleton Sheets
program to try and learn as much as possible.. is it worth getting? Does his
system conflict with yours much? Wanted to get your thoughts on that
Kim-OH: Jim, no thank you, I have been telling her to do this and lend me
her money lol
MikeR: Thank-you for the chat. This is my first chat ever. It’s been very
worthwhile. Thanks,
Jim_Hitt: mike S , lotsa fun, moves fast
Carol: Ok, then, Jim, back to my depreciation question. You can’t take
depreciation on a SD ira. What do you lose because of that?
Mike_Summey: Dave, I recommend Carleton’s program. It is very
comprehensive and covers many different ways to make money with real estate, but
it’s good stuff. You can get it by clicking on the Toolkit on our home page.
Jim_Hitt: carol, YOU lose nothing because YOU have either TAX free OR TAX
deferred money going into your retirement account
Gary: Mike, whats the cost of the Sheets program?
Carol: Jim, OK. I get it now.
Jim_Hitt: carol, depreciation IS used TO save taxes, THE IRA already
saves taxes
Bruce: Jim, as an expert , does it make a difference what investment
vehicle someone uses? Meaning, apt’s., commercial, sfr’s? Doe one have more of
an advantage than another?
Mike_Summey: Gary, I’m not sure. If you click on the Toolkit on our home
page, it will take you to Carleton’s website where you can get all the prices
and details.
Gary: Mike, thanks,
Gary: See everyone next week - goodnight
Kim-OH: night Gary
Mike_Summey: I spoke with Carleton about 3:00 today to see if he wanted
to join us tonight, but he wasn’t feeling well. He’s coming down with a cold.
Jim_Hitt: bruce, I like units AND commercial because THE ARE valued based
ON income, however, sfrs ARE easier TO deal with AND have more liquidity
Gary: night Kim.
Mike_Summey: I think the hour has flown by more quickly tonight that I
can remember in weeks. I guess Jim has invigorated everyone.
MikeR: Jim, Could you give an example of how I can use leverage in an
Entrust IRA account to purchase Real Estate. Also, can I keep and rent the
property, fix and sell, or other? Do I have to sell the property within one
year? Also, where is my money kept?
Kim-OH: Mike it has flown by
Bruce: Jim, from an IRA perspective, would they be treated equally?
Carol: Ji, thanks again. The idea of SD IRA for RE is new to me. I’ve
been trying to find everything I can to read up on it. Do you have any
recommendations for reading?
gray101: I have enjoyed the chat. Now I know just about enough to be
dangerous
Jim_Hitt: bruce, YES
Mike_Summey: gray, you have always been dangerous.
Carol: Mike, it has flown by. I can’t believe its been an hour already.
Jim_Hitt: carol, lots OF good stuff ON MY website
gray101: Goodnight cuz!
Carol: OK, Jim, thanks. I’ll check it out.
Mike_Summey: Maybe Jim will join us next week. I’ll talk with him and if
so I’ll let you know in an email. Roger will be back with us next week too.
Carol: Thanks again, Mike.
Mike_Summey: You’re welcome Carol
Kim-OH: Jim it would be great if you could join us again and again and
again
Mike_Summey: Jim, see I told you it could get to be addictive.
Carol: I’ll second kim-oh. Kim, btw, I live in Cleveland.
Bruce: Mike, thanks for bringing experts like Jim.
Kim-OH: Carol howdy neighbor
Mike_Summey: You’re welcome Bruce. We try to help as much as we can.
Jim_Hitt: miker, YOU CAN rent, rehab AND sell,option,
leaseoption,subdivide etc, YOU leverage inside THE IRA just like YOU DO outside,
bank will loan money, YOU need A down payment, entrust signs ALL THE paperwork,
loan needs TO BE NON recourse
Carol: Kim, I did live in Cinci, but its been quite awhile.
Kim-OH: Carol its such a small world and a much smaller state LOL
Jim_Hitt: kim-oh , thanks FOR THE vote
Carol: Kim, indeed.
Kim-OH: Carol I used to spend a lot of time in Cleveland
Kim-OH: Jim, the folks I know who use Entrust are very happy with the
service
Jim_Hitt: kim-oh, thats good feed back
Carol: Kim, really? Do you come up here anymore? My brother used to live
in Cinci (after I left), but he’s moved, so haven’t been down there since.
Bruce: Jim, I assume I could take money from my 401K put it into a
property beign bought by my LLC . Any time limit I need to hold the property?
Kim-OH: I can only report what I hear at the reia
Jim_Hitt: bruce, NO time limit, there IS NO capital gain taxes IN AN IRA
Kim-OH: Carol, I don’t get to Cleveland anymore but perhaps I should so
that we could meet
Kim-OH: Carol, or we could meet in Columbus sometime
MikeR: Would I be able to take over a property subject to the existing
loan, putting it into the ira?
Kim-OH: Carol, a lot of folks are moving out of Cincinnati lol
Kim-OH: Carol, you are way too kind
Mike_Summey: Well folks, I’m going to call it a night. Thanks Jim for
joining us tonight. It has been a great chat.
Mike_Summey: night all.
Kim-OH: Carol have you attended oreia?
Bruce: time to go, thanks everyone.
Kim-OH: night Mike and Thanks
MikeR: Good night, Thanks
Jim_Hitt: mike S, thanks FOR THE invite tonight I enjoyed IT
DaveO: thanks guys see you next week
Mike_Summey: See you next week.
Carol: Good night.
Kim-OH: Carol it’s quite a gathering
Mike_Summey: I’m gone, but you are welcome to stay and talk as long as
you want.
Kim-OH: Usually in October
Kim-OH: Carol yes it’s quite an opportunity for networking
Ralph_Roberts: good night, all… chat will be post shortly
Kim-OH: bye CArol
Ralph_Roberts: transcript, that is
Kim-OH: Ralph thanks
Ralph_Roberts: see ya, Kim
Kim-OH: see ya Ralph
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