Chat Transcript - February 19, 2007
Posted on February 20, 2007
Pscherer Hi JimC where are you?
JimC Good evening, we’re near Kansas City
Pscherer I lived Kansas City back in the early 70’s
JimC Small world, so did I (surprise!)
Pscherer I taught at Lincoln High from 73-76
JimC I was at Washington HS grad of 74
Pscherer I lived in Overland Park for a while before moving to Northern CA
Pscherer Do you any rentals
JimC I’ve always wanted to visit N. Ca, hear it nice there.
Pscherer Sonoma County is beautiful but way too many people
JimC I’m looking for my first one, it seems to take a lot of looking even in this
JimC buyers market!
Pscherer Hi Jim E
JimE Hello!
JimC Good Name!
Pscherer Some owners are still trying for last years prices but there are deals if you keep looking. I am closing on the second of 3 transactions since September
JimC I’m sure markets are different, but where are you seeing the demand? sf houses, duplexes, or condo’s?
Pscherer sf and duplexes, most condos are losing ground fast.
Pscherer At least in this area–condos rise faster but lose faster on downswings here
JimC I think the same here as well, but need to talk to some local re management companies and confirm, would like to buy where the demand is currently.
Pscherer Hi alan
Pscherer Hi Mike
JimC Anyone jump on in, were just waiting for the stars to arrive.
Alan Hello P & Mike!
Mike_Summey Hello Everyone!
Pscherer Mike we were tal;king about demand currently for condos
Alan Moving to South Carolina in two months….looking for that cheap RE
Mike_Summey I see we have 2 Jims tonight
JimC Hello Mike
JimE Hello Mike
Mike_Summey Pscherer, I’m not a fan of condos as investment properties.
Mike_Summey Hi etgalvan
etgalvan hello Mike
Pscherer I am not either due to condo fees, less control and they seem to have more volitilty
Pscherer HI Penny
Alan Still investing in Greenville area Mile?
Alan Mike
Penny Hi Pscherer and everyone.
Mike_Summey I have a few condos, but I acquired them in transactions where I had to take them along with several other proeprties.
Mike_Summey Hi Penny
Penny Hello Mike!
Mike_Summey Alan, I haven’t invested in Greenville. The closest I have is Anderson.
Alan OIC
Mike_Summey Has anyone made an offer this week?
Pscherer No but I am closing one Monday
Mike_Summey What is it pscherer
Mike_Summey Hi corey
Mike_Summey Hi Mark
corey Hi Mike
MarkCT Hi Mike
Mike_Summey Theeeeeerrrree’s….Al
Al Lee Hello, Mike–everyone
Alan Hi Al
Al Lee I am a bit late,but I made it.
Pscherer SFR, that I am moving into and converting my present home into another rental property.
Mike_Summey Roger will be along shortly.
Mike_Summey Hi Sol
Alan When did you start investing Pscherer?
Pscherer Did anyone else get unsubscribed from WM newsletter today?
Sol (Cali) Hello
Pscherer 1989
Mike_Summey Pscherer did you get a notice you had been unsubscribed?
Pscherer Yes
Alan wow….any golden rules not normally talked about that you learned?
etgalvan Is buying a manfactured home on the site that lease $199 per month for three years? Is that good?
corey Mike very interested in knowing how your son ended up in cobat training
corey combat
Mike_Summey That was me deleting you! I was looking at the database and you were there in duplicate so I removed one of you.
Pscherer No, but if it doesn’t cashflow I won’t buy it, I got burned in the begining
Roger Dawson Good evening everyone!
Mike_Summey corey, he finished second 
Pscherer Thank you Roger—I think
MarkCT I have a question for the experts. I’ve refinanced a couple of properties and pulled some cash out. I plan on using the cash to pay off a property or two.
Alan 
wow…was it hard at first?
corey out of that many I would have a huge head on my shoulders
Mike_Summey etgalvan, tell me more. Are you talking about buying a mobile home that is on a lot that rents for $199?
Al Lee Mark, it seems very inefficient to refi one property to pay off antoher unleses the interest rate is very high on the one being paid off
MarkCT I have a choice. I can pay off two properties with a 15 year mortgage that would get me about $1300 a month in cash flow or 1 property with a 30 year mortgage (and high interest rate) that would give me about $800 a month of cash flow. What would you do?
Roger Dawson Pay off the 30 year mortgage because more of your payment is interest
etgalvan yes, mobile is about $54,900 and lease on the site $199 and I assume that is for monthy.
MarkCT Al I was able to refinance and pull the cash out with significantly changing the payment.
MarkCT Roger rather than getting more cash flow now?
Mike_Summey Mark, it all depends. If you can use the cash as seed money to acquire more properties, that may be good, on the other hand if you are very close on your cash flow now, paying off a couple to improve cash flow may not be a bad idea.
Al Lee If I were going to pay any of those choices off I wouel pay of the 15-year mortgages as they give you more bank for the buck, more monthly cash flow to invest elsewhere
Mike_Summey etglavan, don’t do it! Mobile homes go down in value and if the property owner make you move it the cost is very high.
MarkCT Mike as much as I would like to accumulate more properties my couple of years of experience has taught me that it is a good idea to have the additional cash flow to take care of the unexpected.
Al Lee I would rpever to not pay andy of them off and use the cash to buy more property
Al Lee prefer
Al Lee any
Roger Dawson I guess it depends on what you would do with the extra 700 if you paid off the other loan.
Mike_Summey Hi albert
etgalvan I see, thank you Mike
Al Lee Maybe I wouel invest the money in typing lessons lol
Pscherer I thought it was your keyboard Al
MarkCT I hear you Al but a couple of vacancies and some unexpected expenses kills me without having some sort of cash cushion. A couple of properties free and clear would give me that cushion.
Al Lee Roger, if Mark is and investo (and he is) you must assume he wouel put it to good use–invest it
Mike_Summey Mark, that is very good thinking. You have plenty of time to acquire more properties. It is very important that you don’t over extend yourself trying to do it too quickly.
cstew I got here late, could someone copy and paste the options again?
Mike_Summey Hi Elizabeth
cstew the question ya’ll are answering I mean
Elizabeth Hi Mike.
Mike_Summey Mark, why don’t you put a goodly portion of the cash aside as a reserve.
Mike_Summey Hi Brian
MarkCT Mike I agree. In my enthusiam to pursue the Weekend Millionaire way I probably have aquired too many properties too quickly. At the moment I’m 100% occupied but those situations change.
Brian Hello Mike!
Pscherer MarkCT are you managing those properties yourself
Mike_Summey Hi cstew, I didn’t see you come in the room.
MarkCT No I have property managers taking care of everything.
Mike_Summey Mark, the biggest key to success is patience. A mouse can eat an elephant if you give it long enough.
Pscherer Ok, from my perspective PM’s appear to make better choices in tenants than I do
Roger Dawson Mark asked I have a question for the experts. I’ve refinanced a couple of properties and pulled some cash out. I plan on using the cash to pay off a property or two.
MarkCT Mike I plan on using the extra cash flow to build up my reserves and then pay off another property. I’d like to get $2000 in free and clear cash flow before pursuing additional purchases.
cstew thanks roger
Al Lee Pscherer, that is just about ever investor’s conclusion also
Al Lee every
Al Lee This keyboard can not spell
Sol (Cali) Mike, in the preface of Weekend Millionaire Secrets… you said that you set a goal of generating $10,000 a month income. Was that income net cashflow (profit) or was that the total gross income?
MarkCT So what would you do Mike pay off the one property or pay off two?
cstew its the wine Al, Red does that to a keyboard.
Mike_Summey Mark & others, about every 3-5 years I evaluate the properties on which I still have mortgages and try to refinance some and pay off others. Doing that keeps my debt consolidated on fewer and fewer properties and really improves cash flow.
Al Lee I am drinking coffe tonight, though. It may be the LACK OF wine!
Mike_Summey Sol, that was net spendable cashflow.
Sol (Cali) Mike, so did most of that go toward the expenses on the properties?
Roger Dawson Sol: he bought airplanes with it.
Mike_Summey Mark, I may pay off one and keep the rest of the cash as a reserve. Without knowing your entire circumstances its hard to advise.
Pscherer Al do you know the rental market in San Antonio?
Mike_Summey Sol, no I’m talking about cash after expenses.
Al Lee I have looked in SA a few times, but never found anything that enticed me to buy there
MarkCT I thankfully have a nice of amount of money in reserves now so that is not an issue at the present time.
Roger Dawson Don’t forget about age. A young investor should take chances that would be foolish for an old guy like me.
MarkCT Pscherer I own in Austin (close to San Antonio)
Pscherer Mark how is the rental market?
Al Lee Mark , are you getting cash flow in Austin?
Mike_Summey Mark, then pay off the second property and enjoy the increased cash flow. If you need the money later to make additional purchases, you can always remortgage a property.
cstew I only have 1 rental property, looking for others, have a decent downpayment when I find the right property, but paying off my mortgage more and more each month, hope to have it paid in 10 yrs now
Roger Dawson Mark, Austin is only close to San Antonio if you live in Conneticut!
Mike_Summey Hi oz
MarkCT The rental market is hot the problem is so is the housing market in Austin. It is very hard to find rental properties that cash flow the Weekend Millionaire way.
Al Lee I have Ausin investors looking to buy in Dallas because they can not find positive cash flows
Al Lee Prices are too high
Sol (Cali) Wow! So if I understand correctly Mike, it took “a few short years” to acquire a cashflow of $10,000!?!
oz Hi Mike
Elizabeth Mike, have you ever tried the rooming house concept, where you rent out individual rooms in a house and have the living room and kitchen as common areas?
MarkCT Al my Austin properties cashflow well but I was lucky. I bought them two years ago at a good price when the finance rates were low. I can’t find deals anymore.
Mike_Summey Hi Jeff
Jeff WV Hi Mike
Pscherer Roger , sort of like my midwestern friends asking me why we don’t go out to eat in LA more often from San Francisco
Al Lee Marek, that is consistent with what I am hearing
Mike_Summey Elizabeth, no I haven’t, that’s a job, not an investment.
cstew Elizabeth, that is what I do with my rental to college students
Roger Dawson Right on Pscherer
Elizabeth Ohhhh….
MarkCT I own in several different areas in the country and Dallas is still one of those rare areas were really nice deals can still be made.
Elizabeth How does it work for you CStew?
Mike_Summey Sol, it took me from 1972 until 1983
Al Lee I have had peopel ask me if I know someone who lives in El Paso sinc eI live in Dallas. I am about as close to Chicago as to El Paso.
Pscherer Chicago is a prettier drive than elPaso
Pscherer from Dallas
Al Lee Yes, it is. When I had a plane I flew to El Paso and it is hundreds of miles of nothing at all
Sol (Cali) That’s still pretty encouraging, Mike. 
Mike_Summey Sol, I probably could have done it quicker, but Roger kept coming to visit and I didn’t want him to think I was doing too well.
Roger Dawson When I started speaking my marketer booked me to speak after dinner in Dallas and in the morning in Houston. She said, it’s only this far on the map. The map was the one she carried in her purse. I bought her a wall map.
cstew so far so good, each has their own lease, but cost of the house remains the same, so if 3 are there, in 3 bedrooms, each pays 1/3, but if one leaves they each must pay 1/2 and so on
corey Mike if you would have had the info we have through your books and this site how long would it take you today if you started with nothing again
Al Lee Roger, i once made it to Houston from Dallas in 3 hours in my old Porsche.
Roger Dawson I used to buy Mike breakfast at Dennys because I though he was broke.
Al Lee I was doing 138 mph almost the whoe way racing against a 928.
Mike_Summey corey, I’m sure I would have done it quicker, but how much quicker is anyone’s guess. Unless you have a great deal of cash to invest, it takes time for mortgages to pay down and rents to go up which is what really makes the cash flow grow.
Roger Dawson Al, they make movies about guys like you!
cstew Roger, I got your cd’s in the mail last week, road trip coming up and I plan to listen
Al Lee Roger, they also write news stories and obituaries
Al Lee I was young and foolish
Roger Dawson Thanks cstew. I hope you like them. If you don’t Mike will give you your money back.
cstew lol
Mike_Summey cstew, if you don’t make enough money on your trip to pay for the CDs Roger should refund your money. I paid for mine within an hour of getting them about 20 years ago.
Pscherer 20 years ago–cds? Maybe 8 track
Mike_Summey Everyone, Roger and I are currently working on a new book Weekend Millionaire Real Estate Negotiating. Hopefully it will be out this fall.
cstew It is so true Mike, I wish… I wish I had bought years ago, but back then didn’t know I could even get our own mortgage…. self employed early 80’s… no bank would touch us
Mike_Summey Pscherer, they were cassettes.
Elizabeth Who were you listening to, Mike?
cstew Refund away!! I am not going on a business trip, rather baseball games… LOL!!
cstew Actually the house we own, that we live in was owner financed way back then
Pscherer I was listening then too.
Mike_Summey Speaking of cassettes, we have a closeout price of just $39.95 on our remaining cassette inventory. It is the full version the same as is on the CDs.
Al Lee cstew, in the early 80s you did not need a bank to buy real estate. I bought a lot of houses by assumng the VA and FHA loans. I was self-employed, too. Where there is a will, there is a lawyer–er, way!
Mike_Summey Elizabeth, I was listening to Roger’s negotiating tapes.
JimE Where there is a will there are 500 relatives
cstew lol, yeah, the only way I could figure was what we did, and found an owner finace, still live here
Mike_Summey Right on JimeE
cstew Mike, I think you know my husband
Elizabeth lol lol
Mike_Summey VA and FHA loans are still assumable.
Al Lee It is nearly impossible to find non-qualifying assumable loans any longer, but back then they were plentiful.
Mike_Summey cstew, who is he?
cstew Bill Stewart, Superior Painting
Sol (Cali) Mike, Al, or Roger, when we’re first starting out should we get preapproved for financing before we start making offers (assuming we’re going to find something good).
Roger Dawson Good point Sol
Al Lee The new loans (after 1989) are Qualifying assumable, You must qualify for the loan. The old loans were non-Qualifying, anybody coudl assume the loan.
Mike_Summey cstew, the name doesn’t ring a bell, but I’m terrible with names. If I saw him I’d probably know him.
MarkCT Al I seen some other means of assuming loans such as Land Trusts or wrap around mortgages. What do you think of those?
Sol (Cali) So that means yes, Roger?
Roger Dawson Al does that mean that a qualified buyer could assume a loan interest loan even if the bank wanted to call it in?
Al Lee Sol, sure, why not. You might be able to swing a deal without needing that loan by using owner financing or other means, but why not have a pre-qual letter in your hip pocket to show to a seller if it helps you to get the deal?
Mike_Summey Sol, if you paln to limit yourself to bank financing that is a good idea, but there are so many ways to buy without bank financing you may be limiting yourself.
Roger Dawson Sol, I didn’t realize you were asking a question. Yes, it’s a good idea but you don’t have to.
Al Lee Roger, no it means that if you had a NQA loan and I wanted to buy yoru house, we coudl make a deal in which I just take over your loan without needing to fill out a loan application to the lender.
Sol (Cali) Mike, I don’t plan on only using bank financing. I just was wondering if it was prudent to at least have that “in your hip pocket” as Al out it.
Roger Dawson Mark, our position is that that any assumption that is hidden from the bank is not right.
Sol (Cali) As Al put it…
Roger Dawson Thanks for the clarification, Al.
Elizabeth Sorry, folks, I’m a little slow here tonight. Mike, are you saying that there are still some assumable loans here in NC?
Al Lee Sol, I think that any ammunition you have to help you get a deal is worthwhile. It doesn’t even cost anythign to get prequalified
Mike_Summey Al, I believe you can still assume VA & FHA loans without qualification, but if you do the seller will not be released from the loan and will not be able to get another VA or FHA loan until you pay it off.
Mike_Summey Elizabeth, see above.
Al Lee Mike, that is true for loans originated before 1989.
Roger Dawson I think that FHA will allow more loans if the borrower was tranferred to a new city.
Elizabeth OK, thanks Mike.
Al Lee Problem is that if the loan is that old it has probably been paid down a lost, has a high interest rate, and is not worth assuming.
Al Lee paid down a lot
Mike_Summey Al, I just poured myself a glass of wine to see if it would help your typing!
Al Lee I have seen assumable loans recently that were at 10-11% interest rates. I can get a new loan at 7%.
Elizabeth Mike, do you mail out letters to find potential sellers?
Al Lee Mike, you are onto something. The wine that YOU drink makes my typing better!
Penny thats cute Mike 
Pscherer I hope that wine is from NorCal
Mike_Summey Elizabeth, no I find the best way to find deals is to get out and ride neighborhoods. Become familair with them. Get to know the people and you will often learn about a deal before it ever hits the market.
cstew I hope it is not biltmore wine
Al Lee I once told my wife: “Honey, you need to stop drinking. Your face is getting blurry.”
Al Lee My standby at home is CLos du Bois Merlot
cstew That is what I am trying to do Mike, check out the neighborhoods
cstew expecially near my rental
Pscherer Clos du Bois makes a nice Merlot
cstew so far, my 2 years of college students have been great with the neighbors
Elizabeth That’s true . . .\
Roger Dawson It’s very educational to drive neighborhoods into which you normally don’t go. You see some very modest houses that would make ideal rentals. Some of them are so run down they’re begging for a buyer.
Mike_Summey Pscherer, Estancia Chardonnay for Monteray
Pscherer Very Nice
Penny Nice, isn’t it Mike?
Mike_Summey I have several local neighborhoods I have ridden for years. As a result I own quite a few properties in them.
cstew course now I have both of my sons in the house, and they know I am looking for another, or more so land to put a modular on
Pscherer I usually try to drive a different way to work or wherever just to see what is new and who is fixxing up their homes in anticipation of selling
Mike_Summey My sons used to say “Dad, do we have to go look at houses again?” when I would take them out on the weekend with me. Today they understand why we were doing it.
Pscherer Mike my son was the same way now he is out looking himself
Elizabeth Have you ever bought any FSBO’s?
Sol (Cali) Mike and Roger, in the list of expenses spelled out in your book I don’t see gardening service included. Do you expect renters to keep up the yards themselves in single family properties?
cstew My son is starting to look now too
Mike_Summey Pscherer, look for the ones that seem to be neglected as well. The owners may be getting into deeper and deeper trouble and can’t fix them up to sell.
Mike_Summey Elizabeth, yes I have bought several FSBOs, but I don’t make them a priority when looking.
Mike_Summey Hi shouston.
Roger Dawson Sol, in SFR the tenants should do the gardening and pay for all utilities that are not included in the property taxes or rates.
Mike_Summey Sol, with SFHs usually the tenants handle to lawn maintenance.
shouston48342 Hello Mike, my first time in months. Hello everyone.
cstew and if they don’t handle the lawn?
Pscherer Elisabeth I have bought a few and found them more difficult due their inexperience
Mike_Summey shouston, glad to have you back. Where ‘ya been?
Mike_Summey Pscherer, I agree with that.
Roger Dawson WB welcome back
Sol (Cali) If you’re driving your farmed neighborhoods and notice one of your rental SFR homes aren’t doing lawn maintenance do you just let it be, or do you pressure the PM?
shouston48342 I work for Ford Mtr Co, on the line. Not much time to get online with you so I have to take a day every now and then
Mike_Summey cstew, I just had that situation with a house that was rented to two girls. My property manager sent her maintenance man over to mow the lawn and then sent them a bill. They have since cut it themselves.
cstew Thus the property manager…..
Mike_Summey Right
Mike_Summey That’s what property manager are for…to do all the things I don’t want to do.
Sol (Cali) In that scenario, Mike. Does the PM have to put something like that in the rental contract?
Elizabeth Did they pay the bill?
cstew yes, I have it in my lease that the grass will be mowed by the tenants, or a charge of 30 will be added
Pscherer Sol, absolutely it should be in the contract
Elizabeth Hmmmm—good idee.
Al Lee Whoops! I need to run a bit early tonight.
corey mike I have a situation where I have a neighbor to my tenant who is racist and keeps calling the police on him saying he is disturbing the peace. All the other neighbors say he is not. This neighbor reports disturbing the police weekly.
Al Lee I have enjoyed it as usual
Mike_Summey Sol, it is in the rental contract. It states that the tenants are responsible for lawn maintenance and if they fail to keep the lawn in acceptable condition they will have to pay to have the work done.
Roger Dawson Thanks Al
Al Lee ope to see you all here every Monday.
cstew mine says the grass will be mowed 1x per week march-oct and as needed
Mike_Summey Elizabeth, yes they did.
Al Lee Goodnight.
corey Mike my tennant actually had to post bail to get out of jail. any ideas on how to handle this
Sol (Cali) Is it common for PMs to have rental contracts that specify that untamed lawns will be cut and charged to the renters? if not, should we demand that?
corey we are going to try to file on the neighbor that he is filing false police reports
cstew thanks for the chat everyone! nite
Mike_Summey corey, I would stay out of it unless the tenant is doing something illegal. The problem is not yours…don’t take ownership of it.
Roger Dawson Godo night Cstew
Mike_Summey Sol, that is the customary way of doing things here.
Sol (Cali) Bye cstew.
Mike_Summey goodnight cstew
shouston48342 Bye cstew
Sol (Cali) Ok, Mike. I guess I
corey Mike My concern is this neighbor controlling who my tennants are. By getting them so frustated they just leave.
Sol (Cali) I guess I’ll have to actually talk to some PMs. :p
Mike_Summey I’m going to have to leave you right at 9:00 tonight myself. I have bankers coming early in the morning to discuss financing on a new project.
Pscherer Corey have you lost any yet
corey no this is my first tennant in this house. this neighbor will actually go out and start taking pictures of my tennant just to irritate him
Sol (Cali) Thanks everyone. This has been a very informative evening for me. good night.
Mike_Summey corey, if the neighbor falsy accuses your tenants of things they are not doing, have your attorney write a letter advising that you may bring legal action if he does not stop harrassing your tenants.
Mike_Summey Goodnight Sol
Pscherer If that’s the case I would back off to, it his problem not yours
shouston48342 Bye SOl
corey Mike ok the tennant is great keeps the place spotless and pays on time
Elizabeth Thanks Mike, Roger, Everyone. It’s been great!
Mike_Summey corey, the neighbor has a duty to let your tenant live in peace. It may take a sternly worded letter from your attorney to explain that to him.
Roger Dawson Before you antagonize the neighbor any further, I would sit down with them and try negotiating.
Mike_Summey Goodnight elizabeth
Mike_Summey Roger is a lover, I’m a fighter. That’s why we make such a good team.
shouston48342 Goodnight everyone, thanks for the chat.
Elizabeth Goodnight!
Mike_Summey I have to run too. Goodnight all.
corey Roger what is to negotiate my neighbor is doing nothing wrong. all the other neighbors like them
corey roger like my tennant
Roger Dawson See you next week everyone!
» Filed Under Chat Transcripts
Comments
Leave a Reply