Chat 9-12-05
Posted on September 12, 2005
Ralph_Roberts: Hiya, Al
Ralph_Roberts: welcome, Bob
BobJ(Md): hi
Ralph_Roberts: looks like we’re the early birds tonite
BobJ(Md): heard there wuz a chat here - thought i’d check it out
Ralph_Roberts: yep… quite a few people usually show up… Mike and
Roger should be in any time
Al_Lee: Hi, Ralph. I logged in a bit early and left to take care of some
minor matters. Now I’m back.
Al_Lee: Hi, bobj
Ralph_Roberts: hi al
BobJ(Md): Greetings
Ralph_Roberts: hot in Texas, Al?
Al_Lee: Ralph, I hope all is well with you ?!
Ralph_Roberts: and where you located, Bob? I’m in North Carolina
Al_Lee: Not as hot as it was a month ago
Al_Lee: I bet Bob is in Maryland, right?
Ralph_Roberts: fine here, Al… nice weather finally… not too hot, not
too cool… and it quite raining every day
Ralph_Roberts: oh… I get the clue now 
BobJ(Md): Maryland - north of DC
Al_Lee: We are down in double digits pretty solidly now. Pleasantly cool
compared to July/August
Ralph_Roberts: I was up there last year for a trade show… Owen Mills
Ralph_Roberts: hi Roger! got power?
Al_Lee: Hi Roger.
Ralph_Roberts: this is Roger Dawson <—- Bob
Ralph_Roberts: (bob’s first time, Roger)
Ralph_Roberts: hi Bob
Al_Lee: BobJ, are you an investor already?
BobJ(Md): rehabs mostly
Al_Lee: Do you do the rehab work?
Roger_Dawson: Yes, although it was a panicky day in LA. Everyone was
uptight about the terrorist threat yesterday. I had just finished a program to
900 IT Managers in Century City when the hotel sirens went off and the power.
BobJ(Md): i’m more the finance/idea guy - my son is the GC
Bob_Carr: Hey Ralph
BobJ(Md): but we keep a blog running of our current projects - on our
website
Al_Lee: Roger, I thought about you when I heard about the power outage.
It was a bit scary after that threat
Roger_Dawson: Yes, we West Coasters tend to panic.
Al_Lee: Hi, Kim
Roger_Dawson: Mike called a few minutes ago and said he’d be joining us
around five after the hour.
Ralph_Roberts: hi Kim!
Roger_Dawson: HI Kim! How are you feeling?
Kim-OH: Hi Ralph
Al_Lee: Fashionably late !
Kim-OH: Hi Roger
Kim-OH: Hi Al, how is your wife’s recovery coming along?
Roger_Dawson: Hi Eddie!
Kim-OH: Roger, I’m not feeling so well but I know it will get better,
thanks for asking
Kim-OH: Hi Eddie and jen
jen: hi
EDDIE: hi everyone
Kim-OH: Eddie is that Eddie from MI?
Al_Lee: Kim, seh gets better a little bit every day. This morning we did
a 90-minute yoga class. the kind where it is 95 degrees and you think you will
die, but you don;t. It wqas my first and I rather like it.
EDDIE: No North Carolina
Kim-OH: Al, that’s good to hear and it’s great that you are supporting
your wife that way, way to go
Al_Lee: I was the one needign some support at the end of the 90 minutes!
Kim-OH: Al, the recovery from brain surgery is usually slow but good to
know your wife is progressing nicely
Kim-OH: Al, now you have me RO
Al_Lee: RO?
Kim-OH: oops that should be rotflmao
Kim-OH: wb Eddie
Kim-OH: Roger are you affected by the power outage out your way?
Ralph_Roberts: hi Clair
Kim-OH: Hi Clair, how are you feeling these days?
Clair-MO: Much better Kim
Roger_Dawson: Kim, I think the problem is over now. I was in LA when it
happened. It was slow getting home becuase the traffic signals were out.
Kim-OH: Clair, that’s good to hear
Al_Lee: Roger, I didn’t know that Californians looked at the traffic
signals
Roger_Dawson: Any body know anybody who owns property in New Orleans?
Kim-OH: Roger, I heard that traffic was snarled, glad you made it home
Kim-OH: Roger I do
Roger_Dawson: Kim what are they going to do?
Al_Lee: A long-time friend lives in Gulfport Mississippi and I tried to
call him after the storm, but the phones were all out. He finally called me a
couple of days later and he and his wife had made it to Memphis and are holed up
with relatives.
Kim-OH: The two that I know haven’t said yet, they are still regrouping
out of the area, they can’t return to NO yet
Al_Lee: We have tens of thousands of refugees in Dallas from New Orleans
and lot sof them don;t plan to go back. I wouldn’t!
Roger_Dawson: It’s a serious problem for landlords. No income coming in
and the best you can do is home the lender will suspend payments.
Kim-OH: Al, we have hundreds here in OH and they say the same thing
Kim-OH: Hi sss
sss: hi
sss: first time here. Thought I would check it out
Kim-OH: Roger the news is that the lenders have suspended mortgage
payments for the affected areas for 90 days
Al_Lee: Even without the flooding the crime rate was astronomical and the
corruption in government was the worst in the nation.
Roger_Dawson: The real estate sales are slowing in California. Prices are
getting too high to make much sense.
jen: Roger, wouldn’t a landlord be able to make a direct insurance claim,
or is it just a problem waiting for adjusters to get in there?
Kim-OH: jen, it will take some time for the adjusters to be able to get
into the affected areas and then they will be very busy
Roger_Dawson: Jen, most of them didn’t have flood insurance. It’s going
to be a tough negotiation getting the insurers to agree that the damage was
caused by the hurricane, not the flooding.
Kim-OH: Another of the levies broke today in NO
jen: right, I have been hearing about that.
Clair-MO: We have 7,000 evacees here in Springfield and I have offered
three homes to the fema folks who will pay me directly for up to 6 months by
that time I’ll help the husbands to find suitable jobs so after 6 months they
can began paying rents.
Roger_Dawson: That’s great of you, Clair.
Kim-OH: A number of the evacuees that are here have already found jobs
BobJ(Md): hi clair
Clair-MO: Roger, I’m a nice guy!
jen: Ok, TN and a few other states have pulled all HUD property off the
market until the NO residence are settled
Clair-MO: hey bobJ
Al_Lee: Teh city of Dallas is raising 3Million dollars to help NO people
pay rent here.
Kim-OH: I had to opportunity to host three people here from an emergency
evacuation in my area
BobJ(Md): They also said here that fema is buying any mobile home they
can find to drag them down south for housing
Kim-OH: Hi Mike
Mike_Summey: Hi Everyone
Ralph_Roberts: there’s Mike Summey! <—————————-
Roger_Dawson: Welcome Mike!
Ralph_Roberts: Summey
Al_Lee: Hi Mike
Clair-MO: The Bossman is here!
Bob_Carr: Hi Mike
Al_Lee: Hey, what does Roger look like, chopped liver?
Ralph_Roberts: let the revels … er… questions begin
Mike_Summey: Hang on a second. I’m trying to get my screen straightened
out.
Kim-OH: One company here sent 29 fully loaded RVs down to assist in
housing, they got the brilliant idea to load each RV with most things people
would need
Mike_Summey: Okay!
Mike_Summey: y now.
Mike_Summey: I’m ready now.
BobJ(Md): a local church here decided to send a semiload of stuff down -
it snowballed and now they ahe 4 semis running back and forth, and corporate
sponsors kicking in food and water and stuff
Mike_Summey: eyboard is giving me a problem.
Al_Lee: Apartmetn leasing was at a 20-year high before the NO people
started coming here. I think our vacancy rates will go way down really fast now
Roger_Dawson: Mike, you need to get a Mac!
Bob_Carr: Tell’em Roger
Kim-OH: within 5 hours all the RVs were loaded with household goods,
food, clothing, blankets, toiletries and liquids
Mike_Summey: NO I spilled coke on this one just as as I started.
Kim-OH: Bob the same is going on here
Roger_Dawson: Give the coke a good blow and it flies out of the cracks.
BobJ(Md): couple of food manufacturers up in Hanover PA are donating
semi-loads of food
EDDIE: being from NC it should have been pepsi
Kim-OH: Mike I hate when that happens grrr
Al_Lee: Don’t blow coke in the chat room!
DavidV: mind if I bounce something off you guys? have a purchase I am
supposed to close this week.
Mike_Summey: I did just that with a pressure air can.
Bob_Carr: Mike,I found a home today,putting a offer on it tomorrow
Mike_Summey: Great Bob
Mike_Summey: Go ahead David
Mike_Summey: Eddie, I understand.
Mike_Summey: Hi malpaso2001
Roger_Dawson: Bob, tell us about your find
malpaso2001: Evening Mike
Kim-OH: Bob, this is the headquarters of Kroger company and they are
donating like crazy as well
DavidV: 3 bedroom 71k will rent for 780-820 ran into some trouble coming
up with the cash. have to incur about 4K to use a hard money lender, then will
refi or I can let it slip by
EDDIE: closed on home number 13 today, moving on up
Mike_Summey: Ugh! I just hit the keyboard with another blast of air and
something came out that doesn’t look like Coke.
DavidV: very cool Eddie
Roger_Dawson: David, those numbers look good to me, even if you did have
to get some hard money.
Mike_Summey: David, tell me more?
Kim-OH: ^5 Eddie
Bob_Carr: I got a call about a home from a friend about a estate
sell,they are selling 50k under what it is worth if it could settle asap
Kim-OH: David, I agree with Mike, the numbers look good
jen: what’s hard money?
DavidV: I feel like the numbers are good too. just didn’t like the extra
expense. I got ahead of myself. Ben rehabbing a place I thought would be sold by
now but it won’t be ready for a wek or two
Ralph_Roberts: urk! We’re having brief power blips here… if the chat
goes away, you’ll know my backup batteries have run out … seems stable
again now.
Mike_Summey: Ralph, I just got hit with one also.
Kim-OH: Ralph oh my, this is not a good thing
Roger_Dawson: Jen, that’s unsecured debt, like borrowing on a credit
card. It’s usually a much higher interest rate than debt secured by real estate
or equipment.
jen: thanks/
Ralph_Roberts: if I could get Mike and Roger to kick in $10K for a backup
generater now 
Kim-OH: Ralph lol, do you think the blips are caused by Ophelia?
Ralph_Roberts: no.. that’s still way off shore… just our normal shoddy
Progress Energy
Roger_Dawson: Eddie, congratulations on your 13th rental. Isn’t it
amazing how all the fears you have when you start go away once you’ve got a few
up and running.
Kim-OH: Hi Dwayne
Dwayne_Wiseman: Hello Kim.
Ralph_Roberts: welcome, Dwayne
EDDIE: It sure is
Kim-OH: Dwayne, how’s your little one tonight?
Mike_Summey: David, you’re experiencing something I don’t know much
about. I’ve never sold a property and trying to fix one up and get it sold is
more speculating than investing. People have made lots of money doing it, but
not me.
DavidV: started to put a mortgage on the rehab house but they won’t lend
till it’s 100% so I looked to the hard money. it is more fees than I had
expected. 76k at 12% with a 3300 baloon point payment when I pay it off in a
month or two. the house is in pretty good shape
Dwayne_Wiseman: Hi Ralph.
Mike_Summey: Hi Dwayne
Dwayne_Wiseman: Kim doing well. He just got through with his bath.
Kim-OH: David, look for another lender, they are out there
Mike_Summey: Dwayne, any suggestions for David. That sounds like usury to
me.
BobJ(Md): david - did you try talking to local banks about financing the
rehab ? they’re often much cheaper than hard money
Mike_Summey: Hi Sue
Al_Lee: DavidV, in the rehab business I believe the most money is made by
the hard money lenders.
DavidV: I put 3 months work and 15K into the rehab. Will make 30-40k on
it. will use that to do another and try to pick up rentals along the way
Kim-OH: Dwayne, I remember bath time very well LOL
Kim-OH: Hi Sue
Dwayne_Wiseman: MIke, I don’t believe usury applies to a
"commercial" loan.
DavidV: well don’t have much time left. You gave me good advice about 8
months back. nobody went broke on house they didn’t buy. so if the rental
slipped away I would live
BobJ(Md): hard money is expensive because its short-term money
Mike_Summey: Dwayne, I know, but what David described sounds like it
anyway.
Kim-OH: Yup, Dwayne, here HML charge points and up to 18% interest
Mike_Summey: I think Al is right, the hard money lenders make more than
the people who do the rehabs.
BobJ(Md): points are pretty stiff
BobJ(Md): usually around 4-5% on hard money around here
BobJ(Md): but hard money is just an expense of doing the deal - if it
lets you get the deal done, it’s worth it - just count the expense as part of
the cost of the deal
DavidV: well the hard money loan is to get me in the rental, then I’ll
refi. I can always let it slip away. probly won’t be able to do business with
the realtor again….but I’ll live. Could lose my $500 down
Mike_Summey: Good point bob(md)
BobJ(Md): on our current project - we did a hard money loan, then refi’d
and put a construction loan on it - paid about $5k in hard money points and
interest but it let us get the project in our control while we sorted out some
of the business aspects
jen: Can I run a potential by y’all as my first rental propety?
BobJ(Md): bought it for 80k, will sell it for at least $850k when done
Mike_Summey: David, if you can make the numbers work, do it. If you have
any serious doubts, don’t stretch yourself. No one ever lost money on a property
they didn’t buy.
Roger_Dawson: Go ahead, Jen.
Kim-OH: go ahead jen
Mike_Summey: Go Jen
Dwayne_Wiseman: Mike, if you build a relationship with a local banker you
can often avoid the hmls.
sss: what are hmls
BobJ(Md): hard money lenders
Kim-OH: Bob, whoa, that’s quite a return, how much work does that puppy
need?
BobJ(Md): everything
Mike_Summey: Dwayne, as you know, that’s always been my philosophy.
BobJ(Md): and more
sss: thanks..todays lesson…hard money
jen: a 2 bedroom 1 bath …needs some work…. for 29,000 on a small lot,
1 miles from a university campus, plan to rent to sudents
jen: typical student rent is about 300-350 per person in the area
Dwayne_Wiseman: Tell them, tell them what you told them and tell them
again…………
Mike_Summey: sss, where are you located. Glad to have you tonight.
Roger_Dawson: Sounds, good so far, Jen. What kind of neighborhood?
Kim-OH: Hi Shane
Al_Lee: jen, if you rent to students be srue to gher their parents to
"kiss" the lease.
Mike_Summey: Hi Shane
Shane: Hi Kim
Ralph_Roberts: welcome Shane
Mike_Summey: You beat me to it AL.
jen: small town, aggie area surrounding the school, clean next to the
public library which is a newly remodelled clean building
DavidV: the numbers work. even though it makes me feel like I’m giving
away money . I guess that’s what bothers me
Shane: Hey Mike Ralf
sss: md…thanks…I just finished reading your book and trying to jump
in teh game but am hesitant. It is overwhelming in the DC metro area. My
"farm" area is very dense.
Dwayne_Wiseman: Ralph how are things out your way?
Al_Lee: Mike, I learned that many years ago–the hard way
jen: Parents involved in the lease?
Roger_Dawson: Jen, that all sounds good to me
Ralph_Roberts: nice and quit, Dwayne… thanks
Ralph_Roberts: er… quite
Al_Lee: jen, get their parents to co-sign the lease, all of them!
Ralph_Roberts: quiet? authors and typos… sigh
jen: I need to do a little more research but I think a house that size in
this area is going for around 55,000 so gives me a lot of room to work
Kim-OH: jen your rental contract needs to have jointly and severaly in it
Mike_Summey: sss, BE patient! I’m going through the same thing in my
area, but the cycle will come back around and there will be deals again.
Sometimes you wonder if it will happen, but it always does. I’ve been through
several of these cycles.
jen: I’m afraid I don’t know what that means. I have ‘flipped’ a couple
properties and am looking to try my first rental
DavidV: Mike, Al, and Roger. How many times have you found yourself not
liking or distrusting the seller?
Kim-OH: jen it means that all parties are responsible for the rents,
either jointly or each
jen: ok
Al_Lee: DavidV, probably many times. It doesn;t matter. You won;t have to
ever see the seller again after you own the property. The deal is what matters.
Mike_Summey: David, several times, but it is often due to the stress they
are under that is no fault of yours. Just be fair and you will sleep well at
night.
Roger_Dawson: David, I’ve never cared much whether I liked the seller or
not. What are you faced with?
Kim-OH: jen, if there is an apartment association or reia in your area,
join it if you are not already a member, they will have access to appropriate
forms for your area, also understand the tenant landlord laws for your state and
local area
sss: Thanks for the pat on teh back. In this area most homes sell within
a week or two. How do I start finding preoperties that may not be in teh papers?
Should I look into foreclosures?
Al_Lee: David, get everything in writing and you don;t have to like or
dislike the seller. Real estate deals are suhbject to "specific
performance" which means that the seller (and buyer) can be held to exactly
what was agreed (in wiritng).
DavidV: I insisted on pest inspection….they immediately responded they
would only pay $350 for treatment if there was a problem. they had inspection
done and there was evidence of termites, but no damage.
jen: thanks, I will look into that. I have started studyig the local laws
Shane: Does anyone have any Ideas were the prime rate will go
malpaso2001: Mike, a quick question about foreclosures…if after a home
owner has defaulted on loan and home goes for auction, does the home owner get
any of the money?
Al_Lee: DavidV, wher eis the property? What state, area, etc.
Roger_Dawson: sss, there aren’t too many foreclosures out there right
now. In a year or two that may be big, but right now most people have enough
equity to get themselves out of trouble.
BobJ(Md): i think prime will continue at least a full point higher
DavidV: there is evidence of prior treatment but "nobody knows
" who or when or how. my pest guy said treatment 550. so I wanted them to
cover 350. a sticking point
Mike_Summey: The kind of deals we are all looking for are usually the
result of some unfortunate event or series of events in the seller’s life. I try
to make a deal that will work for me, but I don’t try to strip the seller of all
their dignity. I’ve always lived by the philosophy that you shouldn’t tread too
heavily on people on your way up because you may have to meet them again on your
way back down.
Kim-OH: malpaso, I think that is specific to the various states, here in
OH we are a judicial FC state and if the bid exceeds all the liabilities then
the homeowner gets the excess money, usually doesn’t happen
jen: that is a great philosophy Mike
BobJ(Md): We like ‘em big, empty, and ugly - we’re rehabbers. Usually
don’t have to deal with owners in great stress.
Roger_Dawson: Malpaso, the property gets sold literally on the courthouse
steps. The first mortgage holder will bid the amount they are owed, to protect
themselves. The second and third holders usually get wiped out.
Al_Lee: DavidV, are you saying that the difference between $350 aedn $550
might kill this deal?
Mike_Summey: malpaso2001, the only way a homeowner would get any money
would be if the house sells of more than enough to retire all the debt against
it. A rare happening.
BobJ(Md): most auctions are going back to the lender here and reappear as
reos on the MLS
DavidV: my realtor stepped in and is going to have his pest guy do a
treatment and meet me halfway
Kim-OH: malpaso, most of the properties here go back to the lender
because no one will bid them up
BobJ(Md): equity’s been stripped out - no margin
malpaso2001: Thank you all
Al_Lee: DavidV, sounds like your problem is solved then, no?
DavidV: bobj what kind of properties are you doing in MD?
Roger_Dawson: An alternative to foreclosure for the owner is to give the
first holder a deed in lieu of foreclosure. It’s fast and easy but it doesn’t
wipe out the junior liens.
BobJ(Md): big, empty and ugly - hardcore rehabs - strip em to the studs
and replace everything
DavidV: yeah…but made me dislike the seller. I’ll be happy when this
deal is done and I get my tenant in it.
Mike_Summey: malpaso2001, see when you ask a question you get all kinds
of answers.
DavidV: bobJ how long you been doing that? IN THE city?
Al_Lee: DavidV, you are personalizing a business situation.
Fahgeddaboudit !
BobJ(Md): we’re working mostly in Washington county, MD now - about 3
years
BobJ(Md): doing it as a company for one year
malpaso2001: Thats why im here Mike
Shane: What is the least amount over prime is anyone getting on
commercial, or is anyone getting prime,thats fixed for a few years
DavidV: I know….I can logically figure it out. it’s business. there are
dirtbags out there and you have to deal with them sometimes. get the house, get
it rented and carry on.
BobJ(Md): i’m paying prime+1% on my construction financing
DavidV: how many houses have you done BobJ? I didn similar. started
company to purchase and rehab. but long term goal is to aquire and retain rental
properties
Mike_Summey: David, that $200 may have been all it took to allow the
seller to feel like he got something too. A seller who feels you took unfair
advantage of him willnever recommend you to someone else. I’ve bought several
properties as a result of a seller recommending me to a friend who was in
trouble with a property.
BobJ(Md): this current group of 3 is our 4th, 5th, and 6th - so we’re
just getting started really
Mike_Summey: Shane, I’m getting prime floating. Nothing over.
DavidV: seller bought house for 48 3 years ago and did no work to it. had
a section 8 rental in it all that time for 780 a month. I’m paying 71k they
should be dancing
Al_Lee: Mike, I agree with you 100% on that. If you "skin" the
guy, he might take it personally and devote the rest of his life to getting even
with you. In every deal every party shoudl feel like they got what they wanted,
or at least as good as they could hope for in the situation.
Al_Lee: David, it does sound like the seller is doing OK on the deal from
that
Roger_Dawson: I teach that a key part of win win negotiating is to make
the deal and then do a little more for the other side than they expected. The
little more means more than the results of the negotiation.
Mike_Summey: We have a small group tonight, but some very good questions.
sss: Can I run something by you all?
BobJ(Md): Mike/Roger - just wanted to thank you for a straight-forward,
well-reasoned approach to investing - it flies in the face of all the ‘guru’
crap out there
Al_Lee: Roger, by the way, have I thanked you? Thank You!
DavidV: Well I don’t want to screw anyone but I got bent out of shape
when they tried to reneg on their pest obligation
Kim-OH: go ahead sss ask away
Kim-OH: Hi Penny
Penny: Hi Kim
Roger_Dawson: Sometimes real estate investors feel guilty that they make
so much money being landlords. Let’s not forget the great service that landlords
provide for people who can’t yet afford to own. The alternative is government
housing, which is always a disaster.
Penny: I barely made it tonight
sss: I was recently fortunate to be "gifted" a small townhouse.
It was in teerrrible shape and we are fixing it up to be rented. It was
previously rented and partially subsadized by teh state. Is is advisable to
apply for this again?
Mike_Summey: Don’t forget that next week my cpa, Gary Mathes will be with
us. He is a former IRS fraud investigator and sharp as a tack. I’m currently
going through an IRS audit, but I’m not worried about it. I don’t cheat them so
I don’t expect them to have much to say about my records.
Kim-OH: Mike it’s good to be able to sleep at night isn’t it
Shane: Thanks Mike, Bob I’ve been gettin 1 over, but prime has risen in
the middle of my contract was hoping to get 6.75 to 7 now 7.5. bank says they
may go .75 over. Makes a big difference on a large amount.
Mike_Summey: It sure is Kim.
Roger_Dawson: Al, you’re welcome. I hope that you get your book published
and oursell ours!
DavidV: I will feel no guilt making money.
BobJ(Md): I personally hate landlording. But, I don’t see anything else
that offers the leverage and tax treatments, so I buy rentals. We’re rehabbing
to rent, also - makes them cashflow better.
Kim-OH: sss, that depends on the Housing Authority where the property is
located
DavidV: shane what kind of loan is that?
sss: What criteria should I base it on?
Al_Lee: Roger, if I do half what you have done I will be happy!
Mike_Summey: Shane, the amount of money you have on deposit with them
coupled with your credit score is what determines the rate you get.
BobJ(Md): shane - it’s painful to watch the interest rise on the backend
of a project, when you’re line’s fully extended - but bank financing at 1 over
prime is a dang sight cheaper than hard money, and cheaper than most private
lenders
Kim-OH: sss, you have to base it on how you are treated by the Housing
Authority, if you are treated like a partner then maybe it’s a go, but if they
treat you like the devil then it’s definitely a no go
DavidV: people have to live someplace. might as well pay me to do it.
Mike_Summey: announcement!
BobJ(Md): Shane, also remember - as ayou build up a track record - you’ll
be able to shop for financing and the competition will drive down the rate
you’re paying - but it will almost certainly be tied to prime - the best i’ve
seen here is 2 under prime for really big customers
sss: Beign very new to this, forgive me is this is a dumb question…does
teh housing authority have the say on who rents the house? do we get an opinion?
or does it vary from place to place?
Mike_Summey: Our editor emailed us today to say that the manuscript for
our new book is great and they are lloking forward to getting it published.
Roger_Dawson: It’s good to see so many serious investors in the chat
tonight. We can all learn from each other. I’m going to be in Canada for a
speech next week, but Mike has a super guest lined up for you.
sss: Congrats on the book!
Mike_Summey: I will be going to the Southeast Booksellers Convention this
weekend to sign book in McGraw-Hill’s both.
EDDIE: Good deal Mike, looking forward to reading it
DavidV: mike_summey you raised the issue of accounting. I know you have
other’s manage your property but how do you keep track of all the expenses. I’m
drowning in paperwork with just 3 houses
DavidV: Where is that Mike?
DavidV: looks like Roger’s batteries went dead
Mike_Summey: sss, My property managers qualify the tenants…period! If
they don’t check out they don’t rent. I don’t care what the housing authority
says or does. I guess that’s why I don’t have section 8 tenatns.
DavidV: bobj have you done any of the work yourself? or do you farm it
all out
Al_Lee: I need to run now to tend to family matters.
Al_Lee: Night, all
DavidV: with section 8 tenants here you still get to do full review of
them.
BobJ(Md): we sub out the trades - my son is my partner and has his GC
license and a crew - they do the rest of the work
DavidV: ahhh.
Mike_Summey: David V, it is in Winston Salem, NC
BobJ(Md): i act as the project manager/bookeeper
Kim-OH: sss, sorry I was on the phone, the Housing Authority does not
screen tenants for you, you need to learn how to do that
DavidV: I did most of the work with this first rehab house. had to make
sure we made a profit. but I’m moving away from that at warp speed
DavidV: I regret I havn’t read mindset yet. blew my whole summer on
fixing up this house.
BobJ(Md): we found out it’s break-even whether we do the work or sub it
out - but the job gets done faster if we sub things, so the holding costs are
lower
sss: We have "aquired" a property manager with this property.
He is not a full-fledged property manager. He is more like a financial guy who
knows properties. You brought up a good point. Maybe I should interview a cauple
more managers to get opinions.
sss: THnaks kim-oh
sss: Boy I can’t type!
EDDIE: Mike, I know you haven’t sold any of your properties, but how do
you feel about lease optioning to individuals that have a hard time coming up
with downpayments on their first home
Mike_Summey: David V, I pay my mortgage payments, taxes and insurance.
The property managers do all the rest and report to me monthay on each property.
I personally post the information from their reports to my system and it
combines with the things I do to produce a monthly statement on the performance
of all properties. I send a copy of this report to all of my banks monthly.
Kim-OH: sss, if this is your first property, you need to learn how to do
the screening and then you need to learn the art of being a LL, then turn your
properties over to a PM, because most won’t do as good a job as you will,
especially if you only have a few units
Mike_Summey: David, read Mindset and then you may think differently.
Kim-OH: sss, you must screen your PMs as well or better than you do your
tenants
Mike_Summey: David, do as I do. Read about 30 minutes each day just
before getting out of bed in the morning and just before going to sleep at
night.
BobJ(Md): i’m lookning forward to the time when i have enough units to
justify hiring my own PM
Mike_Summey: Kim, the secret to success is managing the managers.
BobJ(Md): maybe next year …;)
Kim-OH: Mike that’s exactly right
DavidV: Mike how long has it been that you have been able to borrow in
company name?
DavidV: I’ll do that. I can steal 30 minutes
Mike_Summey: BobJ, I’ve had a manager since #1. If you can’t buy a
property so you can afford a manager, don’t buy it unless you want a second job
that doesn’t pay very well and is filled with headaches.
BobJ(Md): david - one banker told me it would take about 3 years, another
said it would require that the company have a valid Dunn & Bradstreet rating
- otherwise they would want gaurantees from the principals of the company
BobJ(Md): mike - tell me about it - bought my first so i’d have a place
to put my parents - a 4-unit
BobJ(Md): it’s hard to buy one that cash flows out here because of the
sales prices
DavidV: I don’t mind guaranteeing the loan. but I want it in my company
name to protect me legally
sss: Kim…Thaks for the advice. I feel so overwhelmed but I am
determined to keep trudging along. I am thinkign I should skip the Section 8
idea until I understand the process better. Concentrate on fixing and renting
the property without that. It is an area that is very convenient to shops and
bus lines and is busy. I don’t think it should be tough to rent. Though it is a
little bit on the seedy side of town.
Kim-OH: sss where are you located?
Mike_Summey: DavidV, borrowing in the company name is not a problem
unless you don’t want to personally guarantee the loans. I don’t buy properties
I’m not willing to guarantee the loans on.
sss: The Wash, DC metro area
Kim-OH: sss, sorry I think you had already said that
sss: this property is in Alexandria Va
Mike_Summey: eddie, are you on a bucking horse and about to lose?
Kim-OH: Eddie needs duct tape to keep him in the room
EDDIE: seems like it, I don’t know what is going on
sss: Yes, Eddie is having a tough time tonight
Mike_Summey: Anyone near Asheville?
Kim-OH: This has been an excellent chat session and thanks Mike for the
reminder, see you next week, goodnight all
Mike_Summey: I’ll be doing a seminar on Nov 19 for the Carolina Real
Estate Investors Association.
Kim-OH: Goodnight Ralph and thanks as always
Ralph_Roberts: thank you, Kim
EDDIE: I’d like some info, I’m only about 5 hours out
Bob_Carr: Mike ,is that going to be in Charlotte
sss: Thaks for al the great advice! See you next week.
DavidV: Mike, how have you found "bird dogs" etc? most realtors
bring me stuff that doesn’t make sense.
BobJ(Md): We’ve had a lot of people blow smoke - nobody who can deliver -
we find ours by driving around, finding empties, hunting down the owners
Mike_Summey: I’m going to have to leave also, I’m tired. Started the day
by taking my youngest son’s things to SC to get him moved into his dorm room at
Furman University. Then had to rush back to take my mother to the doctor. Then
rushed to the state fair to oversee the parking lot that is run on my property
and then back here to talk with you. It’s been a busy day and I’m off to bed.
Thanks to all of you for being part of tonight’s chat and please join us next
week.
BobJ(Md): same time?
EDDIE: Night Mike
DavidV: I have a coworker who has been extremely successful because of
his birddog. As you might understand he isn’t too eager to make an introduction
Mike_Summey: Goodnight all!
DavidV: gnite
Ralph_Roberts: night, Mike
Mike_Summey: Same time…same station. See you next week.
DavidV: bobj, how manay do you have to contact to find one who will sell?
Shane: good nght Mike
BobJ(Md): we’ve been lucky so far, so i don’t have a good average
BobJ(Md): i’d guess one in 10 would be the average
Ralph_Roberts: gotta run too… see you guys later … chat transcript
will be posted shortly.
Shane: good night guys
BobJ(Md): that was fun
DavidV: so I might want to contact owners of depressed properties
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