Chat Transcript July 30, 2007 w/Guest Expert Carleton Sheets
Posted on July 31, 2007
Perillos Investment I just want it to be the first one.
sscercone test
NextTrump Hello
London hello
santo hi perillos, are you new to the chat
jmich18 Good evening from Long Island, NY
santo hi jmich
santo hi boni
boni hello everyone
boni first time here
jmich18 2nd for me!
jmich18 anyone advise how a “hard money” lender secures their investment?
santo you will like it, Carleton Sheets will be here tonight, you can ask him
santo hi shane
shane_Ky Hi
santo shane, how long did it take to get those 278 units
shane_Ky almost 2yr
santo shane i just started in jan. of this year, and have 12 units
shane_Ky correction almost 3yr
boni How many buildings is that?
shane_Ky that’s graet, I started with 12 units
shane_Ky are you talking to me boni or santo
boni to u shane
Carleton Hello, everyone
santo hello, carleton
boni hi
jmich18 ‘evening!
shane_Ky about 25
santo hi mike
Mike_Summey Wow! It looks like everyone is waiting for me tonight!
shane_Ky Hi Mkie
shane_Ky Correction Mike
Carleton [b]Hello , Mike
shane_Ky Hey Carleton
Carleton …..and Penny!!!
Mike_Summey I had a power blip just as I was signing on and it caused me to have to reboot the computer. Sorry I’m late.
mrsg Hi All
Mike_Summey Hi Carleton, Thanks for joing me tonight
Penny Hi Carleton! So glad you are in chat tonight.
mrsg got booted off last week
Mike_Summey Hi mrsg
Carleton Where is everone from?
mrsg South Fla
jmich18 Long Island, NY
TAS TX
Mike_Summey Looks like we’re going to have a crowd tonight.
Carleton Just give your states’ postal code.
Mac Raleigh, NC
Zoe3 winston salem,nc
mrsg Of course. you’ve got the man here
boni md
Penny Looks like it. Hi Mike.
santo Carleton, since jan. of this year i have 6 properties with 12 units in buffalo
Carleton NC is well represented. I bought my second home in NC
Penny I thought it was strange that I beat you in chat.
Mike_Summey I’m slow tonight
Carleton Santo…that’s great!
Mike_Summey Been trying to sell an airplane today.
shane_Ky santo are they all duplexes
mrsg Anyone have any thoughts on how to work the dropping south fla market?
Carleton …as a buyer or seller???
Mike_Summey Everyone, we’ve got Carleton with us so let’s don’t waste time with too many “Howdies” I’m sure he is waiting to answer your investing questions.
mrsg buyer
santo Carleton i live in nyc, can’t buy in this town 1 fam $750,000
mrsg investor
Carleton Where does the maid at the Marriott live?? (In NYC)
santo shane two one fam. two 2 fam. two 3 fam
jmich18 Carleton: please advise how “hard money” lenders secure their investments?
boni I am new at this and dunno where to start
Mike_Summey mrsg, if you use the Offer Generator it will show you how to work the dropping market in South FL. When you can make purchases that will cash flow with the NOI you will hae a good deal in any market.
Carleton In So FL just make what would ordinarily be rediculour offers so that the income will carry the property. That simple. I’m doin that in PSL FL and getting some brokers and sellers angry. I don’t care.
santo shane, i would like to stay with 3 or 4 fam. from now on
Mike_Summey boni, just start wherever you’d like. If you have a question, ask it. Don’t worry, not everyone here is an expert.
mrsg so you’re talking maybe 65 cents ont he dollar type offers
santo mike i am a expert rookie
Carleton Hard money lenders secure their loans just as banks do…usually with first mortgages.
shane_Ky That is a good mix santo
boni thanks mike, i got offered a condo townhouse for 289 k that rents for $1500
jmich18 thanks!
Mike_Summey Carleton, I just learned Saturday that there are 54 properties in one of the expensive development near Asheville that are in foreclosure. It seems the interest only financing is catching up with people even in the high dollar neighborhoods.
Zoe3 new at this 2 but how can i bgin 2 c immediate results if i put no $ down
boni from what i read on your book, if have $910 noi, where does it go from there
Mike_Summey boni, is there any way that will cash flow with the NOI?
Carleton Mike, I too lerned that foreclosures are affecting the prime market as well as the sub-prime market.
wood Hi everyone ,I am late
rickCT Mike & Carlton, How do you get around the imputed interest issue if you structure a deal below market interest rates?
Mike_Summey Zoe, you can’t. The results you will see will take place gradually over time as the mortgages pay down and the rents increase. This is not a get-rich-quick program.
mrsg how would i invest in another market without being able to constantly travel?
Mike_Summey Hi wood. How are things in China. Roger is there now on a speaking tour.
mrsg i meant in another state
santo shane, on bid 4 assets i saw a 22 unit apartment building for $47,000 but it needs $200,000 in repairs, possible cash flow $92,400, in cleveland ohio
wood It is raining here in Jinan, Shandong Procince
Carleton Rick, good question. Generally the low interest rate is just not disclosed altho the income is. I can never recommend that but that’s what’s being done. So if you are paying 2% you deduct that as an expense but don’t state the interest.
Mike_Summey rick, you can’t get around it, but the tax on imputed interest versus the tax on capital gains is the same unless the seller’s taxable income is more than $94,250. After that the difference is very small. Check with a good tax accountant for more details.
Mike_Summey Hi lief\
boni mike, the owners want cash so i am not sure how to structure an offer if there is even one.
Mike_Summey boni, all owners want cash. You never know what they will really do until you make a written offer with a deposit.
Mac Anybody recommend good cheap property financial tracking software. I have property mgr, so only need tracking. Use Quicken but have trouble tracking individual units.
Mike_Summey Mac, what are you tracking?
Mike_Summey Hi laurin
Carleton Boni, you can always get an investor to pay cash for a note that you in turn can give to the seller.
Mac Mike, income, expenses, vacancies
boni mike. u mean, the down payment?
wood Mike,do you recommend buy homes without having any reserve?
Tina Hello All
Mike_Summey Mac, I use a combination of Quicken and EXCEL. It works very well for me because I can get good numbers from Quicken & my property managers and then merge them into an EXCEL spreadsheet that puts each property into it’s own column then totals all properties.
Mike_Summey Hi Tina
Mike_Summey Hi oz
kevindav Hi everyone!
santo mike, i am taking your advice and taking a break for a few months, to put together money for the next multi unit property, also i keep $20,000 on the side for unseen repairs or costs
Mac Mike, I have info per property. I’d like to track by unit.
oz Hi Mike… to many fingers typing tonight (on my part)
Carleton Boni, I ran an ad in Chicago for Condo units I am trying to sell in Florida and on e of the calls, actually three times, was from a woman who said she had investors willing to purchase paper for cash. I haven’t returned her call to check out the detail but I would guess they are buying paper at a discount of 20%.
Mike_Summey boni, no I mean written offers that outline the entire deal you are offering. It can be amything from all cash to all financing. Make offers that will work for you and don’t worry about trying to do what the sellers say they want.
Mike_Summey Hi krspack
krspack1 Hey!
Mike_Summey wood, I don’t recommend buying for long ternm investment without having some cash reserve. You need to be able to carry a property during periods of vacancy or unexpected repairs.
Mike_Summey Mac, why do you need the information by unit. Doesn’t your property manager keep that for you?
krspack1 Mike, about half way through your FAQ book. Some great information in there.
Mike_Summey Hi Kevin
shane_Ky Santo, I was on the phone with a tennant wanting to pay after filting for eviction, what is bid for assets? after repair thats just 11,227 per unit depends what the niebor hood looks like I guess
Carleton Amen to that Mike. The papers are full of absolute auctions for all types of properties where I would guess the owners didn’t have the cash reserves.
Mac Mike, they do, but I’m not getting reports of trends by unit. Maybe I should ask them if they can produce such a report.
Mike_Summey Thanks krspack. The next book will be released in December.
laurimcclain Hi Mike and Carlton: Thank you so much for publishing your real estate programs. Without them my husband and I would not be in the financially secure position we are in today. I never thought I’d actually get the opportunity to sell you this in person.
Mike_Summey Mac, they should be able to do that for you if they are keeping the records.
Carleton Shane, what part of Kentucky?
Mike_Summey Thanks laurin, I appreciate that.
Tina Mike, I just learned of you about a week ago
boni Thanks, mike/carleton, I just found out that they now have the property with a real estate agent and is now asking for $315k, I do not know who to deal now. they offered the deal when they did not have an agent.
wood Mike,it seems that I have to wait for one or two years to get started untill I have some cash reserve
Mac Mike, thanks. Duh, the obvious sometimes eludes me
Mike_Summey Hi Scott
santo mike ,do you think the $20,000 reserve i have is enough for repars and unseen costs, for my 12 units
Carleton Lauri, I hope you mean tell instead of well (wink)
Scott S. Hi all
Mike_Summey Tina, well at least you have found us now. Glad to have you with us.
shane_Ky Eastern part , town of 900
Mike_Summey wood, it’s better to wait and build some reserves than to jump in too quickly and lose everything during a downturn.
Mike_Summey Hi Fred
santo shane bid4assets is a auction site for properties
Fred Hello Mike
Tina Mike, Purchased first 3 books and cd set
jmich18 anyone purchased anything off of bid4assetts?
Tina Mike, read all 3, I couldn’t put them down
Tina Mike, you speak a language I can understand 
Mike_Summey santo, with that many units, I’d like to see you increase the reserve. I think you should increse your reserves with each new purchase. I try to keep enough in cash reserve to pay everything on all my properties for at lease 3-4 months.
shane_Ky My problem is I took my cash reserves and just closed two weeks ago on 72 units. I hope I did not take too much risk and can rebuild reserves
Mike_Summey Hi Deb
Carleton Jmich, bidfor assetrs is new to me.
krspack1 Mike, this may be out of the scope of this discussion, but I will ask anyway: In regards to your personal home in today’s market: is it better in terms of equity buildup to build your own home (acting as a GC) or is it better to find a bargain home?
Deb Hello to all
Mike_Summey Thanks Tina, glad to hear that. I just got a copy of the Russian edition today.
laurimcclain Carlton: Are you finding lots of good deals in Florida these days with the sub-prime debacle? Is the rental market still strong or a bit weak currently?
Carleton Krspacki, my opinion is that you can probably do better by buying an existin gproperty.
Mike_Summey krspack, that is a big question. How much experience do you have? What is your time worth? etc.
Mike_Summey krspack, I would tend to agree with Carleton. I’ve always been able to find better deals on existing properties than I have on trying to build new ones.
krspack1 Well, I have built our home before, am a licensed contractor and engineer (though I don’t use it for anyone else but us), but currently I own an import furniture business and time is money
santo Carleton, bid4assets charges a 10% fee when you buy a property, if something does not sell, you can call that broker and buy direct from him and not pay that 10% fee
Deb Any ideas of how to find a good tenant?
Carleton Lauri, I have not made too many offers on residential property but have done very well on some commercial deals in the last two months. Nonetheless, ther is no question i my mind that there are some incredible deals available on residential properties. Key: BE AGRESSIVE!
jmich18 overall which do you think is the better way to go: Hard money, line of credit or 1st mortgage for a flip? A rehab?
Deb Everyone Iv’e spoken with I do not want in my property, its getting awefully darn expensive to keep pulling credit reports
Mike_Summey Deb, let your property manager do that.
Fred Mike, I would like to learn to do short sales, do you have any clues?
Carleton Santo, I made a note of the web site. See, we all learn in a chat room like this except Mike, who knows it all (Wink).
Mike_Summey jmich18, I’m not the one to ask about that. I’ve never flipped a property. Once I buy one, I keep it.
Mike_Summey Hi mpaske
boni carleton, what’s your outlook of maryland real estate?
mpaske hello all!
Deb I talked to property managers here in Ma 99% of them won’t manage just one property
Mike_Summey Fred, like I just answered jmich18, I’m not a good one to ask because I’ve never sold a property.
Tina Mike, Carleton, what’s your opinion on the Austin,TX market
Carleton Boni, in all honesty I know nothing about Maryland real estate.
santo Carleton, i think you and mike are running neck an neck, with Al lee coming on strong
jmich18 Boni: Montgomery county is greeat if you can come up with lots of money!
Carleton I like Austin very very much altho it may not be as good a market as it was 6-12 months ago. still, it’s in my opinion…excellent!
Mike_Summey Deb, then look of the 1% who will. You will do yourself a favor if you will use a property manager to handle the tenants and then you manage the manager. Let the PM know that you are an investor and although you may only have one property now, you will be looking to buy more and if they do a good job they will get to manage them too.
Tina Mike,Carlton, the market here in Austin is so different from Seattle
jmich18 It’s hard to do no cash there…
Deb The 1 that I findly found cant touch it because I dont have a lead certificate
Fred Mike, It is the other way around, I’d like to buy. I’d like to negotiate with banks, but I don’t know how to start.
Deb And the state has to come in for a large fee
Mike_Summey jmich18, it’s hard to do a no money down deal that will work anywhere, but a good technique I’ve used several tiems is to get a small (20-30%) 1st mortgage from a bank at market rates and then combine that with a large 2nd mortage from the seller at a very favorable rate.
jmich18 sounds interesting Mike, thanks
Carleton And as Mike knows, with that small mortgage the interest rate is low and the qualifying is easy. Problem is that you need to find properties with low mortagage to sellin price ratios.
Mike_Summey Fred, watch the public records for properties going into foreclosure. If you can get the owner to give the banks permission to talk with you about their loan you can then negotiate with the banks. If not you will have to wait until they bring the property into their inventory.
santo Carleton, when will the next new commercial be on the t.v.
Carleton Or you can do a wrap…but so tricky.
Carleton Santo, it’s scheduled tentatively for the 6th of August I believe.
Mike_Summey Carleton, have you heard that over half of the property sold in the US is sold with seller financing? I think that includes both residential and commercial.
shane_Ky Carleton, are you buying any apartments houses
Carleton Mike, no I hadn’theard that figure.
shane_Ky I have some seller financing on some of my apartment
Carleton Shane, no.
Tina Mike,Carleton, there is a property near by with a tax acessed value of 174k, it needs about 5k for cosmetics and the sellers has lowered the price to 169k. According to market it should be worth 192k but it still sits. It was previously on market for 169k, but since the property’s were recently acessed they decided to ask for more and still ended up lowering the asking price. What’s the best approach?
Mac jmich18, here’s a techique I’ve used several times. I use a HELOC on my personal resldence to pay cash for a distressed property, use the HELOC to rehab it, then refinance it at 80%LTV based on new appraised price. By being careful ahead of time in calculating the after-repair value, I end up with a property that cash flows and is completely financed by the bank. I get my HELOC money out with the refinance.
Tina Mike,Carlton Listing says Seller’s are motivated
Deb Can anyone tell me there specific routine of screening for tenants.
jmich18 gotta ask! What’s a HELOC?
Mike_Summey Tina, not only the best approach, but the only approach that makes sense is to compute the NOI and then see if you can structure a deal that will let you buy the property with the NOI. That’s what our Offer Generator program does for you. It even prints the Letter of Intent ready for you signature and presentation to the sellers.
Carleton Mike, my opinion only, but I dont look at tax assessments. So many variables in your question, I woul have to know more.
Mac Home Equity Line of Credit
jmich18 home equity loan?
laurimcclain Mike & Carlton: I’ve been looking into the possibility of buying larger apartment complexes. What are your thoughts on this?
jmich18 got it, thanks!I’ve got about 300k equity but didn’t want to refi!
santo Carleton i like your system, but in my area in nyc it’s impossible, so i invest 400 miles away in buffalo ny, i can’t make deals, i have to buy from a real estate broker
Carleton Aw, Tina, you’ve seen it????
Tina Mike, I enter some figures but didn’t understand fully the program yet, just started with program today
Mike_Summey Mac, that is a method I recommend and have use it many times. It works even better if you can get a line of credit set up that doesn’t involve your residence.
jmich18 Santo, I’ve been considering Buffalo also, Long Island is too outrageous, same as NYC
Carleton Santo, I asked earlier,….where does the maid working at the NYC Marriott live??
Tina Carlton, yes, has pet orders, carpet, paint, but also need to do other work
Penny Carleton, she probably live in Conn. or Jersey.
santo carleton, in a apartment like me
jmich18 or Brooklyn or Queens
jmich18 or the Bornx
jmich18 bronx
Mike_Summey Tina, any questions, all you need to do is place the cursor on the header and help will pop up.
wood santo ,do you know where is Al lee?
Tina Mike, after putting $1100 for rent minus expenses the NOI came to $118
Carleton What a wonderful chat this evening…great questions!! My wife has threaten oreco
Deb Mike how do you get a line of credit without involving your personal residence
boni mac, what are the terms on a heloc?
Mike_Summey Tina, that should tell you about all you need to know.
santo Carleton, i have been in my place for 30 years rent is $480
Carleton Forclosure if I don’t come to dinner. Thanks everyone!!…and good luck!
Penny goodnight Carleton
jmich18 thanks all! G’nite!
Mike_Summey Deb, the best way is to get a property paid off and then use it as security for the line of credit.
boni good night
Fred Good night
jmich18 Santo, please email me: jmsinvests@yahoo.com
Tina Mike, does the NOI represent what is available for mortgage?
laurimcclain Mike: What reading do you recommend i do if I want to start purchasing larger apartment complexes?
shane_Ky Santo, what kind of amortization do you use
boni mike what is better a heloc or a 2nd mortgage?
Mike_Summey Tina, the NOI is the amount left over after covering expenses and vacancy allowance. It’s the amount with which to purchase without a negative cash flow.
krspack1 Mike, would be open to getting a more detailed email from me in regards to the building a personal home vs. finding a bargain home?
santo shane, prices in buffalo ny, 2 fam. $40,000 range 3 or 4 fam $60,000, am not getting your question
Mike_Summey laurin, I don’t know of any specific books. Experience is the best teacher when moving from single family to apartments and small apartments 4-8 units is a good way to get experience before moving to larger complexes.
Tina Mike, so if $118 is satisfactory to the seller, anythings possible
shane_Ky Lauriimclan, I know the question was not for me, but find some good property management books and a book that teaches you about cap rates noi etc. like mikes
wood Mike,where is Al, i didnot see him today
Mike_Summey krspack, I’m not sure I can help you on that. I would have to know so much more to give good advice than you could send in an email.
Mike_Summey wood, I’m not sure where Al is tonight. He is usually in the chats. He may have some other obligation tonight.
Tina Mike I have to re-read the first book in conjunction with the cd’s. I read them through because they are full of great info. Now I’m going to re-read for application
Mike_Summey Tina, I’ve had people tell me thay were still picking up good information on their 5th - 6th readings.
wood Thanks Mike,I am glad I find this chat and learn a lot
Deb Mike are you familiar with Ma Lead laws
boni same here
Mike_Summey wood, have you heard of Roger being in China?
Tina Mike, this newbie has so much to learn
krspack1 Fair enough. I have seen were a number of builders are sitting on spec inventory and not getting the prices (say 200-250/sq. ft. - Charleston, SC) like there were a year ago.
santo shane, i put 20% down with a 30 year fixed rate mortgage
Mac krspack1, here’s something you may want to consider. I worked for a guy who decided to be his own GC on his personal residence to save money. He broke his leg on the job site. Not only didn’t save money, but caused problems for the company because of the time he was off the job.
wood Mike ,I know it.but he doesnot pass here around.
Mike_Summey Deb, no I’m not. Real estate laws are different in every state, which make it difficult to answers specific questions about lead, asbestos, etc.
shane_Ky Most of my banks wwant 20% with am@ 20 yr
boni what is a gc?
Mac GC=general contractor
santo shane, what does that mean
krspack1 Good point, I just usually don’t do any work myself, just manage. Pretty lazy huh
Mike_Summey krspack, builders are feeling the crunch all over. I’ve had 5 contact me in the past month wanting to sell spec homes they’ve built at a discount. It’s like the market has dried up and they are holding the bag. It is only going to get worse for the next 12-18 months in my opinion.
wood good night everyone
shane_Ky That mean they dont go more than 20 yr on multi family
Deb Mike are any of these good deals or you holding out a bit longer
santo shane, even with a 2 or 3 or 4 fam.
krspack1 Interesting you say that. I was speaking with a realtor yesterday that works directly for some developers/builders. His advice was the same as yours and Charletons. He felt I could pick up a new home from a builder that was ready to pack it in.
Mac krspack1, he wasn’t doing any work himself, either. A load of lumber he was inspecting fell on him.
Mike_Summey I’m going to have to leave you also. Someone just came to see me. Good chat tonight.
Tina Good Night All
krspack1 Mac, that stinks
Mike_Summey The rest of you can keep talking as long as you would like.
santo nite mike
boni good night
Mike_Summey Transcript will be posted tomorrow.
Mike_Summey Goodnight all.
krspack1 Night
steve_nm goodnight.
oz g/night Mike
Fred good night, Mike and Thank you
santo shane what state are you in
shane_Ky no I bought a condo to rent and got 30 yr I dont have any duplexes just two single family and a condo rest are apartments
boni santo, what happens if they accept your offer
santo what offer
boni to buy ther property
Fred good night, everybody
shane_Ky Kentucky, wow I was typing and every one left
boni do u go to a lawyer
Deb Does anyone do cori’s on there perspective tenants
santo i buy from a broker and the deal is done thourgh him
boni okay
boni gotta go,good night.
santo my broker offers me a property and if i like it he faxes me the contract
boni thanks again
santo shane, your cash flow must be out of this world
Deb you guys are good, I cant seem to get off the ground
shane_Ky we do about 140 to 150 a month positive cash flow is good but I need to build cash reserves, I just hope nothing major happens
Deb Shane is that after you pay PM or no
shane_Ky it is not that hard deb, I was turned down by several banks 3 yr ago
shane_Ky pm ?
santo property manager
Deb I actually have a property vacant at the time, no mortgage on it, was left to me, cant find a decent tenant
shane_Ky gross is that, I am the property manager, unfortunately I have to work
Deb Do you find it hard to manage yourself
shane_Ky You may be looking to hard
shane_Ky no
Deb How do you go about finding good tenants
shane_Ky I have one place that does credit checks, mostly we interview check references it does not work all the time
shane_Ky word of mouth, I rarly advertise
santo nite all, have to go
shane_Ky One place I do the newspape with good results
Deb Im so afraid they will destroy the property
Deb How much do you pay for credit reports
Deb and what company do you use
shane_Ky I know the feeling but there is a little risk involved
shane_Ky I believe $25
Deb Stupid question but do you have them faxed to you or what?
shane_Ky my manager of that coplex takes care of that. I just bought those 72 units
shane_Ky complex
Deb Oh so you do have a property manager, I thought you said you didnt
shane_Ky what I do is mange the propeties myself, but each location I have either a tennat or maitenance worke look after it
Deb Oh I see
shane_Ky The new one I have some one full time in the office but I let go of the prorty management firm that had it they worked she worked for them
shane_Ky I cant spell property
Deb so thats a full time job for you huh
Deb why would an investor need to know how to spell property
shane_Ky Yea, I am starting to hire more help though, I am doing bills as we talk
shane_Ky Thats true or care
Deb oh, well thats a good sign, needing help.
Deb well have fun doing your bills, nice talking to you, gotta go, have a good night
shane_Ky I guess
shane_Ky Same here good night
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