Chat Transcript - February 26, 2007
Posted on February 27, 2007
santosleigh hello everyone, can anybody answer this problem, i bought a house for cash, $50,000 went to the bank for a equity loan for the next house. the first house is appraised at $65,000 but the bank appraiser said it is only worth $25,000, how can this be, the $65,000 appraisal is from the insurance company that is covering me. how can there be a $40,000 gap between appraisers
Mike_Summey Hi Leigh
Mike_Summey Leigh, did you ask the bank where they got their figure?
Mike_Summey What is the appraised value for tax purposes?
Mike_Summey Hi Roger Dawson
Roger Dawson] Hi Mike
Mike_Summey Roger, Garrett Sutton is going to join us next week.
Roger Dawson] That’s great Mike. I’m going to be skiing in Canada.
Mike_Summey What?
Mike_Summey You aren’t going to miss the chat are you?
santosleigh mike, the lady at the bank said maybe the appraiser just drove by, the house just had a $22,000 rehab.
Roger Dawson] Mike, don’t cry. It’s only for a week
Mike_Summey Leigh, what is the tax appraisal?
Mike_Summey What happened to you Roger?
Roger Dawson I logged out to get the typo off the end of my name
Mike_Summey Looks like everyone is late tonight.
santosleigh mike i don’t know what you mean by tax appraisal, do you mean the yearly taxes,if you do, they are $808.
Mike_Summey Hi Penny
Penny Hi Mike
Roger Dawson Went to an Oscar viewing part last night. Gisela won the pool as usual. She know all those obscure foreign movies that nobody’s heard of.
Penny looks like I’m early tonight
Roger Dawson Hi Penny and Pscherer
Pscherer Hi All
Penny Hey there Roger.
Mike_Summey Leigh, each county appraised all its real estate for tax purposes. that’s what the property tax is based on. You can find the tax value at the county tax assessor’s office usually located in the courthouse.
Mike_Summey Hi Pscherer
Penny Neat Roger! Did you guys make it for the finale!
Mike_Summey Penny, you’re right on time…almost! 
Penny 
Mike_Summey Hi Zoe
Mike_Summey Hi oz
Zoe Hello Mike and everone else. I missed it last week and am glad to be back on again.
Mike_Summey Zoe, we’re glad you’re back too. Any questions for us?
oz HELLO MIKE
Pscherer I haave been doing a lot of BPO’s lately. An astounding number and many seem to have occurred because people vastly overpaid to make the deal.
santosleigh mike, so doe’s this mean that my house might only be worth $25,000 instead of $65,000 which means i can’t get the loan for $35,000
Mike_Summey leigh, that is possible. What did you base your purchase price on?
Mike_Summey Pscherer, many people who got caught up in the euphoria of a couple of years ago overpaid and are now hurting.
Penny Roger, I’m listening/watching a fantastic concert by Josh Groban right now aired from Los Angeles. Some Amphetheatre there. Its great!
Pscherer In my small area my office mate and myself are seeing as many as 8 requests per day from lenders and we are not the only people doing them in this area
Mike_Summey Are we having a slow night tonight because everyone is so tired from staying up half the night to watch the Oscars last night?
Zoe Roger, I have a question concerning (brackets) in the negotiating gambit. Would it be possible to go a little above the half way negotiating positions?
Mike_Summey Hi Ken
santosleigh mike, now i am sick, this is terrible, how can i recoup this loss, this ruins all my plans
KenJ on AI Hey Mike & Roger, Hi everyone
Mike_Summey leigh, check it out before you get too worried. I asked you earlier what did you base you purchase price on? Did you use the Offer Generator to establish a value?
Zoe Sorry Roger, [finishing] and still be ok because the numbers worked out for me in this particular deal?
Mike_Summey Pscherer, what have you been doing a lot of?
Mike_Summey Hi Eddie
Eddie-NC hi everyone
KenJ on AI Mike and Roger, I’m looking at a home to purchase using WM methods. The current owner is another investor renting the home out. Currently there is a tenant in the property without a lease. He wants to sell. Do I need any special provisions in the offer to make sure they have vacated when I close?
Pscherer Broker Price Opinions (BPO) lender requests for a current market value based on comps to determine if it is worth it to file a notice of default or try to work with the owner.
ajlopez4 Evening all.
Mike_Summey Hi ajlopez
Roger Dawson Penny, if it’s outdoors it’s probably the amphitheatre in Griffith Park
Zoe Hi ajlopez4
ajlopez4 I have a quick question
ajlopez4 There are condos being built in downtown chicago
Mike_Summey Ken, if you are concerned about the tenant and want him out, put a provision in the contract that the deal will not close until the tenant is gone and you can be given sole posession of the property.
Penny its very nice.
santosleigh mike, i did not have the offer generator at the time i bought the house, today i sent you a letter about this deal,you should get it in a day or too. i must sign off now, i can’t continue with these chest pains…
ajlopez4 They structured the deal so you put 10% down of the value of the condo and lock it in when the condo is done being constructed in 2008.
ajlopez4 How does that sound?
Mike_Summey Leigh, calm down. You may have a great deal and not know it. Check it out before you worry too much. What willthe property rent for?
Roger Dawson Zoe, Bracketing is assuming that you’ll end up half way between the two opening negotiating positions. It doesn’t always work that way. You’re okay as long as the income covers the outgo.
Zoe Thank you Roger
Mike_Summey ajlopez, I’d run from the deal so fast it would make your head swim. I was reading a recent article that said over 40% of the people who made preconstruction deals a year or so ago are now forfeiting their deposits rather than close the deals.
KenJ on AI Thanks Mike. I was considering trying to find a way that they could stay in the property if they qualified with the management company. That might make the closing more complicated. Has anyone done this much in the past, kept a curreent tenant in the home through a change in ownership?
ajlopez4 wow - thanks mike. I had a feeling about that.
santosleigh mike, the property is renting for $650. right now but all my dreams are going up in smoke.
Mike_Summey Ken, I’ve bought many properties with tenants in place. If you think the tenant might be okay, have them complete an application and check them out before you ask them to move.
Mike_Summey Hi TAS
TAS Hello.
Pscherer Leigh, could you please give us the beginning of this question.
Mike_Summey Leigh, if the property is renting for $650 the property is worth the $50,000 you paid unless it needs a huge amount of rehab work.
oz oops, hit a wrong key… typical for me!
Mike_Summey oz, my computer doesn’t have a goodbye key.
KenJ on AI That may work Mike. I could get the application completed after I get a contract and know before closing if they would work. I would still put the provision to make it vacant in the contract if I wanted to enforce it.
Penny oz, Mike is trying out his funny bone tonight.
ajlopez4 Mike, do you know why 40% forfeit there deposits? are the buyers doing something wrong? or is it just a poor real estate decision?
oz Mike, mine don’t either, but it does have mess up keys.
Mike_Summey Ken, put a provision in the contract stating that unless the current tenant meets your qualifications and is accepted by your management company you will delay the closing until the tenant is out.
Pscherer ajlopez–mostly condo’s are overbuilt
KenJ on AI Thanks Mike, got it
santosleigh mike, the letter i sent you today gives you pictures of the total rehab that kenhill properties did he said it was a $22,000 rehab.
oz thanks penny
Pscherer Talk to some of the people in Florida who were selling their preconstruction contracts, the last buyers are running because Florida condo’s are extremely overbuilt.
Mike_Summey ajlopez, because the condo market is in freefall in many areas and the builders are unloading the units at prices so low they can forfeit their deposits and still buy for less than they could if they completed the preconstruction contract.
Penny but oz, you had a good comeback!
KenJ on AI I live in Florida. All the condos here went from hot! to NOT! overnight.
Zoe Roger & Mike, The OG has arrived and I am totally stoked by how simple it is to use when I’m calculating figures. Can one of you clarify something for me? Should I trust the insurance company that is already in place with this particular property being that they already have all the info needed to give me a assessment of part of my research for my NOI, or should I seed out another insurance company?
Pscherer Nearly 90% of all the out of my area listings I am sent are Florida Condos. They are being marketed heavily on the internet in CA
oz Penny, I am frequenyly told i hae good com backs, having 4 daughters I learned good ;-}
Roger Dawson A builder (particularly of condos) can put any price they want on preconstruction. They only know if it’s viable when they start to close.
Mike_Summey Zoe, what are you wanting from the insurance company other than a quote for insurance?
Pscherer 4 daughters, ouch. My one keeps me on my toes
KenJ on AI Thanks for the chat gang. Gotta go. See you all next time.
Pscherer ajlopez 10% is a lot of money to hold the condo.
Zoe Mike, I am trying to do my NOI calculation figure on the OG and it is prompting me to input this [insurance] figure
Mike_Summey ajlopez, why are you interested in preconstruction prices on condos?
Mike_Summey Zoe, that is the monthly or annual premium for fire insurance. The insurance company should be able to give you a quote.
Penny same here Pscherer, my one keeps me sharp!
Zoe OK Mike got it
santosleigh mike, like i said the house had a $22,000 rehab, it doe’s not need any work
ajlopez4 Well, I’m not really interested in buying preconstruction condos. I saw an advertisement by where I live and wanted to know if it was a good idea.
Zoe Mike because of the prompting by the OG I am learning so much newer things to search out when before the OG I never knew any of this!
oz Pscherer, jng in it is well worth it, I have also have had a couple/three or so of theri firlefrinds living in at various time. They eventually grow up ;-}
Mike_Summey Leigh, $650 per month rent on a $50,000 house that needs no work is a great deal. The bank should finance 40-45K based on the income stream alone.
Mike_Summey Zoe, you will find out that the OG is the finest tool available for long term investors. It will keep you out of trouble and enable you to create offers on properties within minutes.
Mike_Summey ajlopez, as I said earlier I’d run from it. Pure speculation is what it is.
Mike_Summey Zoe, I’ll be looking for a testimonial telling us what you think of the OG after you’ve used it a while.
Zoe Absolutey Mike, I am telling all my other friends about the OG and trying to break it down so that it appears to be an irresistable product that’s a “Must Have”!
santosleigh mike, i don’t understand this, how can my insurance company insure me for $65,000 and the bank appraised it for $25,000 i’m going crazy just thinking about it
Pscherer Leigh find another insurance company.
Mike_Summey Zoe, I had another real estate guru tell me last week that we should be selling the OG for at least $299 to $499. He told me that we were cheapening the product by selling it at $69.95.
Pscherer The land has value so it shouldn’t be counted as repleacement cost.
Pscherer Mike that wouldn’t have been Dolf would it
Zoe Hey Mike how is the weather there? I saw on the news that NC took a hit with a tornado.
Roger Dawson Zoe, it’s been perfect weather in Los Angeles. Maybe that’s why everyone wants to move here.
Mike_Summey Leigh, the insurance company is trying to sell insurance. The bank is loaning money. Think about it. the higher value the insurance company places on the property the higher premium they can charge. The lower value the bank puts on it the more secure loan they have.
Mike_Summey Zoe, weather is fine here. I’m in the western mountains.
Mike_Summey Pscherer, no comment!
santosleigh pscherer, do you mean my insurance company don’t know what there doing
TAS The scarier thing is that they know exactly what they are doing to you.
Zoe Mike now that I have the OG, I think $500.00 is a small price to pay when it turns into $50K in 15-20 years or less because the OG keeps you out of trouble and in
Zoe wholesale purchases
Mike_Summey Leigh, show the bank officer the lease at $650 per month and ask how the property can only be worth $25,000. If you paid $50,000 for it I wouldn’t insure it for more than that and probably would insure it for about $40,000. Most replacement cost policies only require you to insure 80% of the value.
santosleigh mike, will i still be able to get the $35,000 loan
Mike_Summey Zoe, may I send you a bill for the difference?
Zoe Roger lol about moving to Los Angeles. To hot for me Roger, I like 12 degree weather.
Mike_Summey Leigh, if one bank doesn’t want to do the deal try another. the bank may be having a problem with real estate loans right now and are being overly conservative.
Zoe Send to me Mike with an envelope post marked to Roger, lol
santosleigh mike, it sounds like i’m sunk
Mike_Summey TAS, you’re being awful quiet. Is this your first time in the chat?
TAS Yes. Leigh, why can’t you find another lender, that will use a different appraiser.
Roger Dawson Santosleigh: don’t panic! Looks to us like you have a good deal. Find a loan broker who will get the financing for you.
Zoe Hey Mike & Roger, where is Al, I wanted to see if the brand of wine he switched to has helped his typing, and if it would help me with mine
Mike_Summey Leigh, I think you are in fine shape. Quit worrying! If you can’t do the deal with the bank you are talking with, go to another one. Banks are businesses too. When one doesn’t like real estate loans another one does. In 6 months the tables may turn and it be jsut the opposite.
Mike_Summey Zoe, I’m not sure where Al is tonight. The wine may have had too much effect on him.
santosleigh thank you all, for trying to help me i guess i’m a weekendfailure
Mike_Summey Hi Alex
alex_lopez hello
alex_lopez wat do you think about real estate in dallas texas area
TAS Where is the property leigh?
alex_lopez wat do you think about condos in chicago?
alex_lopez mike or roger
santosleigh tas, buffalo n.y.
Zoe Leigh, no kidding with the advice to move to the next bank. It just seems as though the negotiating gambits you learn may also help you in wisdom to have the “walk away power”.
Mike_Summey Leigh you have to think positive. Don’t beat yourself up. The worst that can happen is you collect the $650 per month for a few months. That’s amuch better return on the money than the bank will pay you.
Pscherer leigh what I meant re the insurance company is they should be looking at replacement value of the home, not the amount the land and the structure together
Mike_Summey Alex, you’re late. We’ve been having that discussion for the last 30 minutes.
Zoe Pscherer, how has RE Investing been for you lately?
Roger Dawson Walk away power comes from convincing the other side that you have options
Mike_Summey Alex, the gist of the conversation is stay away from the condos.
Pscherer Good, I closed on a home today and I have one in escrow set close in March.
TAS OK, so last time I checked there were several MAJOR banks in NY. Why are you committed to this one that won’t loan you the money you need?
Mike_Summey Hi WTV
Zoe Ohhhhhh! that’s right Roger, should’ve turned to the next page
alex_lopez why wats the big deal
alex_lopez ?
alex_lopez i mean the advertised to sell at 230,000 six months ago
alex_lopez its still not built
Pscherer Alex_lopez we haave been bashing condos
alex_lopez and now its selling at 250,000
WTVDBAD Hello all.
Pscherer Have any closed
Pscherer alex
alex_lopez the same unit, and is not going to be done being built until june 2008
alex_lopez a
Pscherer I could offer them 280,000 would it make it worth 280?
Mike_Summey Alex, in most places the condo market in in the tank. Besides, we don’t recommend condos as long term investments because there are too many factors that affect your return on investment that you can’t control.
Pscherer In addition on condos., there are 3 types here in CA those getting ready to sue the devloper, those who are suing and those who settled for too litle to make the repairs
Mike_Summey Alex, if you will go back and read tonight’s transcript after it is posted tomorrow you will be able to see why we don’t recommend condos. Why are you interested in them anyway?
santosleigh mike, i could notfell any lower right now i fell like taking my 1941 oldsmobile that is in showroom condition and smashing it into a brick wall!
Mike_Summey Leigh, I’m sorry! I think you’ve got a good deal and I don’t see how smashing you olds into a brick wall will make it any better.
alex_lopez ohh
Pscherer As far as control with the condos. you are frequently asked to do a special assessment for repairs that weren’t figured into the monthly fees
alex_lopez im interested in them because the one i was looking at, went up in value by 30000 in a matter of six months
Pscherer And those assessments can be many thousands and they are due in 30 days.
alex_lopez and I could just sell it if its a hassle to maintain
oz hang in there sleigh, it ain’t all that bad… things will work out
Pscherer Alex you are missing the point just becasue the developer raises the price doesn’t mean he will close escrow on any of them.
Mike_Summey Alex, what difference does that make if you’re buying it for the income stream. Has rent gon up a corresponding amount and are all of the completed units rented or occupied?
alex_lopez no and no
Zoe Santosleigh, I echo what oz said, and ad that what ever your going through it will somehow work out
Pscherer Time heals mistakes Leigh
Pscherer and it doesn’t sound like you made one.
alex_lopez its not done being built yet and the value went up 30000
Pscherer Price and value are different things Alex
alex_lopez go on…
Mike_Summey Alex, I’ve know cond associations to amend their by-laws to prevent renting the units.
santosleigh pscherer, aha, so it was a big mistake!
Roger Dawson There is money to be made by secure preconstruction pricing with a small deposit but it only works when the market is booming. We’re on the downside of a boom right now.
oz alex, are they playing games,
Pscherer the price can be pie in the sky, value is what someone actually closes for
alex_lopez ohhh
alex_lopez oh ok
alex_lopez your right
TAS It doesn’t sound like he wants to buy it to rent. It sounds like he wants to buy it on the bigger sucker plan.
alex_lopez i didnt realize that
Mike_Summey Thanks TAS, I couldn’t have said it better.
alex_lopez thank you guys
alex_lopez but im totally wrong
TAS I’ll pay 250K hoping a bigger sucker comes along in 3-6 months to pay an extra 30k.
Penny goodnight everyone
alex_lopez your riht
Zoe Take care Penny
alex_lopez damn thanks alot
oz g/night penny
Mike_Summey Alex, we’re investors, not speculators. If you want to gamble go to Vegas. Its more fun and they have pretty girls serving free drinks while you lose your shirt.
Mike_Summey Hi eryk
TAS Works great as long as you are the sucker, and not the bigger sucker. Then it just sucks.
eryk76 hello mike.
alex_lopez ohhh
alex_lopez i have to go
oz gotta run, goodnight all
Roger Dawson I need to run. I’ll be in Canada skiing next Monday, but you’ll have a great guest (an attorney) and I’ll see you in two weeks.
alex_lopez ibye
Zoe later oz
ajlopez4 Have a good evening all.
Zoe later aj
santosleigh i think i will take my car for a drive…
eryk76 Mike would you consider rehabers speculators?
Mike_Summey eryk, yes.
Pscherer Night all
Zoe Good night Psherer
Mike_Summey eryk, anytime you buy properties with the idea of selling it for a profit you are speculating.
Mike_Summey I’m going to have to leave you also.
Zoe Good night everyone
eryk76 have a good night.
Mike_Summey Goodnight everyone and don’t forget next week we will have Garrett Sutton as my special guest to talk about corpaortions, partnerships and LLCs.
Zoe Cool I’ll be here
eryk76 goodnight all..
» Filed Under Chat Transcripts
Comments
Leave a Reply