Chat Transcript 7-3-06
Posted on July 4, 2006
1099: Mike I need to know if sfh is a good investment as a owner or to rent out. Won’t be on the chat tonight have to do my weekday million homework. Take Care
stock13: I am a new member. Is this a live audio or a written chat room
ken: written chat
stock13: Thanks Ken
Mike_Summey: Hi everyone!
stock13: What question can we ask
Mike_Summey: Happy Holiday…almost!
Mike_Summey: stock, you can ask anything you like.
Mike_Summey: Where is everyone from?
tex: texas
tex: hard guess
ken: PA
Mike_Summey: Hi Sandy
stock13: I was told there is goverment subsidized rental income but not section 8. Anyone know what this is
stock13: n.j.
Mike_Summey: Stock, Section 8 is the only one I know about.
sandy: Hi Mike. Hi everyone
ken: Mike do you know of a trick to keep tenants from trashing your place. somtimes screening doesn’t help much
tex: mike, what typically are some of the most challenges people have with starting business
Mike_Summey: We may have a small crowd tonight due to the holiday, but that will make it better for those who are here…and easier on me.
Mike_Summey: Hi John
John_n_NEFL: Hello Mike & all
stock13: I was told there was a acceptable disabilty housing income
John_n_NEFL: Neptune Beach, just east of Jacksonville FL
stock13: It is for a socially acceptable disabity housing
Mike_Summey: tex, the biggest challenge for most people is having the patience to get through the start-up period. this is when newbies learn that there are very few busiensses that make money during the start-up phase.
Dean: Hi everyone
Mike_Summey: Hi Dean & Gene!
stock13: Anyone have any idea how I find the govement agency that does it
Mike_Summey: stock, I’m not familar with that. Maybe someone else is or maybe you could ask it again later when more people are in the chat.
ken: My sisters neighbor had someone come in a place her windows and seal her home up better for the winter. It was a county organization. they did that for her for free
ken: replace her windows
Mike_Summey: Hi Penny
Penny: Hi Mike.
Penny: I see there are a few of us not off vacationing on the holiday weekend.
Mike_Summey: ken & stock, there are government programs to help low income people with fuel, etc., but I’m not familar with any program other than Section 8 that helps pay the rent.
tex: what is the name of program where buyers can get 25k government rebate to buy a homes.
Mike_Summey: Penny, some of us have to work & some of us just enjoy doing it.
stock13: I have several rental properties. When I find a good tenent I do not incease the rent each year. What does other do
ken: Mike do you put any of your properties in a land trust?
Mike_Summey: tex, not familar with that program either. I don’t deal much with low income programs.
Penny: Mike, I’m one of the have to’s
Mike_Summey: stock, you should increase the rent by a small amount each year to keep up with inflation. If you don’t, it erodes your buying power a little each year resulting in your properties becoming less and less profitable.
tex: ok, but its not a low income. realtor advertieses it with listings that qualify.
Mike_Summey: ken, I don’t use land trusts. I see no real value to them.
genestewart: Mike, I was glad to read the story of your starting a Grit route in your book. I also started and delivered Grit (two routes - we had moved) in 1947 and 1948 to 1951. What years were your Grit routes?
Mike_Summey: Penny 
Mike_Summey: gene, mine was in the mid 50s.
ken: Mike i really don’t either but i keep hearing to put them in a trust. Do you just sign your name to the deed?
genestewart: Thank you Mike
Mike_Summey: ken, I hold all of my properties in LLCs. I do this for estate planning purposes, not any of the gimmick stuff you hear about.
Mike_Summey: gene, you must be a little older than me.
ken: Mike how many properties do you put in an llc? and why do you have more than one
stock13: When you put your propperties in a llc did you do it when you purchased it or at a latter date
Mike_Summey: ken, I hae all of my NC properties in one and my SC properties in another.
genestewart: Mike, Right, just a little older. My routes were in Iowa and Nebr. I am now in Charlotte.
Mike_Summey: stock, most of mine were originally purchased in just my name, but a few years ago I moved them all to the LLCs when I did some major estate planning. The ones I’ve purchased since have gone directly into the LLCs.
Mike_Summey: Hi mkuld
sandy: I read Mike’s books, but I don’t remember Grit…..is that the cereal stuff?
John_n_NEFL: Mike, I’ve read your book, set up bank account, and arranging money. Next I’ll get business cards, set up LLC and buy Generator. Do you reccommend LLC in only my name or jointly w/ wife (solid Marriage)?
Mike_Summey: sandy, that is in the Mindset book.
tex: cya
mkuld@msn.com: Hi Mike
sandy: I’ll need to re-read. I don’t remember that
stock13: Mike if I have my properties in my personal name & I have a mortgage on them and insurance & them transfer the deed into a LLC wouldn’t the mortgage company then call the loan since I am not the owner but the LLC
ken: John you might want to check out godaddy to get a website i got one with myname for around $55 for 2 years with a security page its cheap but its a start plus i get a nice email name ken@kenhicksjr.com
Mike_Summey: John, if you set up the LLC in just your name (single member LLC) you don’t have to file a tax return on it. I’m not sure if that’s the case if you have two owners. That would be a good question for your CPA or other tax advisor.
Mike_Summey: Hi noel
Mike_Summey: stock, none of my mortgage companies were concerned about it because they still had my signature on the note.
Mike_Summey: stock, I notified all of them and informed them that I was transferring the properties for estate planning purposes.
noeljackso: hi mike and everyone
ken: Mike do you have to record the deed again?
John_n_NEFL: Thanks ken & mike—I know a Ken Hicks from years ago–where you from?
ken: PA i’m 26
stock13: What about insurance on the property, since the was in my own name & now it is in the LLC what would the mortgage co. want
John_n_NEFL: is Sr from GA and/or FL?
Mike_Summey: ken, yes you do. When you transfer the properties to the LLC you have to have a deed from you to the LLC and have it recorded the same as if you were selling them.
ken: no. PA
Mike_Summey: ken, you can put multiple properties on one deed.
ken: he was in the army back back in the 70’s
John_n_NEFL: nope-another one
ken: Mike would that hurt you putting multiple properties on one deed if you decide to sell one ?
Mike_Summey: Do any of you own our Weekend Millionaire audio program?
ken: no, i keep meaning to purchase them
sandy: I do. I got it from NC many years ago. I read the corresponding book while I listen to the cds.
stock13: Anyone out there in NJ
Mike_Summey: ken, no it wouldn’t. You can transfer as much ownership as you want on a deed and then if you sell something you just deed away what you sell.
Mike_Summey: The audio program is a great tool to use while you’re out in the field look for properties. You can just pop in a CD and go directly to the part where you can listen to what you’re supposed to be doing while you’re actually doing it.
John_n_NEFL: Mike, for financing etc, should I wait before using llc?
Mike_Summey: We’ve just moved the Offer Generator and the Audio Program to the home page on the website. You will find both on the right hand side under the heading Weekend Millionaire Products.
ken: IF i was to form an LLC i was told i would have to use a commercial loan which had a higher interest
Mike_Summey: John, until you are well established and your LLC has good equity, you are going to have to personally endorse the notes. Not much way of getting around that in spite of what some of the gurus tell you.
Mike_Summey: ken, talk to you lender about that. I don’t think that’s the case with a single member LLC.
ken: ok mike, this was in a bigger bank not a local bank
Mike_Summey: ken, it should matter the size of the bank. The bigger problem is bank loan officers who don’t know as much as they try to make you think they do.
Mike_Summey: ken, properties held in a single member LLC are treated on your tax return the same as if they were in your name personally.
Mike_Summey: Hi elba
elba_NY: Good evening everyone, Mike Penny.
Penny: Hi there Elba
Mike_Summey: elba, you made it a little earlier this week.
elba_NY: Yes I did. My little boy cut me a break tonight.
Penny: I was just about to say the same thing Elba
Penny: Glad the household is calm tonight
ken: What are some good questions to ask a cpa to make sure they are looking out for your best interest. I know some say yes i can help you but if you ask a question one the phone you might get a big bill
Mike_Summey: elba, bless his little pea picking heart!
elba_NY: Thank you both.
elba_NY: Ken how about: How many if any of your clients have investments properties?
Mike_Summey: ken, most CPAs are going to charge you for advice. Keep in mind that they are professionals and all they have to sell is their time.
Mike_Summey: Good question elba.
ken: Thanks Elba, mike
elba_NY: If they answer yes or tell you how many maybe you could take it from there.
ken: yes elba that makes perfect sense
elba_NY: Ask if they would be willing to give any references.
Mike_Summey: ken, some CPAs specialize in working with real estate investors.
ken: most of the time i get referred from a friends saying this person is the best but its like a cirus talking to them
stock13: Mike Previous question about insurance. What if the insurance is in my personal name & I transfer the deed into a LLC what happens to the insurnace. Can it stay in my personal name or does it have to be changein into the name of the LLC to cover the property
Mike_Summey: Hi TT
elba_NY: If your friends are not into what you are into their advice may not be too helpful.
ken: i’m learning that the hard way
TT: Hi Mike
elba_NY: Hi TT
Mike_Summey: stock, usually all you have to do is contact the insurance company and have your LLC added as an additional insured.
stock13: Thanks Mike
Mike_Summey: stock, my insurance policies list my LLCs, me personally and my banks as named insureds.
elba_NY: Mike, would that have any effect on the lender?
elba_NY: Welcome Eddie
Mike_Summey: elba, no it wouldn’t. As long as their interest is insured you’re fine.
Mike_Summey: Hi Eddie
Eddie-NC: Hey everyone
elba_NY: meaning the deed transfer as stock asked.
Mike_Summey: elba, the deed transfer doesn’t matter to them because their mortgage is in a first postion both before and after the transfer and if you are using single member LLCs, the ownership is the same for all proctical purposes.
stock13: If the properties are in the LLC can the rent checks still be made out to you personal
elba_NY: Thanks :p I know a lot of people fear the Due on Sale more than they should.
stock13: What if the mortgage is in your name & spouse & you transfer it into a one member LLC
sandy: Are there private conversations tonite or is it just me. I can’t seem to connect the dots here tonite.
Mike_Summey: stock, if the properties are in LLCs, you will need to set up an account in the LLCs name and have rents come to that account. If you need money from the account, just write yourself a check and code it as a distribution.
Mike_Summey: stock, if the property is in both names, you will have to have your spouse sign the deed transferring the property.
Mike_Summey: Sandy, what are you missing?
elba_NY: Sandy, feel free to ask any questions. Jump in at anytime
sandy: The Due on Sale clause…..what was that a response to?
elba_NY: Sandy, deed transfering.
Mike_Summey: sandy, to the concept of transferring properties from your personal name to an LLC. Would this trigger the Due on Sale clause in a loan.
Mike_Summey: If this is a concern to anyone, talk to your lender before you do it. I believe you will find that they don’t have a problem with it unless they think you are trying to pull a fast one on them.
sandy: Got it. Thanks.
elba_NY: :>
stock13: Mike are you saying that if the property is in both names, then the tansfer into a one name LLC what then does the mortgage co due since only one person is now the owner & not two people
Mike_Summey: stock, all it does is leave your spouse obligated on the mortgage jsut as before the transfer, but without any ownership.
stock13: OK I will then speak to the mortgage company
TT: Mike, I want to junmp and say this: Your latest newspaper article is excellent, the best so far. I especially enjoyed the part about “if you cant save you are already living above your means”. Man, I really need to find a way to get this into my younger brother’s hands without causing a family feud!
Mike_Summey: stock, I suggest you talk to a tax professional about joint LLC ownership with a spouse. It may be that the joint ownership is treated as a single member LLC would be if you are filing a joint return.
sandy: Mike, isn’t that risky for the spouse?
Mike_Summey: Sandy, you’re not as lost as you think!
elba_NY: Hey, if they both agree. Lets hope one is not trying to pull a fast one on the other.
stock13: Beside estate planning what other advantages for a LLC
Mike_Summey: Sandy, if you owned propeties jointly with your spouse, would you be willing to turn over your share of the ownership but not your share of the debt obligation?
elba_NY: TT. I too will send a copy to my little sister
sandy: I’m going to have to study this chat tonite. It seems the llc protects the guy whose name is used but puts the spouse in a risky position unless there is one great marriage.
elba_NY: :p
Mike_Summey: TT, I’m glad you are enjoying the articles. They are written for ordinary working people, not people in high finance.
Mike_Summey: That’s about right Sandy.
sandy: Not with the spouse I had….those nice generous young men can get really nasty when the meal isn’t put before them again. No sense of fair play. Now, if I were receiving the ownership without the obligation, that is a different story.
Mike_Summey: stock, there are some limited liability advantages, but not as great as some people think.
ken: Just like land trusts?
Mike_Summey: Right Ken
ken: I honestly don’t understand why you would do a land trust it seems you would be bringing one more person into your loop of business
Mike_Summey: Land trusts, LLCs and other such entities do little to protect you any better than good insurance and honesty.
stock13: As I previoused mentioned I have several rental income properties with plenty of insurance to cover us personally. What would be the best reason to put the properties in a LLC
ken: can you buy insurance for your llc? extra protection?
elba_NY: stock, you can go to Al Lee’s website renthouses.org He has had some good show about LLC advantages.
Mike_Summey: stock, I moved mine to LLCs to avoid having the properties go through probate on my death.
stock13: What is the website address
sandy: Mike, so your wife is obligated but gets no ownership. How does that help her in your demise?
Mike_Summey: ken, no need to. Just add the LLC to the named insureds on the policy. Same policy, just another named insured.
elba_NY: www.renthouses.org click on library of past shows
ken: Does any one use blanket insurances? If so how much do you save
Mike_Summey: sandy, my wife does not have the ownership or the obligation. I have both.
stock13: Is blanket insurance different than umbrellla ins
sandy: Because….?
sandy: You were never joint owners in the first place?
elba_NY: Mike, didnt we have a past chat about insurance? Is it in the archive?
Mike_Summey: ken, I have blanket policies that cover my properties. The biggest advantage is having the full amount of the blanket policy on each property and in the case of a loss on multiple properties from one event, you only have one deductible to pay.
Mike_Summey: stock, there is a big difference in a blanket policy and an umbrella policy. A blanket policy provides primary coverage. An umbrella covers losses that exceed the primary coverage limits.
Mike_Summey: sandy, that is true. We were never joint owners from the start.
stock13: I guess a loss on mutiple properties would be an apartment house or several properties next to each other
Mike_Summey: elba, yes we did. The chat transcript is archived. It is the one with Doug McKinney.
elba_NY: stock, In the same area as well.
elba_NY: Did everyone get that? read up I know I will be checking it again.
elba_NY: Thanks Mike.
stock13: I am correct to understand then a umbrella coverage is better than the blanket since it goes above the primary coverage
Mike_Summey: stock, a couple of years ago, we had the remains of three hurricanes pass over us in a couple of weeks. As a result, I had 41 roofs damaged with hail. All were replaced by my insurance company and I only paid one $500 deductible.
sandy: I got that the umbrella covers where the blanket leaves off.
elba_NY: Niiice.
ken: I was told i could only cover 4 properties on a blanket insurance
elba_NY: How times flies when your learning about real estate. I must go. Mike, Penny, everyone is always great to be here. Happy 4th everybody. ;>
Mike_Summey: stock, you will have to have primary coverage before you can get umbrella coverage. Also usually an umbrella policy is for liability coverage only. The same policy can cover exposure from your rentals, your home, your car, your boat, etc.
Mike_Summey: Happy 4th to you too elba. See you next week.
Mike_Summey: ken, that’s strange because most companies won’t write blanket coverage unless you have 5-10 properties or more.
ken: maybe i needed 4 properties
stock13: Thanks Mike for your information
Mike_Summey: Well everyone, like elba said, time really flies when you’re having fun. It’s after 9:00 and I going to have to run also. See you same time same place next week.
Mike_Summey: ken, I think that is correct.
sandy: See ya. Thanks
Mike_Summey: goodnight all.
ken: night all, thanks mike
John_n_NEFL: happy and safe 4th to everyone-bye
Eddie-NC: good night Mike
stock13: Just writing another question is the chat over
stock13: how long is it
genestewart: That was good information this evening. Thank you Mike and all. Gene
Eddie-NC: the chats usually are from 8 to 9
stock13: Thanks Eddie
stock13: ood nite all
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