Chat 8-22-05
Posted on August 22, 2005
Al_Lee: Hi, Looks like I am the first one in. That is unusual, but
fine with me.
Al_Lee: Hi, Bob
Ralph_Roberts: hey, Al!
Al_Lee: Ralph! I’ll have another recorded interview for you in a couple
of days
Ralph_Roberts: great, Al… thanks
Ralph_Roberts: Sads, quite a few
Ralph_Roberts: hi Roger!
Al_Lee: Roger! Howdy!
Ralph_Roberts: I’m home now… when you called Saturday, i was in
Sweetwater, Tennessee
Roger_Dawson: Hi Everyone!
Roger_Dawson: Mike, will be joining us shortly
Al_Lee: I’ve had Mike on the radio show abot 4 tiems already and hou,
zero, Roger. When can we do a shwo ?
Roger_Dawson: Al, I thought you’d never ask. Just let me know when.
Bob_Carr: Hi Al,Great show yesrerday,I was thinking of coming down and
spending a couple of hours with you and checking out your real estate market
Roger_Dawson: Ralph, do they still talk funny in Sweetwater?
Al_Lee: Roger, you aren’t shy abut taling in front of al thos people, are
you?
Ralph_Roberts: Don’t know, but they drink more than water now … several
big wineries in the area now
Roger_Dawson: I’d much rather talk to a lot of people, they’re easier to
control than small groups.
Al_Lee: Bob, let me know when you want to come down and I will show you
around, or introduce you to soem of my people who know more than I do.
Roger_Dawson: Sads, to answer your earlier question, I’m a millionaire,
but you pretty much have to be in California these days!
Bob_Carr: Thanks Al,your club looks like a great way to get into the
Texas market
Paul_CA: Good evening everyone.
Al_Lee: Roger, standing in front of a large group of people is
therapeutic to me. I can remember when I felt sick as a dog up unitl the minute
I stood up in front of a group and then all my ailments went away and I did
great. It is something you can;t really explain, but I bet you understand.
Roger_Dawson: I spoke to 15,000 people in Taiwan once. It was a great
experience.
Roger_Dawson: Okay, who has a real estate question tonight?
Ralph_Roberts: I didn’t know you spoke Chinese, Roger 
Roger_Dawson: You just make sounds Ralph. They can’t understand each
other either.
Al_Lee: Ralph, I thought Roger’s English sounded a bit foreign!
Ralph_Roberts: right… okay, folks… real estate questions?
Paul_CA: Hi Al.
Al_Lee: Hi, Paul
Paul_CA: Sorry, I missed the Al/Mike show. I’m sure it is on your
website.
Ralph_Roberts: it will be, Paul… soon as I get the recording.
Roger_Dawson: I spent the weekend looking at some world class real
estate. I sailed my sailboat up to Paradise Cove and anchored there over night.
Barbra Streisand’s former home sits up on the cliff and you’re looking at $2-40
million dollar homes. They’ve gone up in value about 20% in the last year alone.
Bob_Carr: Roger what are some of the pitfalls of buying out of town
Al_Lee: The shwo will be on the website in a couple of days, both oru
websites! I am waiting for the recordign to arrive to me by CD so I can convert
it to a Flash file and give a copy to Ralph (who does all the work, byt the way)
Paul_CA: Roger, the market in North. Cal has slowed a bit. Do you see the
same in South Cal?
Roger_Dawson: Bob, I’ve always said buy within 50 miles so that you can
drive by the property once in awhile. But with the high prices in the main areas
on both coasts I’m beginning to think that there’s good money to be made out of
town.
Paul_CA: Hi Kim.
Ralph_Roberts: hi Kim!
Kim-OH: Hi Paul
Kim-OH: Ralphhhhhhhhhhhhhhhh
Kim-OH: Hi Penny
Roger_Dawson: Paul, San Diego has slowed simply because it got too
expensive for anyone to buy. But LA is still booming.
penny: Hi Kim. Hi everyone!
Al_Lee: Roger, you are moving closer to becoming a member of my club and
buying in Texas, where cash flow is still possible on a regular basis!
Roger_Dawson: Hi Penny!
Bob_Carr: Hi Kim
Al_Lee: Hi, Kim
Ralph_Roberts: hi Penny
penny: Hi Roger. Looks like you guys have started already.
Roger_Dawson: Al, it’s making more sense all the time.
Al_Lee: Roger, like I tell my wife–I am always right!
Kim-OH: Al, I listened to the show while it was live, good show
Roger_Dawson: We’re waiting for Mike. He went to a community event and
will be here soon.
Al_Lee: Kim, thanks. I wish you had called in, too
Kim-OH: Roger we missed you last week
Kim-OH: Al, I would have called in but I was doing some chores while I
was listening
penny: Hi Ralph.
Kim-OH: Al, I have to work when I feel well enough
Roger_Dawson: Kim I was in beautiful downtown Cleveland doing a program
for Ohio Savings Bank. They do construction financing around the country. You’re
from Ohio, aren’t you?
Mike_Summey: Here I am!
Roger_Dawson: Yeah, Mike!
Kim-OH: Al, how is your wife ’s recovery coming along?
Ralph_Roberts: and introducing Mike Summey ! <————-
Paul_CA: Hi Mike.
Kim-OH: Roger damn, I would have gotten to Cleveland to hear you speak
Mike_Summey: I left the football game at half time so I could come be
with you guys & gls.
Kim-OH: Hi Mike
Paul_CA: Mike, we feel honored!
Kim-OH: Mike you are such a good guy to leave a football game to join us
penny: glad you made it Mike.
Roger_Dawson: Everyone is waiting for the bubble to burst, but remember
if you can buy the way we teach, it doesn’t matter if the property goes down in
value for a while. Your renters are still buying it for you.
Kim-OH: Mike I listened to you and Al yesterday
Al_Lee: Kim, thank you for asking. She is doing very well. There are
minor complications just from being at hoem in bed for weeks (they require that
she res a lot for a month or so), but everything loos very normal and just what
the doctors expeced and hoped for.
Mike_Summey: Our high school just got a new artificial turf field and
tonight was the first game on it. The game had been delayed from Friday due to
the field not being ready.
Mike_Summey: Really Kim, why didn’t you call in?
Mike_Summey: Hi curtis
Kim-OH: Al, that’s great news and yes she needs to get out of bed part of
the day and also cough and breathe to prevent pneumonia
Al_Lee: Mike, I asked Kim the same thing. Folks are jsut shy about being
heard on the air, I think.
Mike_Summey: We had a good show except for all you chicken who wouldn’t
participate.
Al_Lee: Kim, yes, she does got up and move arund, but gets tired fast.
That is what we were told to expect, though.
Kim-OH: Mike I was doing chores while listening to the show and I have no
choice but to work when I’m able to
Kim-OH: Al, I used to have my own radio show so I’m not shy LOL
Al_Lee: Kim, How interesting, I had no idea. What was it about?
Kim-OH: Al, yes I would imagine she does get tired easily
Mike_Summey: Back to the football game for a minute…the very first play
of the game on the new field, our team ran the opening kickoff back for a
touchdown. Not a bad way to break in a new field.
Kim-OH: Al, it was mostly a music show on our only truly publicly owned
and operated local station
Paul_CA: Mike, hence the term "home-field" advantage.
Kim-OH: Mike you got that right
Mike_Summey: The score was 12-12 at the half when I left.
Mike_Summey: What’s everyone talking about tonight?
Roger_Dawson: How do you score 12 in football?
Kim-OH: Al, one hasn’t lived in radio until they get stuck doing back to
back shows for 12 hours LOL
curtis: Hi Mike, I’m Al’s son. He has told me great things about this
chat room
Mike_Summey: I did another radio show today at noon to 1PM Eastern…The
Frankie Boyer show! Did anyone catch it?
penny: Roger both teams missed thier extra points.
Roger_Dawson: Hi Curtis, good to have you here.
Kim-OH: Hi Curtis, glad you are joining us
curtis: thanks
Bob_Carr: Mike,we are going down to Texas and buy property with Al
Mike_Summey: Roger two touchdowns no extra points.
Al_Lee: Hi, Curtis. Glad you coudl join. We had hoped you wouel call in
to the radio show Sunday, but I guess you were on a hunting trip ???
Kim-OH: Mike I got the message just before I left for a medical
appointment so I missed the show darn
Mike_Summey: That’s great Bob. Let me know how it turns out.
curtis: You have to have your priorities strait!
Bob_Carr: Mike - I mean all of us,you flying us ?
curtis: I will be sure to download the show from your website!
Al_Lee: Talking about priorities straight–Curtis took Your book, Mike,
to Hawaii with him and actually read it.
Mike_Summey: Frankie Boyer has asked me to be a regular on her show and
I’ve accepted. I’ll post the schedule of when I’ll be on once I get it.
Mike_Summey: Good for you Curtis. Did it help?
Kim-OH: Mike that’s excellent, will it be an hour long format?
Mike_Summey: Kim, I don’t know. Today I was supposed to be on for 30 min,
but it turned into an hour.
curtis: Yes, great book! I really enjoyed it.
Mike_Summey: Thanks.
Kim-OH: Mike, so it sounds like you will do a part of the show weekly
Mike_Summey: We will have a chat next Monday, but will skip the following
Monday since it is Labor Day.
Al_Lee: Mike, wheb you speak in that slow Nawth Cahoh lin ah way, an
half-hour shwo coudl take a bit longer! 
Mike_Summey: Kim, I think I will be on more like twice a month.
Kim-OH: Mike, I will watch for the schedule and try to schedule my
medical appointments around the shows LOL
Mike_Summey: The show airs live in Boston and is syndicated to several
markets around the country plus it is available on the Internet.
Mike_Summey: Hi mayorad
Kim-OH: Hi mayorad
mayorad: Howdy, Mike! Hi, Kim!
Roger_Dawson: I always admire these radio hosts who can do a three hour
show everyday. It took me ten years to get my three house seminar right.
Roger_Dawson: Three hour I meant
Mike_Summey: I have my CPA scheduled to join us on Sept 19. You will
really like him and will get some great infromation on the accounting aspects of
real estate investing. He is a former fraud investigator with the irs, so he
knows things from both sides.
Kim-OH: Roger, you are too funny
Roger_Dawson: Should we log in under assumed names then?
Kim-OH: Mike that should be an interesting chat for sure
mayorad: So, Mike, what’s the format for tonight? Just fire off
questions?
Kim-OH: Roger, only if one has something to hide LOL
Mike_Summey: That’s it mayorad. Just ask whatever you want.
Kim-OH: Hi Larry
Mike_Summey: Hi Larry
penny: Roger, you are on it tonight!
Al_Lee: I think that havein ga good cpawho understands real estate is
extremely importatn. I have refereed a lot of our club members to CPA because
their own CPA did not know real estate and I don;t think it is our job to teach
them.
Mike_Summey: Tonight is an open chat. Anything goes.
mayorad: Gotcha. Thanks, I’m typing my question now.
Al_Lee: The tax benefits of owning real estate are unparallelled, but
yoru CPA must know what they are or you will miss out on thousands of dollars in
benefits.
Roger_Dawson: My experience is that even people who are too honest to
pick up a lost $20 bill will fudge on their taxes and cheat an insurance
company. It’ neccesary but regretable, like drowning kittens.
Mike_Summey: Al, that short finger is giving you a bit of a problem
tonight, isn’t it?
penny: awwwhhhh
Al_Lee: Mike, is is more the half bottle of Pinot noir, i suspect.
Bob_Carr: Mike,If Ii put down more than 20% in my area to get my rental
numbers in line,what do I have to watch out for ? Should I try to invest in
other parts of the country or sit tight and keep looking here ?
Mike_Summey: I’m currently having the privledge of going through another
IRS audit. Hopefully I will come out fine as I don’t try to pull any funny stuff
on my tax returns.
Al_Lee: I think I need a new keyboard. I am used o using a spell checker
and the chat room doesn;t have one to fix my typos!!!
Roger_Dawson: Maybe Curtis dropped a Viagra in your Pinot Noir and your
fingers are getting stiff!
Kim-OH: Roger, rotflmao
curtis: Mike, I have a question regarding commercial financing. Do you
have experience in obtaining loans outside of the standard conventional
products?
Mike_Summey: Bob, whatever you put down, you need to get a return on that
investment. I prefer to keep my investments close to home, but if you can
concentrate enough in another area to make it worthwhile to visit regularly and
keep an eye on things, I guess it is okay to look further out. I do have one
block of properties about 100 miles away in SC.
Al_Lee: Mike, my experience with audits is that the auditors do not
understand real estate, so they focus on other stuff, like your meals and
hotels, and steer away form the real estate stuff. The last time I was audited,
I knew more thant the IRS auditor abut rela estate and she just allowed
everything I did, but stuck me for the lunches.
Mike_Summey: curtis, all of my loans are outside of standard conventional
loan products. I don’t qualify for conventional loans that are sold on the
secondary market.
Al_Lee: Roger, Curtis lives abot 5 miles form me so he wouel need long
arms to drop anything in my glass.
Bob_Carr: Thanks Mike,I guess I get restless,but know better from what
you and Roger have been preaching in the books and in person !
mayorad: Mike, here’s the question: First, I’m looking at a property with
boarded windows. I got a hold of the property card and it says right next to the
owners names "Surv" (I’m assuming this means
"Survivorship"). I asked a relative of mine to look up the
Grantor-Grantee book, and found that the male (I’m assuming the husband) quit
claimed deed the house to the female (whom I’m assuming is the wife). The
property is definitely abandoned. However, there seems to be no information on
the owners anywhere. Tried the yellow pages, but no luck. Any suggestions on
other places I can try (that is, to find information on the owners or
survivors)?
Mike_Summey: Al, I charge off very few lunches and diners and the ones I
do have full documentation as to why. The auditor wants to look specifically at
the management fees and repairs on several of my properties. I just supplied the
files with cancelled checks and invoices for everything that was expensed. They
can look all they want.
Roger_Dawson: Curtis, if you’re talking about commercial property like
shopping centers or factories, just about any loan is going to be
non-conforming. They’ll evaluate that particular opportunity.
curtis: I am in a position of owning several investment properties and it
is getting increasingly more difficult to obtain a conventional loan. I am
simply not able to build my portfolio at the rate that I would like to. I deal
exclusively with single-family properties.
Mike_Summey: mayorad, is the property tas bill being mailed to an address
where it is not being returned. If so, I’d start with that address.
Roger_Dawson: Mayorad: have you called your friendly title company rep?
Have you Googled the parcel number?
Al_Lee: Roger, are you talking dirty?
mayorad: Great points, Roger and Mike. Yes, that sounds like something I
can do.
Al_Lee: This isn’t that kind of chat room.
Mike_Summey: curtis, you have to face the fact that once you have 10
loans you can’t get any more conventional loans. You will be considered an
active investor and have to get financing from banks that will make investor
loans, sellers or third party private lenders. That’s just the way it works.
Roger_Dawson: Google is an incredible search engine. You can even pull up
an aireal photo of the property.
mayorad: btw, Mike and Roger, where would I find out where the property
tax bill for the property is being mailed to - just ask the tax collector?
Al_Lee: mayorad, here in Texas you can lok on the internet to find that,
but it may not be the same in other states.
Roger_Dawson: I would ask a title rep. to search for it. If you don’t
know one, just ask any local real estate agent for a name.
Mike_Summey: mayorad, that’s all you have to do. You can visit the tax
assessor’s office and not only get the address, but find out if the bills are
being returned or not.
mayorad: Okay, I’ll take that all under consideration. Thanks, Al Lee.
Thanks, Roger. Thanks, Mike.
Bob_Carr: Mayorad,in my area when you put the address in the county tax
site they tell you where the bill is being forwarded
curtis: In your experience, do you find that banks are willing to make
long-term loans for single-family properties?
mayorad: Great - thanks all for chiming in.
mayorad: Thanks, Bob, as well.
mayorad: curtis, idea and maybe Mike and Roger will agree: how about
private funds?
mayorad: That is, getting money from Private Lenders/Individuals.
Mike_Summey: curtis, most of the banks will give long term amortizations,
but they want 5-10 year balloons. That doesn’t mean you have to pay the balance
off in 5-10 years, it just means they will want to take a look at it before
extending for another 5-10 years.
Mike_Summey: Hi Frank
FrankAL: Hi Mike
Mike_Summey: mayorad, every area handles things a little differently as
far as what you can get online, but all counties have a courthouse and a
register of deeds office where you can get information.
mayorad: Excellent point. Thanks again, Mike. btw, Mike, you think Curtis
can turn to Private lenders/individuals or Hard-money lenders (like Brookview
Financial)?
Roger_Dawson: Mike, don’t five year balloons make you nervous? What
happens if they want excessive points or an interest rate that gives you
negative cash flow?
curtis: ditto Roger…
Mike_Summey: curtis & mayorad, when I talk about third party lenders,
I’m primarily talking about people who have money and want to put it in
investments that will earn more than what they can get in the banks. Many
elderly people who have been trying to live off their interest income are
excellent prospects for finding private funding.
mayorad: Yup, that’s it!
Mike_Summey: Roger, I’ve workde with 5 year balloons for 25 years and the
only time I ever had a problem with them was when Nationsbank was formed from
the merger of ncnb and a bank in Texas. They would not renew any of my loans due
to internal problems with real estate, but several other banks were happy to
take them out as they matured.
Al_Lee: Roger, 5-year balloons make me nervous, but Curtis is a much more
aggressive investor than I am (I like sure things), and he has bought a lot of
proeprties in the past couple of years. That is why he is looking for other
sources of financing.
Mike_Summey: When I make a new loan with a 5 year balloon, I make it
clear in the beginning that if I perform as agreed throughout the 5 year period,
the bank will renew the loan without charging points or fees.
Roger_Dawson: Mike, don’t five year balloons make you nervous? What
happens if they want excessive points or an interest rate that gives you
negative cash flow??
Mike_Summey: Hi Byron
mayorad: Hi, ggn!
GGNByron: Hi, Mike
Paul_CA: Mike, does renewing the loans mean the rates don’t change?
Al_Lee: Paul, the rates will/can change.
Mike_Summey: I don’t worry about 5 year balloons. What you need to
understand is that banks want the balloons so that it reduces the life of their
loan portfolios. That’ shelps them with the regulators, but it doesn’t
necessarily mean they have to charge points of excessive rates when they renew.
Bob_Carr: Mike - That’s good to know
Paul_CA: How does a balloon loan help you Mike? What are the advantages?
Mike_Summey: Paul, I use a product called a fixed payment/floating rate
loan. The payment is set in the beginning based on a 1/2 to 1 point higher rate
the actual rate and then the rates can float up and down without effecting the
payment. The only time this might be a problem is if we have excessive rate
jumps and in that case, the remaining life of the loan can be extended to keep
the payment constant when the loan is renewed.
Mike_Summey: Paul, the fixed/payment floating rate helps me in that banks
love it because it protects them as well as me. That’s how I get banks to work
with me on investor loans when they turn others down.
Paul_CA: I think I understand. This allows you to better manage
(budget)the cashflow?
Mike_Summey: We’re ahead 18-12 now! Matt just called and gave me an
update. It seems that neither team can make an extra point. :/
Mike_Summey: That’s correct Paul.
Mike_Summey: And the banks don’t have to lock into a fixed rate that they
are unable to match funds with.
Paul_CA: Mike thanks for the info. I’ll do some more research on it.
Paul_CA: Good luck to the team, Mike. Gotta run… goodnight everyone.
Al_Lee: For the record, I prefer 30-year fixed-rate real estaate loans.
If you buy a reasonable amount (less than ten a year) of properties, you shoudl
be able to find sources (we have them in our club) who will continue to make
taht type of loan to you. when you get past ten loans, you will have to pay a
slightly higher interest rate for a non-conforming loan, but that is fne with
me. I hve a few dozen such loans and every property is positive cash flow.
Mike_Summey: Goodnight Paul
Roger_Dawson: In England most loans are floating interest rate with a
fixed payment and variable term. The problem is you can sign up for a 30 year
loan and end up with a 40 year loan, where almost the entire payment is
interest.
Mike_Summey: Why didn’t we have all of these financing questions last
week when we had the mortgage broker and banker with us?
Al_Lee: Banks won’t ever loan their own money at those terms (30-year
fixed-rate), but insurance companies will because they are legally required to
invest their reserves in a safe repository. I hav emade loans directly form
insurance companis,or through brokers. Both work fine.
Bob_Carr: Al , I have only found one property that I could get to be
positive in Md this year
Mike_Summey: Al, I’ve made loans through insurances compaines as well,
but most of them want $5-$10 million minimum before they will talk to you.
Al_Lee: Roger, your point is well-taken. The USA is virtually the only
country wher eyou can get a 30-year fixed-rate loan. it is the best deal you
will ever find . It caps yoru interest costs and allwos you to refinance at a
lower rate, if rates drop.
Roger_Dawson: In Canada, the standard loan is seven years. It’s a huge
advantage for the banks because it puts them in control.
Mike_Summey: Bob, that’s not a problem. If you only find one per year,
even that will make you rich over time. You will find that as the market moves
up and down the deals become easier and harder to find correspondingly. Just be
patient and keep looking.
Al_Lee: I have an insurance company in texas that will loan on Texas
proeprties at godo rates. You must have excellent credit and pay 20% down, but
it lets you go beyond the Fannie Mae 10-loan limit.
penny: goodnight everyone
Bob_Carr: Mike it is hard being patient !
Roger_Dawson: I need to run, folks. Great being with you.
Mike_Summey: Al, that must be a Texas deal. I’ve dealt with Mass Mutual
and they won’t even talk about small loans. A small loan to themm is $5,000,000.
lhoffman: hey guys
Mike_Summey: I’m going to cut out early tonight also and go back down to
catch the end of the football game..
curtis: Guys, thanks for the information. Good evening.
Mike_Summey: ‘ll talk with you again next week.
Mike_Summey: Goodnight
Ralph_Roberts: good night, Mike
FrankAL: good night mike
Ralph_Roberts: chat transcript will be posted shortly… rest of you guys
can stay as long as ya like
mayorad: Good night, Mike.
Bob_Carr: Al,what are some of the pitfalls of investing out of town
Al_Lee: Bob, I don; tthink there are any. I think it is actually better.
to inves out-of town.
Al_Lee: If you buy near home you are tempted to act lie a landlord and go
check on the proeprty, etc. That is not what yo ought to be doing. You shoudl
have a professinal property manger dong that.
Bob_Carr: Al ,if you have the time next week,Ill fly down and talk with
you
Al_Lee: You should be evaluating each investment on its financial merits.
mayorad: Curious: Has anyone ever dealt with a private lender/individual
that lived outside of their home state?
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