Chat Transcript – JUne 4, 2007
Posted on June 5, 2007
santo hello everyone, i am now santo, used to be santosleigh.
Bill L HI Santo
santo hello, bill
Bill L Did you have a nice Memorail Day weekend?
santo hello, yes , did you
Bill L Yes a couple of concerts and ariding in Rolling Thunder
wood hi everyone
Bill L Hi Wood
Bill L hi
wood Hi Bill L
eryk76 hello
Bill L Last week Wood and I had the Chat room all to ourselves
wood right
Bill L hi mac
santo hello, mac
Mac Hi all
santo hello, mike
Bill L Hi Mike
Mike_Summey Hi everyone!
eryk76 hello mike
Bill L ANy suggests on how to deal with tight fisted bankers?
Mike_Summey Break their arms! 
Mike_Summey It loosens their grip.
Bill L LOL
Mike_Summey Not really! Just kidding.
Mike_Summey Hi corey
santo my bankers want to give me 100% financing
corey Hi Mike
Bill L Santo, why and how
Mike_Summey the banking industry is going to be tightening up because of the problems with the sub-prime loans. The feds are tightening the screws on them.
santo credit score—825
Bill L Yes my wifes is 830 and mine is 810
Mike_Summey Santo, with a credit score like that, you must own the bank.
santo not yet
Mac Mike, but isn’t that going to create opportunities for those with good credit. Doesn’t the bank’s money need to be invested somewhere?
Mike_Summey I will be meeting tomorrow with a group regarding forming a new bank.
wood when could I start to invest?How much money should one have at least?
Bill L INvestor friend I hope
Mike_Summey Mac, you are correct.
Mike_Summey If your credit is great you should have no problems.
Bill L My wife is starting the business, and my guess is not having a polished Business plan to them
Bill L hand them
Mike_Summey wood, since you are in China, I don’t know what the laws are there nor how credit works. The basic principles we teach will work anywhere that you can use them. Buy properties that will let you cover all expenses and have enough left over to pay for them.
Mike_Summey Hi josh
Bill L hi roger
Mike_Summey Roger is on the pnone trying to get in the chat
josh Hey Mike
Mike_Summey There he is.
Mike_Summey Hi AL
Bill L hi al
Al Lee Hey, guys. How are you all?
Roger Dawson Hi everyone. I just got in to Pittsburg
eryk76 If you are trying to get approved for your first investment property aren’t the banks more interested in your income to debt ratio than your great credit score?
Al Lee Hi, Santo
santo mike, looking at a house with 5 br. for $50,000, my broker finished the rehab.
Bill L that also is one issue.
santo hi, Al
corey Mike my son Josh and I are looking into different ways for him to purchase real estate. He is making about 1000.00 a week and of course no 2 year employment history. He has 700 plus score. If he purchase the a home off credit cards and then went to the bank with a 1 year signed lease would they finance it for him since the tenant is paying the note
Mike_Summey Bill, if you make your offers using the Offer Generator software, that should be all you need for the banks. Several of my bankers have purchased the software to us to evaluate investor loans. It is better than what the banks provide.
Mike_Summey Hi Dennis
Dennis Hi
Roger Dawson Hi Dennis
Bill L Let me give that a try, and give my wife some muscle to work with the bank.
Al Lee I would be very cautions about using credit cards to buy anything you can not pay off when the monthly bill comes in.
Mike_Summey eryk76, debt to income ratio is important if you are buying a home to live in, but investment properties should stand on their own and not require you to dip into your earned income.
Al Lee cautions
Bill L AL, Amen
Al Lee cautious
Roger Dawson Hi Penny
Mike_Summey Hi eplessin & Penny
Penny good evening everyone.
eplessin42 Hi Mike
Bill L hi penny
Al Lee When the bank see that credit card debt it coudl kill you chances for certain!
Bill L hi eplessin
corey Al we wouldn’t have a problem at all paying the credit cards we are just evaluating different ways for him since he is only 19 and just starting to earn income to get financed
Al Lee corey, I mean pay the entire balance at the end of the month, not the minimum payment!
Mike_Summey corey, I agree with Al. Stay away from the credit card debt unless you have a play to pay it off when the statement comes in. I’ve seen many people get in serious trouble listening to real estate gurus telling them to get credit cards and use them to make purchases. DON’T SO IT!!!
Mike_Summey Hi Theo
Theo_SC Hey everybody
Roger Dawson Hi Theo
Bill L hi theo
Mike_Summey corey, could you loan or gift him the seed money to get started.
Al Lee Don’t DO it, either!lol
wood If you want buy a house ,you should pay 30% at first.It is still a long way for me to get it .
Mike_Summey wood, how old are you?
wood 24
Theo_SC Hey Mike & Roger
wood 3000-5000yuan per square here
wood and my income is 1000-2000 now
corey Mike thats what we are considering doing is going in as partners or me cosigning. We are just trying to evaluate all our possibilities. He will be making a 6 figure income within the next 12 months and investing all of it in real estate. Any suggestions for him. I am still going to cover all his needs while he is building his real estate business
Theo_SC I finally got in touch with a REO Bank officer today. She will be sending some properties on Wednesday
Mike_Summey wood, at 24 you have many years ahead of you. You have several options. First, you could start saving now to save up the down payment for the first property. Second, you could make offers that ask the seller to finance the 30% the bank won’t finance. Third, you could get a small loan from the bank 20-40% and ask the seller to finance the ballance.
Mac wood, can you find a partner, someone to put up the money while you do the work of finding and fixing up the property, then split the profits?
Al Lee A friend of mine is quite successful as an investor and he bought his first house at 18 with no help. I tend to think that if you give too much help your kid will not learn the necessary lessons and will not apply the proper value to things and will not hold onto them. It they have to sturggle and figure out a way themselves, they appreciate it and value it and will probalby have it, or its fruits, until they die.
eryk76 mike, how much diffrence in rent is there between say a 2 bed 1 bath apartment vs a 2 bedroom 1 bath home? I knpw that location may dictate this diffrence but what would you say the average is?
Mike_Summey Corey, why don’t you set up an LLC with the two of you as co-owners. You decide the % ownership each will have. Then you could put in the cash and your son could contribute the sweat equity. In the future he could purchase your interest, you could gradually gift it to him or you could remain partners.
Mike_Summey Hi Ken
Theo_SC Mike…this REO bank officer said that one of the problems with short sale id getting the borrower to sign a defencency (check spell)that that owe the bank…how do you get around that?
Ken Mike were did you read that article about cities that are declining in price or sale. The one you mentioned in your email
wood Good idea,and I will try to find a partner .ask the seller to finance 30%,does it work?
Mike_Summey eryk76, my experience is that an apartment the same siz as a house will rent for about 80% of what the house will rent for, but the real advantage of the house is that the tenants usually pay all utilities and take care of the grounds.
eryk76 thanks Mike.
santo mike, i bought my last 2 houses from my broker, now he has a 5 bedroom in buffalo for $50,000, he just completed the rehab, and it’s rented for $725. but he wants to hold it for 4 months before he sells it to me, i can’t that long, should i buy one of his other houses, i don’t make offers i just buy from him
Roger Dawson Theo, it doesn’t sound like a short sale to me if the bank is asking the defaulting borrower to sign a note for the deficit.
Mac santo, that sounds like fire sale prices. Is Buffalo depressed?
Mike_Summey Theo, that is just wishful thinking for the bank. Why would a seller sign such an instrument? What’s in it for them? Tell your banker to get real. They are probably going to take a greater loss if they go through the foreclosure process and then have to sell the property than they will lose if they agree to the short sale.
Theo_SC ok
Mike_Summey santos, why does he want to hold it?
Roger Dawson Hi Sparky
Mike_Summey Hi sparky
Al Lee Theo, is there a scond lien on that house you are discussing with the bank?
sparky37 Hello All soory so late
sparky37 sorry
wood Roger Dawson ,ask the seller to finance 30%,does it work?
santo Mac, in buffalo it’s all cheap, my second house a 3br was $35,000
wood I mean when you buy a house
Theo_SC Al…no, there is no 2nd in place
Mike_Summey Everyone, are you seeing prices fall in your markets yet? We’re just beginning to feel the slump in Asheville, NC. We usually run 6-12 months behind the rest of the countryboth going into a downturn and coming out of one.
Theo_SC She said (bank) that it will be better to let it go to the court step
Bill L wow, 50K only bys one bed room here in N. VA
Al Lee All my houses in Dallas/Fort Worth rose 7-11% in the last year in appraised value.
Theo_SC does that right?
sparky37 asking prices are still up in ny/nj but sales are slow
Bill L Sales slow here, prices are adjustring
santo mike, he wants to hold to get some money back
Al Lee $50k is a down payment on a house in most places. In California, it is te optin fee.
Al Lee the option fee
Theo_SC does that sound right?
Mike_Summey Ken, the article was a CNN money article if I remember correctly. I just wrote down the drops and didn’t write down where the article was. Sorry. I didn’t plan to use the info for anyone except myself when I wrote it down.
sparky37 house are on market at least 6-9 months where as they used to be on 1 to 2 months
Roger Dawson Wood, yes, it should work as long as the 30% doesn’t mean that you’re 100
Roger Dawson encumbered.
eryk76 Yeah, prices are falling here in New England but when I look through mls there are still people trying to get what there property was worth almost two years ago.
Mac sales are a bit slower in the Raleigh-Durham-Chapel Hill, NC area, but prices are rising. In some newer areas appreciation is greater than 15% in the last year according to an appraiser I talked to yesterday.
Roger Dawson 100% encumbered (with no equity)
Theo_SC I am not experience in going to the court house for purchase
Ken Mike thanks, I like reading up on that stuff. I am thinking of relocating not sure were to yet most like NC sense my electrical license will transfer. I tried TX but they don’t take my license.
Mike_Summey Theo, then let it go! I’ve found that banks rarely do as well in a forced sale as they will if they negotiate with a reputable buyer. Maybe you could get them to agree to cut the interest rate if you assumed the laon. Same difference!
Ken Mac you from Raleigh
Mac Ken, yes.
Theo_SC I have always heard that you should $$$$$ at the court house
Mike_Summey Mac, that was last year. This year is very different.
Ken Roger what is the number 1 tip you would give to people for Negotiations. I like your thinking. I went with my cousin to buy appliances and within 10 mins he saved about $400
Theo_SC OK, I will try that tomorrow
Ken Mac you like it there. I am thinking of relocating there. Cost of living seems to be up some.
Theo_SC hey penny….
Penny Hi Theo!
Mac Mike, according to the appraiser, the prices in these same areas are continuing strong appreciation this year as well.
Roger Dawson That’s great ten. Number one tip is to let the other side know that you have options and are prepared to walk away.
Mike_Summey Theo, I once got a bank to cut the interest rate on nine loans from 9.5% to 6% to avoid having to go to a foreclosure sale. We closed the deal the morning the sale was to have taken place on the court house steps.
Theo_SC Al…what’s the deal with the 2nd? is there somethng there?
Al Lee Theo, if a shrot sale, the 2nd lien holder usually gets stiffed.
Mike_Summey Mac, ask him to prove it. If so I can guarantee you that the area is not a good rental area.
Ken thanks
Theo_SC thanks for the tips…this is why I like this chat group
Mac Mike, I agree that it’s not a good rental area. I thought you were talking about prices in general.
santo Mac, my first house cost $50,000 for a 3br, the bank said it was worth $80,000that was one of the reasons for 100% financing for the second, plus my 825 credit score
Theo_SC I was pretty happy today to have gotten in touch a REO person…I have been trying for months
Theo_SC I am now on her list to send properties too
Ken Theo those people are hard to contact.
Ken I think they get some many guys calling them
Al Lee Sometimes a second lienholder might have rights to take over the property by paying off the first lienholder. That woudl make th ebnak “whole”, so they will not be very negotiable until after the second lienholder has declined.
Theo_SC I know, I had to go through hoops
santo mike,my broker wants to hold the house for 4 months to get some money back
Mike_Summey Mac, we are primarily talking about areas for investors. There are some areas, usually very high end properties, where sales are still holding up strong, but these are areas where buyers seldom use financing.
Theo_SC Thx Al…
Mac Theo, if you’re talking with an REO person, you’re dealing with someone who deals with properties after they’ve come back to the bank after the courthouse sale. You need to be talking to the loss mitigation department to get a deal before the courthouse sale. These guys are also hard to contact.
w1099 Hello everyone long time no c
Theo_SC Thnx Mac
Al Lee HI, 1099
Ken Mac it is my experience that the lender won’t release that information. I had my best like at the court house in the Prothonataries office
Mac Mike, agreed.
Theo_SC I will keep trying
Mike_Summey santo, why don’t you go ahead and sign the contract to close in 4 months subject to the property being in the same condition it is today. That puts the seller at risk of sufferring tenant damage, not you. If the deal is good, and it sounds like it is, what’s the rush?
Mike_Summey Hi 1099]
Theo_SC I thought the REO person can make those decisions
w1099 Hey Al and Mike
Mike_Summey 1099, where ya been?
Mike_Summey Decide to come back josh?
w1099 I been doing I of work getting this real estate thing off the the ground Mike
Theo_SC Can the same person handle both side of the transaction?
josh sure
santo mike that sounds like the right thing to do, thanks a MILLION.
Mac Back to the price question. For investment property, the prices are flat. No decline yet, but the rental market is soft. Many people expect us to be near the bottom as job growth is increasing.
eryk76 Roger, is it possible to have the seller to carry back financing on the 20 precent down needed to obtain bank finnancing? Or does the bank want to see funds exchanged?
w1099 Have to do two things at once My wife getting our credit and thing up to par
Theo_SC Mac…where r u?
Mike_Summey Theo, I’ve found the loan officers who make the loans can be a good source. They are usually the first to see when their customers are getting into financial trouble.
Mac Theo, Raleigh, NC
Mike_Summey Hi jace
w1099 How the chess games going Al ?
jacepharm@gmail.com Hello Mike and everyone
jacepharm@gmail.com Hello Roger
w1099 Hello
Theo_SC eryk76…good question, i want to know as well
Roger Dawson Mike you can answer Eryk’s question better than me.
Theo_SC Thnx….Mike
jacepharm@gmail.com Mike, Im in NJ and starting to find some opportunities open up
Al Lee 1099, I cranked my rating on GK utp to 1549, but I had a few days I played when I was not in the mental state–too distracted with other matters–and am losing a few games now.
w1099 Hey there Mr Roger
Mike_Summey Mac, personally I think we are a long way from the bottom of this cycle. This is the 4th one of the cycles I’ve been through and my experience is that the down side usually mirrors the upside in time.
sparky37 jace where in nj?
w1099 Understandable Al
Mac Mike, I don’t disagree. Every time someone predicts that we’re beginning to recover, we don’t.
Al Lee But, I thnk you agian for introducing me to GK. It is far better than Yahoo’s site
jacepharm@gmail.com Mike, Problem is that there are two many condo conversion of older properties while at the same time new condo develepments going up…Market becoming very satuarated and making an already great rental market even better
w1099 Not a problem Al enjoy it
Bill L GK?
jacepharm@gmail.com Sparky-Northern NJ hudson county
w1099 Game Knot.com for chess
sparky37 i am in bergen
Mike_Summey eryk76, some banks want to see the money. When the sellers have enough equity, I like to obtain 20-40% bank financing and then get the sellers to carry the balance. I’ve found it is the best way in today’s market to get 100% financing.
Theo_SC WOW!!!!
Al Lee Recovery depends on where you look. In Dallas-Fort Worth, unemployment is down, in-migration is at record highs. Fastest growing metro area in the US
Theo_SC Mike…is that with a ballon?
w1099 Al have you ever heard of a person by the name Douglas Andrew? Or Mike and Roger
eryk76 that sonds like a great way to go..
Al Lee That is GameKnot.com
Mike_Summey Theo, did you just have an ephany?
jacepharm@gmail.com Sparky Bergen county is a great county to live in….Especially Paramus, Ridgewood, etc….
Theo_SC yeah
santo mike, i am comfortable working with this broker in buffalo, he said he will keep paying for my title insurance if i keep buying from him, i can’t buy in my area, nyc too pricey, $750.000 for a 3br
Bill L Thank AL
Al Lee I’ve heard of Miek and Roger !
w1099 Thanks Al I knew something was wrong when I put it up LOL
Al Lee No Douglas Andrew. Who is he?
sparky37 thats where i am, except invest oppt’y is slim and none
Al Lee 1099, we should play another game soon
w1099 Has a great Book out called Missed Fortune
Mike_Summey Theo, I have been able to secure several full term seller loans doing just what I said. I just paid off a 10 year loan last fall, I have 16 months on another that was 15 years and 28 on another that was 12.5 years.
w1099 we will Al not a problem
jacepharm@gmail.com Sparky-yes to many single families….You need to invest in passaic or hudson county if you can stomach it
Ken Mac I missed most of the begining chat how is the Raleigh market holding up.
Mike_Summey santo, it sound like you have found a very good arrangement.
Theo_SC jacepharm…I went to college in Mahwah, NJ
sparky37 i have looked at some in passaic but nothing was worth the investment
Theo_SC Ramapo College of NJ
jacepharm@gmail.com Theo, excellent! how do you like SC?
Mac Ken, flat for investment property, good appreciation for some high-end SFH, which are not good rentals.
Theo_SC Mike…I am amazed at what can happen
jacepharm@gmail.com Sparky-I stay in hudson……I love it….
Theo_SC it’s great, no snow
wood Roger ,when you get the seller financed ,when will you pay ?
sparky37 what r some of the towns in hudson?
sparky37 Is Flanders there?
santo mike, my broker has 19 houses he rehabed, and he sells them as he does more
Theo_SC Mike…what about a ballon term on seller financing the deal?
jacepharm@gmail.com MIke, I tried to do some seller financing on some deals and alot of sellers did not go for it. I have one currently that is thinking it through. I made her the offer last year and she refused. She called me again a few weeks ago…Seems she bought an expensive condo in NYC and needs cash
Al Lee Santo, be careful of rehabers selling you houses. They are notorious for cutting costs by cutting corners.
Mike_Summey wood, you pay the sellers just like you would a bank. Make payments to them each month. It provides them with an income and lets them convert real estate wquity into an income stream.
eryk76 santo, those prices seem to be really low for newly rehabed properties. How extensive is the rehab?
Theo_SC Mike…do you get the deed?
Mac Santo, I would also be concerned about rental income in a depressed area. If you buy too many properties, you may end up carrying some of them because of vacancies or reduced rent.
Al Lee Some of my club members bought rehab houses that are giving them grief now. Some do not even meet “code” for the city.
Ken Mike do I understand this right. When you go to the bank for a loan you don’t go to the loan officer, You go to the banker? Can you clear me up on this
sparky37 Jace–is Flanders in Hudson?
Roger Dawson Wood, the great thing about seller financing is that you are free to negotiate any terms you want. However, we think that your payments should at least be covering any interest, so that you’re not going deeper in debt.
jacepharm@gmail.com Sparky-Kearny, Jersey city etc….
Mike_Summey jace, it’s very difficule to get seller financing from sellers who are strapped for cash. The best sellers to finance are ones who what to convert real estate equity into an income stream. Sellers cn only finance their equity.
santo Al, i had a inspector check them out and they are ok
sparky37 Oh ok Jersey City I think is going to be one of the next hot spots
Al Lee smart move
Theo_SC thnx Roger
Mike_Summey Ken, sometimes I use the term banker and loan officer interchangably. Sorry if I confused you.
santo the rehab on the houses was $23,000
jacepharm@gmail.com MIke, Yes you are correct. I was going to give her some cash up front and the rest seller financed.
Mike_Summey santo, as a caution, I would not purchase too many house close together. Scatter them throughout the area so that if a neighborhood declines it doesn’t affect all your properties.
Mike_Summey Hi wps
wood Roger,how do you earn money from real estate?buy then sell it highly? or from the tanent?
Theo_SC This is different from buying with seller carrying back the finance right?
wps Good evenig, sorry for being late
Roger Dawson Hi Wps
santo mike my area can only get better
Theo_SC if you give them cash up front?
w1099 Understanding the Market is one of of the keys to success Mike I learned that from your LOL
Theo_SC Roger….if u r using bank finance & seller finance, do the get cash?
Theo_SC seller
jacepharm@gmail.com MIke, realtors in my area have been overpricing property as in other parts of the country and now they are sitting there for months without being sold. They are hoping someone is going to buy them and convert to condo….I dont think it will happen for now….Market to satuarated
Mike_Summey Theo, I’ve gotten cash for the sellers by getting a small loan from a bank and then asking to seller to finance the balance. This works great is the seller has a small mortgage that needs to be paid off in order for them to fiannce the purchase.
Roger Dawson Theo, sorry, I don’t understand your question
Theo_SC ok
Theo_SC somebody said that the seller get cash
Roger Dawson Mike, do you have to double escrow that or is the bank happy because THEY are not overencumbered?
Mike_Summey jace, I agree. Realtors have misled many people into believing that prices would continure going up by double digits forever. It’s a shame and a lot of people are going to lose money as a result of bad information.
Theo_SC I was wondering if it is bank financing and seller, if the seller get cash up front
w1099 Well it was nice chating with everyone Mike , Roger take care and everyone else take care also. Al I will c u in the chess room soon take care.
Roger Dawson bye 1099
Theo_SC Mike…u answered it
Al Lee See you soon, 1099
eryk76 bye 1099
Mac Got to go. G’night all.
Theo_SC This chat was good, I learned a lot…thanks all….
wood Mike,how do you earn money from real estate?buy then sell it highly? or from the tenant?
Mike_Summey Roger, if the bank’s interest is only 20-40%, they don’t care as long as they are in a fitst position. It works for the seller as well because they get an income stream and if they have to forclose, they are usually in no worse position than they were before the sale.
santo mike, my goal for this first year is 4 houses
sparky37 good night all
Mike_Summey wood, you rent the property to tenants and then use the rent to pay expenses and to pay for the propeerty. The difference between the income and expenses is what you earn. In the beginning it may be a very small amount or just a break even amount, but as rents increase and the loan pay down, the difference between income and expenses becomes wider and wider. That whi it take patience to build wealth with real estate.
Mike_Summey Hi Debbie
Mike_Summey Goodnight sparky
Theo_SC Santo…u can do it…my goal was 3-5 houses per year and I have been meeting it.
Al Lee buying houses low and selling high is a business,not an investment. Whatever you make will be fully taxed. IF you do it repeatedly, you will even become classified as a dealer and have to pay 15.2% employment tax on it as well as income tax. Buying and holding to make cash flow from the rent is investing and, if done correctly, can be virtually tax free income
Roger Dawson Good advice Al
Theo_SC I agree AL
Mike_Summey Al, I couldn’t have said it better myself.
Roger Dawson I need to run. See you next week.
wood It will be hard to earn money if less tenant
Mike_Summey Well folks, I have house guests so I’m going to have to leave you. See you next week.
Theo_SC later Roger
jacepharm@gmail.com Good night all
Theo_SC me too…see u next week
Mike_Summey The rest of you can stay and talk among yourselves as long as you like.
Al Lee I put the “virtually” in there so that a CPA can not say that I mislead anyone. In truth, it definitely can ge totally tax free. Actually, it will be “tax deferred” until you die and then forgiven when you die and your heirs receive the propert at a stepped up cost basis
Mike_Summey See you next week.
Mike_Summey Goodnight
santo nite all
Theo_SC jace…u there?
Al Lee Goodnight Mike
eryk76 night all.. have to take carre of the kiddos..
Al Lee OK, I will be signing off now, too
Al Lee ight
Al Lee Goodnight
Bill L Good night all
Theo_SC jacepharm…I still have family & friends up north
Theo_SC I worked in Ramsey for 8 years
Theo_SC good night all
wood bye all
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