Chat Transcript May 29, 2006
Posted on May 30, 2006
jxn: Hi, Mike. Are you there?
Mike_Summey: Hi everyone.
ken: hi
jxn: Hi, Mike
Mike_Summey: Sorry about the blank email this morning.
ken: mike any property managers coming soon to the chat
Mike_Summey: We have switched to our new web server and new webmaster and we had a glitch in the email program when it transferred.
jxn: Mike, Can I ask a question about taxes before it gets busy in here?
Mike_Summey: Ken, yes I have invited one of my property managers to join us in a future chat. She handles about 140 properties for me and will give you some good ideas.
Mike_Summey: jxn, go ahead
Mike_Summey: Hi Sandy
Mike_Summey: Hi Bob
jxn: In your book you tell sellers that one benefit of owner financing is not having to pay taxes on the sale of their home all in one tax year.
Bob_Carr: Hi Mike
Sandy: Hi Mike
Mike_Summey: You may get a test email any minute now. I just tried the email program after our new webmaster fixed the problem.
jxn: I thought that as long as the owner owned their home for more than 2 years, they didn’t have to pay taxes on the sale anyway.
Mike_Summey: jxn, a seller only has to pay taxes on the money they receive in a given year.
jxn: So how can we use tax relief as a pursuasive argument?
Mike_Summey: Penny
Penny: Hello Mike
Penny: Hi Bob Carr & all.
Sandy: Mike, I have a question about the Millionaire Mindset
Bob_Carr: Hi Penny
jxn: Even if they receive it all in 1 year, they may not have to pay capital gains taxes at all, right?
Penny: Got it Mike.
Mike_Summey: jxn, tax relief is just one of the benefits an owner receives when they finance. An income stream is another.
Mike_Summey: Go ahead Sandy
Mike_Summey: jxn, in many cases, the seller may not have to pay any taxes if they are selling their primary residence.
jxn: I don’t understand how tax relief is a benefit if they woulnd’t owe taxes from the 1 time sale to begin with.
Sandy: You (as well as many others) say to write down all your goals. Were you talking about just the financial/real estate or all the other goals one has. I’ve done that, but tend to end up micromanaging so much, I rebel against myself and quit.
Mike_Summey: jxn, if they are selling an investment property they may have a tax issue.
Mike_Summey: Sandy, write down the end result and let your mind handle the details on how to achieve it.
jxn: So, in negotiating with an owner of a personal residence, tax relief cannot be used as a valid argument
Sandy: Are you focusing on one goal at a time or many?
Mike_Summey: jxn, usually a more persuasive argument is the fact that with favorable financing you can offer a higher price than you can if you have to use conventional financing.
jxn: Thanks
Sandy: btw, last week’s chat was very helpful.
Mike_Summey: Sandy, I have several goals. Right now one is to buy a new airplane…a Beechcraft King Air 200. Another is to achieve a $1,000,000 per month income from my investment properties.
Mike_Summey: We may not have too big a turnout tonight since my chat reminder email didn’t go through.
Mike_Summey: If any of you receive a test email during the chat, please let me know and let me know if the text is with it. I sent one just prior to getting in the chat.
Sandy: Holy Mackerals. A million a month?! I’m going for $2000/month to replace my income. But I get what I was doing wrong. I was also writing down the plan, then getting frustrated for not following it. I like the idea of just writing the end goal.
Sandy: Thanks
ken: same here sandy thats my goal first
Penny: Mike, as I said earlier, got it.
Sandy: The reminder came through. It did its job.
Penny: Meaning Your email. Came through fine.
ken: Mike i got the email to
Mike_Summey: Great, it looks like the problem got fixed although it was a bit late to help today.
Mike_Summey: Hi corey
corey: Hi Mike
ken: Mike i use out look express and it didn’t say who it was from but the subject was there
Mike_Summey: Hi Al
Penny: Hi corey
Sandy: Just got your test email.
Doc411: Your e-mail came through with text.
Al_Lee: Hi, Mike, everyone
corey: Hi Penny
Penny: Mike I’m glad you got the the glitches worked out with your emailings.
Al_Lee: I just walked into the house and yoru email arrived reminding me of the chat
Penny: Hi Al.
Mike_Summey: We made a switch in webmasters and web hosts in an effort to bring more professionalism to the site and to have more control over the content posted on it. I think you will see several changes for the better in the coming weeks.
Al_Lee: Hi, Penny. How is everything going?
Al_Lee: Computer glitches! A way of life these days.
Mike_Summey: Roger is still in South America on a speaking tour, so he will not be joining us.
Al_Lee: Hi, Bob
Sandy: Al, I’m in the process of reading your book. That is how I spent my 3 day weekend. It was absolutely helpful! While I keep track of finances, I didn’t know how to organize them for RE. Finally, a starting point!
Bob_Carr: Hi Al
Al_Lee: Sandy, I am glad it is helpful
Penny: Things are going great with me. Hope the same for you. I’m still observing & learning. No major steps yet.
Al_Lee: Be sure to go to my webstie and download the newer versions of the software, too.
Sandy: Very helpful.
Mike_Summey: Sandy, be sure to read my newspaper column. I try to send out the link to read it online with the Monday morning chat reminders.
Al_Lee: Mike, you have some good stuff to say about disciplining yourself and controlling your spending.
Penny: Thats great Mike. I’ve heard great things about your new web master too!
Mike_Summey: Thanks Al. That’s been sort of my specialty for over 30 years.
Sandy: I have been Mike. I read your Mindset book in 24 hours. I’m worn out on book reading, but for some reason I absorbed yours and Al’s book like a sponge.
ken: does anyone use a realitor when searching for properties? and if not why.
Al_Lee: If your outgo exceeds yoru income, you upkeep will be your downfall.
Al_Lee: I wish I had typed that better!
Mike_Summey: Sandy, don’t expect miracles. Building wealth takes time and persistence. Just remember that a mouse can eat an elephant if you give it long enough.
Penny: whow Al, thats great food for thought!
Al_Lee: I hope that mouse has refrigeration, though 
Mike_Summey: ken, I use Realtors most of the time. Sure, they have to be paid, but I feel they earn their commissions by taking a lot of the paperwork and other such things off of me.
Sandy: Yes, the challenge is that this mouse is 56. I have no illusions of miracles. I’m still working on maintaining the motivation. I’ve had some hard knocks and am less resilient than I used to be.
Penny: LOL Al
Al_Lee: Sandy, I have had many setbacks and have recovered every time. If you don;t give up, you will eventually win
ken: Mike do you sign a contract with them or do you talk to the listing agent
Mike_Summey: Sandy, instead of looking back, look forward. It’s not about what you haven’t done. Today if the first day of the rest of your life and you still have time to do great things. Colonel Sanders was 65 when he started Kentucky Fried Chicken.
Al_Lee: YOu may fell like you are less resilient now, but if you experience a few litlle victories your spirit soars and you become invincible again.
Mike_Summey: ken, I don’t have a set pattern I follow. I handle each transaction as it comes. Some I go through a buyers broker who represents me, some I go through the listing broker, some I handle myself and some I just forget about.
Bob_Carr: Al Lee !!!
Sandy: Al, by your book, you are assuming the investor has a solid income. While I have had the same fulltime job that requires a college degree, it pays nothing. They cut my pay by 30%, so no possibility of keeping up with inflation. And I could be fired any day, depending upon the whim of a student, teacher, etc. So my dilemma right now is do I spend time building the earned income first, or jump into RE somehow.
Mike_Summey: Super Al!!!!
Al_Lee: Sandy, buying real estate that has a positive cash flow is creating incime of the best kind–passive income.
Al_Lee: income of the best…
Sandy: Mike, I think of Colonel Sanders all the time. And yes, looking forward is the thing to do. That is a skill in itself. I am getting close.
corey: Mike in the near future with the people getting hurt in the interest only mortgages are you looking to purchase any of these with a paticular method over another or just whatever works.
Mike_Summey: Sandy, our education teaches students to get a job and work for someone else. You have to teach yourself to build wealth and that is what Weekend Millionaire Mindest is all about.
Sandy: Yes, Al, I am looking forward to passive income. My bones are aching. I can no longer rely on working harder…
Al_Lee: Sandy, the advantage that Mike and I both had is that life beat us up at a very early age. We had no illusions that anyone wouel take care of us except for ourselves.
hottiekindhart: Mike, just checking in
Mike_Summey: corey, I do whatever works. I’ve said it many times in these chats and in my other writings, every property is different and every seller is different so theoritically there are as many ways to buy properties as there are combinations of people and properties.
Mike_Summey: Hi Hottie!
Bob_Carr: Sandy,we saw that yesterday at Indy on the last lap.Don’t be looking behind,drive it home !
Sandy: Mike, I am miffed that I didn’t start out sooner. One of my dilemmas in trying to not look back…..the lost time and stupidity in being in charge of my life.
Mike_Summey: Sandy, we have all had setbacks. Think of it this way, sometimes the best thing you can learn is what not to do.
Bob_Carr: Sandy, we all could say that we something in your lives.
Sandy: Al, I knew when I was 4….I opened a savings account at 5 and have been saving ever since. I suppose being a female creates different scenarios. I saw that in Mike’s book. You know, the man is supposed to take care of the female. So that was my only illusion.
Mike_Summey: Sandy, it’s not how you handle the good times, but how you handle the bad one that make you or break you.
hottiekindhart: Mike, what would you say the average percentage a property manager should get for managing residential properties?
Penny: definately true, Mike
ken: I found a vacant property and i know were the owner is. I sent out 1 letter letting her know i’m interested in the house. I haven’t heard anything back. on average how many letters would you send out to get the persons attention about buying their house.
Bob_Carr: Until I heard NO.
Mike_Summey: Hottie, I’ve seen management fees run 4% to 12%. The average is about 10%. Once you get several properties you can negotiate better fees, but keep one thing in mind…if you want good management, you have to compensate them well. If you try to squeeze the last dollat from them you will not get good service.
corey: mike do you have any restrictions on not buying homes over a certain age example 20 or 30 years old
Sandy: Actually, for some of us, learning how to handle the good times is important….you know the self sabotage. However, hopefully I’ve cleared much of that up. I am much wiser than before. Now, I’m collecting my skills. Thanks for all the thoughts. I’ll take them to heart.
ken: bob good idea. maybe i’ll send one out every 3 weeks 3 times i just don’t want to beat a deed horse
Mike_Summey: ken, I probably wouldn’t send the first letter. I’d try to locate the owner and talk directly with him or her.
Al_Lee: The property managers I have known usually charge for three things: management fee (8-10% of gross rent), leasing fee (50-100% of first month’s rent), and renewal fee (25% of first month’s rent when lese renews.
ken: mike i tried to get a phone number but 411 doesn’t have it
Sandy: ken, did you try googling the address?
ken: no
Mike_Summey: corey, I don’t like to buy properties built before the mid 1970s because to the potential liablility associated with lead paint and asbestos. With that said, there’s nothing wrong with buying older properties if you check these things out and they aren’t a problem.
Mike_Summey: ken, check with the tax department to get the contact information. They have addresses and phone numbers.
Mike_Summey: Hi zert.
ken: yes mike i did they gave me the address i didn’t ask for a phone number
Al_Lee: Houses built in the 60’s might also have aluminum wiring
Mike_Summey: Al, I don’t pay leasing fees or renewal fees.
hottiekindhart: Mike, I have been having a problem in Jackson, MS finding a residential property management co. Any suggestions?
Al_Lee: Mike, I don’t mind paying the leasing fee because it gives the manager money to pay a commission to other brokers for finding a tenant. I feel that it probably keeps my vacancy rate down.
Mike_Summey: Hottie, you may have to start with a real estate agent who both manages and sells properties and eventually train one to become a fulltime manager. That’s what I had to do in the beginning.
zert: Hi everyone - Happy Memorial Day
Al_Lee: Happy Memorial Day–and don;t forget the people we are supposed to be remembering, vertrans and servicemen and women.
Al_Lee: veterans
Penny: Hi Zert, hope your Memorial Day was a great one also!
Penny: so true Al
Mike_Summey: ken, I hae a similar situation with a house near me that I have had my eye on for about a year. I fianlly got the phone number from the tax office and learned that the house is vacant because the owners’ parents became ill and they have had to move in with them to take care of them. They plan to move back to their own home when the parents pass away or have to go into a nursing home. That one didn’t turn out to be a deal for me.
Al_Lee: We just got a property tax cut here in Texas. About 30%, they estimate.
hottiekindhart: Mike, would you buy a house with asbestos siding?
Al_Lee: average house will pay $2000 less in taxes annually, they promise.
Mike_Summey: Hottie, I may. If I did, I would probably cover it with vinyl.
Al_Lee: That is a savings that goes directly to the bottom line for an investor
Mike_Summey: Al, I was shocked at the property taxes in Texas. Is that one of the factors holding down prices there.
Penny: Mike can you just cover it? Aren’t there regulations? How would you dispose of the old siding if you removed it?
ken: i’m finding it hard to find deals and when i make an offer then i get a counter offer about 20,000 more than i offered i can only go about 5,000 more than my first offer and i don’t get a the property but thats the game. now i move to the next and give the owner my card
ken: on cards whats everones business card look like? mine is plain black and white, does anyone use the hundred dollar cards?
Mike_Summey: I’m thinking of combining the Monday morning chat reminders with my newspaper articles and other tid bits and putting them into a newsletter type document. Would you like that or do you prefer to keep it the way it is?
Al_Lee: Mike, not really. It scares off out-of-state investors becaues they looka t the tax rate (which was 2.5-3.0% of valuation). What they don;t think about is that the valuation is so much lower here that the absolute tax is still a bargain. If you pay 3% tax on as property valued at $100k that gets $1100 rent you are way ahead of the guy in another state who pays 1% on a property valued at $450k that gets $1100 rent.
Al_Lee: What people should look at is the bottom line. The cash flow to them.
Mike_Summey: ken, do you have the Offer Generator software program?
Bob_Carr: Ken,watch when the air comes out of the bubble in your area,you will be in the drivers seat.
ken: i did down load it but i had to wipe my computer i dont’ have it anymore
ken: bob i’m in bumb egypt the average cost of a home is about 110,000
ken: i just sold mine primary home near hagerstown MD for 250,000 thats were the bubble will go
Mike_Summey: ken, that piece of software will teach you how to balance price and terms in such a way that if you make an offer and the seller counters $20,000 higher you will be able to meet his price by changing the terms.
Penny: ken, your black & white cards sound like a great way to start out to me. Atleast you’ve taken one of the first steps that Mike & Roger talk about in their first book. I haven’t even done the cards yet.
Bob_Carr: Ken,be patient.
hottiekindhart: MIke, do you really believe in the real estate bubble???
ken: i’m trying to construct a website to in my space time, its a little things here and there that keep me moving forward
Al_Lee: getting turned down will teach you how to deal with rejection. Let it roll off yoru back like water off a duck’s
Mike_Summey: ken, my cards are green and have my picture on them. they say, “I buy houses, apartments and other income producing properties”
Bob_Carr: Ken,I’m just below you and still buying and looking everyday.
Mike_Summey: Hottie, this is the 4th cycle I’ve been through. Yes I beleive in the bubble. I seen it happen many times before. In 1993, on the down side of the cycle that occurred in the early 90s I bought 65 properties in one year. I didn’t buy that many in the 5 years prior.
ken: bob wear are you located at
Mike_Summey: Hi Shoe
Al_Lee: Bob_Carr, you were going to give me a call ro email a few weeks ago. I have soemthing you might be interested in coming up.
Bob_Carr: Between Baltimore and Annapolis
shoe_kc: hello
ken: expensive area
Al_Lee: Bob, did you ever find a car like Curtis’?
Bob_Carr: al,i will call you tomorrow.
shoe_kc: had a question on the offer-generator software…how does it compare to the software that comes w/ the Carlton Sheets system?
corey: Mike in the 65 you bought in one year were any of those from a group purchase such as from an investor that was in trouble or were they all on their own
Bob_Carr: Still looking for the car al,i spent the cash on another house.
Mike_Summey: shoe, Carleton’s software is great and I use it all the time, but he doesn’t ahve anything like the Offer Generator. As a matter of fact, I loaded it on his computer the last time I visited him. He loves it.
Al_Lee: The ‘investors’ who buy houses to flip are regularly getting themselves in money trouble. I have mad soem good buys by keeping in touch with several such ‘investors’ (they are really speculators) and beign there to bail them out.
shoe_kc: mike, thanks for the input…I’ll go ahead and get it then.
Al_Lee: Bob, that’s what Curtis shodl have done, too.
Mike_Summey: corey, yes sever were in group purchases, but who cares 10 units rent for the same thing whether they are bought from individual sellers or from one.
Penny: dance Mike.
Mike_Summey: Penny, whats’s with the dancing elephant?
Bob_Carr: Ken,I have been buying in a area of Baltimore that has been great.I just settled on one last week,and hoping to get accepted on another tomorrow.
Penny: that you downloaded your offer generated program on Carleton’s computer & he loves it.
Bob_Carr: Pink!!
Penny: I think that is a testimont to the program, considering Carleton’s success also!
shoe_kc: question on owner financing: say, I find someone that’s willing, the numbers all work out great…now what? I haven’t found anything yet that outlines what forms, etc. need to be filled out/signed/etc to make it all “legal”
Mike_Summey: Al, we both know about all the real estate gurus out there selling get-rich-quick schemes. My experience is that most get-rich-quick schemes are actually go-broke-fast schemes for ordinary working people.
Al_Lee: Mike, they do make the gurus rich from the fees they charge.
Sandy: Is Larry Goins’ program a get rich quick scheme?
Al_Lee: I have had many people join my club and then want to do things they learned from those “experts”. Many of those things don’t even work and some are actually illegal
Mike_Summey: shoe, the Offer Generator program will actually print the offer letter ready for your signature and the sellers. Once the letter of intent is signed you can take it to any real estate attorney or title company to have the information transferred to acontract form.
shoe_kc: mike, ah, ic…thanks. I know that carlton’s system has a checklist section, step by step…but i’ve been scoping the neighborhood, and found one that may work out for me…and am getting nervous about things happening too quickly.
Mike_Summey: Sandy, I don’t know about Larry’s program. I have not been through it. I had him as a guest on a conference call to let him explain his program. what he does is so different from what I do that I don’t feel comfortable commenting on it.
shoe_kc: happening before I have the chance to learn…
Sandy: Okay. I bought it. He has helpful information for a beginner.
Mike_Summey: shoe, if you can buy based on an offer created by the Offer Generator, you will not get in trouble with it unless you ignore the warnings that pop up if you try to create an offer that will result in a negative cash flow.
Sandy: I’m not sure about his strategy. Too many books and cd’s at once…
Al_Lee: Sandy, you should be careful about mix-and-match’ing different strategies. They may all be valid and good, but if you take the front end of a horse and the back end of an elephant you will not get a good result–though the horse and the elephant are both good to start with
shoe_kc: mike, thanks…
Mike_Summey: Sandy, there are many real estate gurus out there selling stacks of books and tapes and boot camps. I’m sure there is some good material in them, but I wonder how many ordinary working people are able to truly comprehend what they are teaching. I just wrote an article for my newspaper column on this very subject.
shoe_kc: been through your book and a few others, and the WM method is what I’ll be following…this weekly chat and the author’s “accessibility” is a huge part of that.
Sandy: Yes, Al….it is making me think about this field of RE though.
shoe_kc: al’s book is on it’s way though…
Al_Lee: Whew!
Mike_Summey: Thanks shoe, I truly want to see people who follow my teaching succeed. I don’t earn my living selling books and tapes and giving boot camps. I earn my living doing what I write about.
Al_Lee: :>
shoe_kc: was hoping it’d be here before the holiday weekend, but it looks like it’ll be here tomorrow…
hottiekindhart: MIke, got company over, see you next week. Thanks for your help, again.
Sandy: I guess that is why I latched on to your’s and Al’s thoughts. I haven’t bought any others. I bought Larry’s because of his tie to you and his guarantee. But I need to implement in order to learn.
Mike_Summey: In my very first newspaper column I wrote about my feelings on helping others. I think that one of the greatest injustices successful people can do to their fello man is to go to their graves with the knowledge that helped them become successful and only leave behind the thing they accumulated. That’s why I write and donate my time to these chats.
Bob_Carr: Goodnight Pink Elephant Lady and everyone else !
Mike_Summey: Goodnight Hottie
Penny: ‘nite Bob-Carr
Sandy: I am lucky and grateful for that Mike. Your integrity shows through.
shoe_kc: ditto sandy…gives me confidence
Penny: Mike, thats what I like about you. You are so real, you live what you preach.
Sandy: Both you and Al
shoe_kc: knowing that you all are here
Penny: I’ve gotta say goodnight also. See you all next week. Thanks.
shoe_kc: I’ve got a lead on an fsbo in my hood…will be my first “investigation” w/ my current knowledge…
Mike_Summey: Sandy, I’ve bought many real estate investing programs and I’ve learned something from each of them. I look at it this way, if I spend 6 hours listening to a CD program and I only learn one thing that helps me make a deal it was worth the time and money.
shoe_kc: willgive you guys an update next week
Al_Lee: Mike’s and my strategies are 90% similar. We differ in a few areas mainly because we operate in different markets. Essentially, though, if you buy properties that cash flow, you will become rich. period.
shoe_kc: wish me luck!
Sandy: Good luck, shoe….will be thinking about …
Mike_Summey: hey Late man, where ya been?
shoe_kc: yeah…cashflow…seems like the math is simple enough, but the software definitely helps w/ the evaluation.
Late_Man: Running Late!!
shoe_kc: thx sandy
Mike_Summey: Sorry, but it’s well after 9:00 and my son is here wanting to spend some time with me.
Al_Lee: Gotta go now. Goodnight, Mike, everyone.
shoe_kc: cu next week
shoe_kc: thanks again
Mike_Summey: see you next week and hopefully the email will get out on time.
Mike_Summey: goodnight all
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