Chat Transcript November 20, 2006
Posted on November 21, 2006
gquick
hey pscherer…
Pscherer
Hi haven’t signed on in a while
gquick
have you been investing long? i’m still a newbie…
Pscherer
yes, on and off since 1978
Pscherer
currently have 4 buildings
gquick
i just finished reading weekend millionaire and just did my first week of the 8 week plan…
gquick
I found a couple of abondoned houses and one FSBO
Pscherer
great, I love the book and recommend it to friends all the time as well as several agents I know and work with
Pscherer
have you talked to the FSBO?
gquick
mindset and FAQ just came in the mail today. i cant wait to start reading them
gquick
actually, i have some questions for mike and co. about it tonight
gquick
i havent setup any finances yet and don’t want to jump in too quick
Pscherer
Why is he motivated to sell, do you know?
gquick
i don’t know. i just found it on saturday and don’t want to sound too ‘clumsy’ when i approch him
gquick
hey mike
Mike_Summey
Hello
Mike_Summey
Hi pquick, Mac & Pscherer
Mac
Hello Mike; hello everyone
gquick
pquick? nice real nice
Pscherer
Don’t worry about sounding clusy, just talk to him andfind out why he wants/needs to sell
gquick
Mike_Summey
Looks like we’re a bit slow getting started tonight.
gquick
its a really nice duplex that is definately a bread and butter type
Mike_Summey
Have I missed anything?
Pscherer
qquick has found a fsbo
Pscherer
and wants to ask some questions
gquick
pscherer and i were just talking about my first weekend drive around the neighborhood
Mike_Summey
I’m here and ready. Shoot!
gquick
was only able to complete 1/4 of the 10 mile radius around my home. I was in no rush and really enjoyed learning about my neighborhood while looking through “investor” eyes. I’ll complete the other 3/4 of the radius as soon as I can. I came across 2 abandoned properties in relatively good shape, and 1 FSBO duplex that really interested me. I’d really like to investigate the abandoned’s and contact the owners about the FSBO. I’ll probably start with the FSBO.
gquick
i already typed up my questions do i don’t waste time…
Mike_Summey
Isn’t it amazing what you can find and learn just by riding?
gquick
. Can you help me out with my approach? Initial questions, information gathering, etc.? I don’t want to be “clumsy”. Or am I just moving way too fast and should follow the 8 week guideline to learn more before jumping in?
Mike_Summey
gquick, have you inspected the FSBO yet?
gquick
havent contacted them at all. found it and just looked around. took the phone number down and just waited to ask questions tonight
gquick
pscherer thinks i should just contact them and find out why they are selling
Mike_Summey
gquick, on the home page of this website you will find a link to “downloads” on the left side. Just scroll down until you find it. Click on the downloads button and it will take you to a link to an inspection form I strongly recommend you use when inspecting properties. It is a FREE download and you are welcome to print as many copies of it as you want.
Mike_Summey
Hi Ken & Brian
ken
hi everyone
gquick
hey all..
gquick
do i just call and introduce myself as an investor
Pscherer
I am seeing sfh dropping in he area I invest but not 4+ properties is that usual when slowdowns occur?
Mike_Summey
gquick, the inspection form helps you look at everything you need to look at, evaluate the condition of each item and then estimate cost to repair anything that needs repair.
Mike_Summey
Hi TT
TT
Hi
Pscherer
or should I wait out these larger properties a little longer
gquick
pscherer… whats sfh
Pscherer
single family home (residence)
gquick
ok mike. hopefully i’ll have a good story to tell next week. should i have some $$$ setup first?
gquick
thanks
Mike_Summey
Pscherer, that’s not unusual. Investment properties are not as subject to hype as SFHs because they are usually valued based on income unlike houses that often get valued on emotion.
Mike_Summey
gquick, what do you mean some $$$ set up?
Mike_Summey
Welcome back TT. You’ve been away most of the summere.
Mac
Mike, you mentioned in your email notice today about speculators in trouble that would provide bargains for us long-term investors. Since the speculators usually bought for appreciation and not cash flow (e.g., boutique condos), their properties still won’t cash flow even at reduced prices. Any suggestions on finding cash-flow properties?
gquick
like to be ready with some creative financing? 20% down is out of the question. or do i need to find out why they are selling before i can really do anything
gquick
i’m all ready to figure out the noi and stuff, but cant even find square one yet.
Pscherer
That makes se I only look at the numbersn
Mike_Summey
Mac, there are many people who bought SFHs betting on the come. I think we will see many deals come available as adjustable rate mortgages start adjusting. I’ve bought several properties where the sellers actually had to bring cash to the table to make the closing work.
Mike_Summey
Hi Steve
Mike_Summey
Mac, it is not uncommon to see people lose substantial portions of their equity in a down market. That’s what makes it so good for long term investors…they don’t buy with the idea of selling, they want to build an income stream.
Mike_Summey
gquick, the more you can know about the sellers and their goals, the better offers you can create.
Mike_Summey
gquick, follow the 8 exercises in the back of the real estate book. That will help you get started as well as anything you can do.
gquick
do i just call them and setup an appt to see the house and start getting the details of the deal together?
gquick
i just finished my first of the eight weeks and thats how i found the 3 properties. it was pretty exciting.
Mike_Summey
Hi Eddie
gquick
i plan on going out next weekend too.
Eddie-NC
hey everyone
gquick
hey eddie…
Steve Lux
Hi Mike. What number does the Offer Generator generate? Is it the maximum amount one should offer?
gquick
welcome back pscherer… thought we lost you
Pscherer
you did for a while
Pscherer
spam blocker didn’t like having java based application at the same time
gquick
What would be the most efficient way to look for information about abandoned properties? i’ve done the courthouse thing in the past. is there a more efficient way of locating the owners, etc.?
gquick
sorry for all the questions… can’t wait until i can start answering some.
Mac
gquick, my county in NC has the tax records online showing the owner and the address where the tax bill is being sent.
Pscherer
Some counties have tax records online and request only that you post your name and or email address.
Mike_Summey
I just got a call from Carleton Sheets. He was trying to join us but is having trouble with his computer. He asked me to giv eeveryone his regards.
gquick
thanks guys. i didn’t think that stuff would be online. i’ll have to check it out.
Pscherer
Some counties are very up to date and others are 6 months behind.
gquick
actually i’m a dba. maybe i could become a consultant for the county and get it up to date for them. help me at the same time.
Mike_Summey
Everyone, the public records are becoming more and more accessable over time.
Eddie-NC
Yea, I’ve been trying to get on for three weeks before I realized I hadn’t downloaded the new java
gquick
mike, is that “the” Carleton Sheets?
Mike_Summey
Hi 1099
Mike_Summey
gquick…the one and the same.
1099
Hello Mike and Everyone
Mike_Summey
Hi Doug
Mac
gquick, my county also has the entire tax database as a downloadable Access database.
gquick
thats too funny. i feel like i’ve known him my whole life!!1
Doug_in_CT
Hello
gquick
an entire downloadable db would be awesome. i’ll let everyone know what i find next week.
Mike_Summey
I think Carleton’s problem is that he hasn’t downloaded the latest version of JAVA. This new program requires it.
Doug_in_CT
I was looking at our town appraisals today. A company called Vision Appraisals did our recent revaluation. They have a public website with an astonishing high level of detail.
Brian
Strange thing Mike, this Java thing won’t allow me to copy and paste?
1099
Mike what other method is there looking for investment properties beside going out on the weekend?
gquick
mike, weekend millioinaire mindset and FAQ just got delivered today. cant wait to start reading.
Mike_Summey
Brian, the new program update has a number of things I don’t understand either.
Doug_in_CT
You can find out who is the owner of record, the current appraised value, recent sales prices, all the neighbors’ information is right there.
gquick
1099. you’d be suprised if you just drive around for about 4 hours like mike recommends. it’s incredible what you find
Mike_Summey
1099, newspaper ads, real estate publications, public records, Realtors, etc.
Pscherer
Many also include mortgage amount and date of last sale
1099
Kool thanks
gquick
mike, i was wondering about asking realtors? do they help you more with buying or selling? how do they help you buy ‘wholesale’ real estate?
Pscherer
If you are going to use a Realtor find one who invests themselves. they will have a better idea what you are looking for
Mike_Summey
Everyone, don’t look for one method of investing. Every property is different. Each owner is different. Theoretically there could be as many different ways of buying properties as there are combinations of property and people.
Mike_Summey
Hi zert
zert
Hi Mike and everyone
gquick
would i just go to say a Remax place and ask someone? or is there a better way to find one?
gquick
hey zert…
Pscherer
Method is not as important as profit
zert
yes
Mike_Summey
gquick, i use buyer’s brokers a lot. They work for you and they have access to MLS listings and are usually able to get more information from selling brokers than you can.
gquick
does everyone agree with the rich dad poor dad cashflow philosophy? i read that book and that really changed my outlook on money.
zert
I interviewed them to see if they have knowledge in investment properties
1099
Mike when looking to buy an investment property is it true that lenders dont like to deal with investors that much?
Mac
gquick, another way of finding a good realtor is to ask around at your local REIA group
gquick
thanks Mike. i’ll take note of that.
1099
Yes I do gquick
gquick
thanks Mac. i’ll note that as well.
Doug_in_CT
gquick, I have found a seasoned realtor who serves as my buyers’ broker. She knows exactly what I am after and when she sees something in my “farm area” she automatically sends me an email with the details of the listing. She has led me to purchase 5 different properties in the last couple of years.
Mike_Summey
1099, lenders love me and I’ve been an investor for 35 years. If you handle your affairs properly you can build good banking relations and not have to worry whether you’re like or not. Read the chapter on building a support team in the real estate book.
Mike_Summey
Hi Penny
Penny
Hello Mike. Sorry I’m late.
gquick
Doug, you’ve puchased 5 in the last few years? nice.
1099
will do mike
Doug_in_CT
She knows just what to say to the sellers’ broker and how to keep my information on a low profile.
gquick
1099, have you read any of the weekend millionaire books?
TT
Mike gave some advice last week that i thought was very good. He said to get to know the agents in your area who list the foreclosures. That has made a big difference in my results over the years.
1099
Yes Sir and they are great books
1099
I just dont read them I study them to learn
Mike_Summey
TT, getting to know the brokers who handle a lot of foreclosures is a great way to deal with that kind of property, but it’s only one of dozens of different ways to find good deals.
gquick
1099, they’re what actually gave me the push to start. i’ve been watching Carleton Sheets for years, but stumbling on Mike’s books really gave me the push. Thanks Mike.
Brian
Mike you gave some very valuable advice some months ago never to let the tenants pay their utilities themselves. Boy were you right! By the time I got it all sorted out in my 2 plex I had evicted the main floor tenants and was out close to $1000.00. Hard lesson!
1099
Thats great
Mike_Summey
gquick, I wish Carleton had been able to get in to see that. Thanks!
gquick
I wish Carleton was here too…I’m still laughing at the chance to talk with him.
Mike_Summey
Brian, I said to alway let the tenants pay their own utilities, but to make sure they were in the tenant’s name, not yurs.
Doug_in_CT
So gquick, you go in and try to ask around for the most seasoned realtor (most experience) and then you meet this that persona and tell them what you are up to, and then see if you are compatible. If so, you might have found a very valuable “team mate.”
Mike_Summey
gquick, he’s joins us quite often, so if you do the same you’ll get to talk with him soon.
gquick
Doug_in_CT… thanks. that’s the number one thing on my checklist this week.
Mike_Summey
Roger Dawson sends his regards. He just called and is traveling back home tonight.
Brian
These tenants shared the utilities and the mainfloor never paid their portion. They just let the other tenants portion cover the minium payment. Took some time to catch up with them.
Pscherer
The most seasoned agents do not necessarily = knowledgeable or good with investors. If that were the case more of them would own property themselves. First question should be “do you own rental property” not how long have you been in the business
gquick
this is my new 8pm Monday slot. this is like a pep rally and it just makes me want to keep moving and keep the momentum going.
1099
before it gets to late I would like to wish everyone a happy hoilday and Mike save me some of your turkey lol
Mike_Summey
gquick, the best advice I can give you is to BE PATIENT!!!! If it takes you a year to buy your first property, you’ll be doing as well as I did my first year.
Pscherer
Better to be patient and get a real deal on your purchase rather than a turkey
Mike_Summey
1099, I’m having dinner with my mother on Thursday and then going to Talahassee for the FSU/Florida game on Friday.
Mike_Summey
gquick, patience is key for long term investors. I’ve never heard of anyone losing money on a property they didn’t buy.
1099
Mike when u said buying your first porperty do u mean as an investment or your first home? And have fun with your love ones
gquick
I have to be honest. i’m not really looking at the FSBO i found as much more than “practice”. i’m going in with no amunition, but look at it as a great way to break the ice and meet with a potential seller face to face and “learn” how to find out what’s going on with their selling.
Pscherer
Yes talk to him even for practice
Pscherer
You will learn so much and it will give you confidence
Mike_Summey
1099, my first investment property. It took a year to get the first one, then I bought two my second year, four the third years and the rest is history. I had one year in the early 90s when I bought 65.
gquick
I own my home now (well, in about 2 yrs I’ll own it). does that help with getting financing for investments?
gquick
I meant 25 yrs. - not 2.
Mike_Summey
gquick, do you have much equity in your home?
gquick
1099, do you own any investment properties now?
1099
so would it be wise for onr to buy there home and refinance it to use the money to buy their investment property Mike?
Steve Lux
Mike, does the Offer Generator create a maximum offer number?
gquick
well,we have a HELOC out on it, but have about $20000 left.
1099
No Iam buying hiuse next year in Charlotte me and my wife
gquick
good luck…
1099
Thats House Mike
1099
thanks gquick
Mike_Summey
Steve, the Offer Generator will let you construct dozens of different offer that will all work with the NOI. It will allow you to use all of the NOI to create an offer or just part of it. What it does is show you how to balance price and terms in such a way that you can buy the proproperty wholesale. Anytime you can buy with the NOI it is a wholdsale deal.
Mike_Summey
Hi wps
gquick
if only i had understood the whole noi/cashflow thing years ago…
Mike_Summey
1099, if you own your home and have equity in it, you can obtain a HELOC and use it to purchase investment properties. Many investors do this. Then later they refinance the investment properties to get the money to pay back the HELOC>
1099
That why I love you mike
Steve Lux
Mike, will the Offer Generator allow you to include a desired monthly profit amount?
1099
whatever a HELOC i will use it
gquick
1099, home equity line of credit
Mike_Summey
Steve, yes it will. You simply create offers that don’t use all of the NOI and what’s left is cash flow.
Mac
gquick, I do what Mike mentioned. The bank will only finance the lesser of the purchase price or the appraised value. By buying with your HELOC you ultimately get the bank financing at the appraised price.
1099
kool thaks gquick
Pscherer
I used the heloc to purchase 4 properties over the last 2 years and repaid it from equity in new properties
gquick
thanks Mac. It’s just a scary thought for my novice mind to use my house to buy a house. i’m sure my wife will just love the idea!!!!!!
Mike_Summey
Mac, that’s true for most new investors. After you’ve proven yourself for a few years you can get financing based on appraised values, but in the mean time using a HELOC to cover the shortfall lets you refinance after a period of tiem based on appraised value. That’s when you get back the money to repay your HELOC.
Pscherer
You using equity to buy equity your money isn’t lost, just repositioned
gquick
hey honey.. i have a great idea for using the rest of our equity!!!!
Mac
the trick is not to leave the loan on the HELOC out very long before you get permanent financing from the bank
Pscherer
Absolutely pay it off qucikly as they float
1099
well its time 4 me to call it the night everyone take care and c u next week Monday
gquick
later 1099…
Mike_Summey
Everyone, I have a friend who lives near me that used a HELOC to purchase 20 properties in less than 5 years, Refinanced to repay his HELOC and after 5 years had an income of over $100,000. He was 60 years old when he started.
gquick
so if i check out this FSBO and have $20000 in equity left, in reality I’m covered with whatever $$$ i need for the purchase if i can negotiate a wholesale price?
Mac
gquick, yep
Mike_Summey
I’m going to leave you at 9:00 tonight too as I still have a lot of work to do tonight. Year end is approaching and with it comes property taxes, financial updates, new files for the coming years, etc. I’m trying to get a jump on things so I’m not buried the last couple of weeks of the year.
gquick
to be honest, i’m to new to even think of that. i think i should be patient and look at the FSBO as practice. anyone agree? or are we thinking never say never?
Penny
goodnight every one.
Mike_Summey
gquick, the $20,000 or a portion of it can provide the downpayment.
Mike_Summey
Goodnight Penny
Mac
gquick, if you’re comfortable with the numbers, make the seller an offer that works for you. If you get it, great. If you’re not comfortable, either get someone to review the deal with you or just use it for practice.
Mike_Summey
gquick, I recommend that you make several really low offers in order to get some practice, knowing that if one is accepted you will have a really good deal.
gquick
sounds like a plan. this was great. thanks for all your answers everyone. talk to you next week
Mike_Summey
Well folks, I’m going to say goodnight also and get back to work. See you next week.
Steve Lux
Goodnight Mike.
Mac
Good night and Happy Thanksgiving
Mike_Summey
Happy Thanksgiving to everyone!
intromaster
guess I missed it, huh?
intromaster
oh, well..maybe next time!
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