Chat Transcript - October 29, 2007
Posted on October 30, 2007
santo hi mike
rosebud Hey, Mike.
Mike_Summey Hi everyone.
maria Santo, that’s good
Mike_Summey What a great night here. Not a cloud in the sky.
Mike_Summey Hi Jeff
rosebud It’s been a great fall day!
maria We are having the first of our summer weather here
rosebud Maria, where are you located?
maria rosebud, New Zealand
Mike_Summey I visited the top execs at two banks today. they agree that there will be some great real estate deals coming soon.
Phoenix Shredds hi everyone
Mike_Summey Hi Phoenix
Mike_Summey Hi Alex
alex Hi
Phoenix Shredds hi mike
rosebud A beautiful country, I’m told.
Phoenix Shredds er
Mike_Summey Theeeeere’s Roger Dawson
Phoenix Shredds hi roger
Phoenix Shredds haha
rosebud Hello, Roger.
Roger Dawson Hi Phoenix
maria rosebud, it is - great place to tour around in
santo mike, i just started reading, real estate tax secrets of the rich by sandy botkin
Mike_Summey Hi carolinamom, you’re new tonight aren’t yu?
santo roger hi roger
alex Where can I get a book/guide to help me write a business plan for a business of ownind SFH as rentals?
Mike_Summey Hi Mark
MarkNC Hii Mike, everyone
Phoenix Shredds mike, regarding your statement about the possible good deals coming soon, would that include northern california? things have seemed bleak out here
maria rosebud, where abouts are you?
Mike_Summey alex, why do you need a business plan? Don’t buy unless the cash flow will cover the purchase. End of plan.
rosebud NC, USA, same city as Mike.
Mike_Summey Hi Penny
Roger Dawson Hi Penny!
alex I want to be ready to ask for a loan, once I fine the right SFH, at the right price for the NOI.
Mike_Summey Phoenix, that includes the whole country. We’ve just begun to feel the decline in the real estate market and that’s great for long-term investors. You have to buy wholesale to make money with rentals and you will be seeing more and more of that, including California.
Penny Hi Mike & Roger, everyone!
Mike_Summey alex, one of the bank executives I met with today said he would finance any deal produced with the Offer Generator. He said it made more sense than any of the banks computer programs.
Phoenix Shredds Yeah, I was thinking that may be the case. Thanks.
alex thanks
rosebud That’s good to know if I have to get bank financing. Thanks for the tip.
Mike_Summey alex, that is any deal produced with the Offer Generator that doesn’t by-pass the red flag that says it is a negative cash flow deal.
MarkNC Which bank is that Mike? Most of the banks I tlak to seem to shy away creative/owner finaced deals.
Mike_Summey Wachovia
alex I understand, thanks
rosebud My bank, too! Even better.
Mike_Summey SunTrust feels the same way.
santo mike, i was telling al lee on his radio show yesterday that a freind of mine is selling his fathers home that he bought for $5000. in 1938, a one family 4 bedroom 2 bath— $750,000, a nice profit
Mike_Summey Mark, no bank has a problem with creative/owner financed deals as long as they aren’t overexposed. Give a bank a first mortgage for 20-40% and get the owner to finance the balance and if you can fog a mirror you can get the loan.
Phoenix Shredds hi, elizabeth
Elizabeth Hi!
MarkNC Funny, Wachovia is one of the few banks here I have not talked to about investment properties, I guess I always the local banks would be more into creative financing. I have been looking for a bank first of like 75-80% with the owner financing the rest.
Mike_Summey Next month I have two executives with Experian, the credit people, who will be our guest in a chat to discuss ways to improve your credit ratings.
santo hi Al
Al Lee Hi, a little late, but I made it
Al Lee Roger, you’re late!
santo roger where you go
Roger Dawson Not really Al. I had some technical problems here and had to sign in again.
Phoenix Shredds computer difficulties, roger?
Phoenix Shredds haha, yeah
Mike_Summey Mark, that is backwards to what you need to do if you expect to finance all or most of a purchase. Most banks know will only finance 70-80% of a purchase without seller financing for the balance.
Al Lee My bluff didn’t work!
Mike_Summey Hi Oz
oz Hi Mike
Roger Dawson Yes, it doesn’t take much. I’m a low-tech guy stuck in a high-tech world.
Al Lee HI. santo. I keep runing into you.
Al Lee running
Mike_Summey Al, I liked the video of the Apache you sent me. My son Matt will be flying one of those.
Mike_Summey Hi Zoe
Al Lee Hooray for Matt. I would give anything to be 20 and back in the Air Force now
Mike_Summey Matt is in the Army. They’re the Apache guys!
rosebud We are too soon old and too late wise.
Mike_Summey Al, what is going on with sales in the Dallas area?
Roger Dawson There was an article in the LA Times on Saturday that said foreclusures are also now affecting the high rent zip codes like Bel Air and Beverly Hills.
santo al, yes, yesterday it sounded like the Al lee and santo show
Al Lee Yeah, but I was in the Air Force, so that is what I remember
Al Lee santo, just keep throwing those comments and questions at me. It make smy job so much easier when I have feedback.
Al Lee Mike, I beleive I read that Texas is the only state whose real estate market is growing
Mike_Summey Hi wood
rosebud Al, we heard about the huge profit on the 1938 house purchased for $5,000 and sold for $750,000. Wow.
oz I was in the ARMY, but assigned to the Air Force, much better duty
wood Hi Mike
Al Lee rosebud, were you listening? That IS a nice profit.
Zoe Maria is it snowing yet?
Al Lee oz, better food, too
rosebud Listening, heck. I was speechless for a while.
santo Al, i did not know if i asked too much, i did not want to hog the whole show
Mike_Summey Zoe, for Maria it is coming into summer.
maria Zoe, well it was a week ago
maria We are having a mild winter, instead of summer
Mike_Summey It is supposed to get to 27 degrees farenheit tonight in Asheville
Al Lee santo, it is never too much. I can always just ignore the comemnts or questions if I am running out of time or something like that.
oz right on Al, and in particular if the mess sgt is a friend.
Al Lee We are getting some nice cool weather, but there is also some 80 degree time in the afternoon.
santo rosebud that was my freind who sold that $750,000 house in n.y.c.
Mike_Summey The unsold inventory in this area is exploding. Prices are still high buy there is twice as many properties on the market now as a year ago. It is only a matter of time until prices start to fall.
rosebud Sorry, Santo.
oz Mike that is much to cold
Zoe Wow Maria, We’re experiencing some snow flury’s with temps at 30 degrees F
Phoenix Shredds Haha, I enjoy nights that drop into the 20’s. But here in Sacramento that only happens a handful of times a year.
Al Lee Sales are down here because of the lending situation. That measn rentals are up
Elizabeth Mike, how do you finance your rentals? Conventional loans?
rosebud Mike, won’t more rentals depress rental prices?
Mike_Summey oz, it can get cold and wintery here in Asheville. I’ve seen it -26 on the thermomoter and I’ve seen 60″ of snow come in just over a day.
maria Zoe, Yow !
Elizabeth Or rather, how did you do it in the beginning?
Phoenix Shredds Wow Mike. That is cold and a lot of snow. ::happy to be in California:: haha
Al Lee Mike was that in Asheville, or Thule Greenland?
Mike_Summey Elizabeth, you name it and I’ve done it as far as financing. I don’t have any special way except whater works for each deal.
Roger Dawson You can tell a lot about the rental market by watching “for rent” signs go up in front of apartment buildings.
Elizabeth If you pay cash, then there’s less cash for future deals. What do you do then? HELOC?
Mike_Summey rosebud, there more renter the higher rent are pushed. Supply & demand.
oz >Mike that is far to cold for this old guy, I can handle 60 frgrees. like 70 netter, and all the way up to upper 70’s. ;-}
Zoe Maria, I am presently working on putting together a deal with the “Subject - to- Financing” technique for some of the properties that are in Pre-Foreclosure.
Mike_Summey Elizabeth, in the beginning, I started like most everyone else, with conventional financing. It was not until I learned that there are many other ways to finance that I really started buying a lot of properties.
Elizabeth Thanks Mike. Have you ever used unsecured business lines of credit?
Phoenix Shredds Roger, can you elaborate on what you can learn from “for rent” signs going up in front of apartment buildings?
maria Zoe, what do you mean “subject to Financing’ technique?
Mike_Summey Elizabeth, I have several lines of credit, but they are secured with real estate.
santo Al my first eviction went okay, got the person out in 3 weeks, painted the place, cleaned the carpets, raised the rent $50. and have a new tenant.
Elizabeth How did you get them, if I may ask? We need some options. Do you know of any banks in the Raleigh area who will do these?
Al Lee santo, you will be a success story with your picture on the cover of a magazine some day.
Mike_Summey Elizabeth, do you have any properties that are owned free and clear?
Elizabeth Yes.
rosebud Especially with those great deals Santo has in his area.
Elizabeth 1
Roger Dawson Phoenix, in Southern California where I live, it was very unusual to see a “for rent” sign in front of apartment buildings. Now I’m seeing a lot, which tells me that the vacancy rates are climbing.
Mike_Summey Use a free and clear property to secure a line of credit and then use it for down payments on other properties. Soon you can refinance a purchased property and get out enought to repay the line of credit and keep using it.
Phoenix Shredds Oh, ok. I should drive around and take a look at that myself. I live up north in Sacramento.
oz Elizabeth, Quicken loans and discover are both reather easy for HElOC’s
rosebud Okay. I give up. What’s a HELOC?
santo Al, i am just a lucky rookie
Mike_Summey Roger, whay are vacancy rates climbing during a period when it is increasingly hard to purchase. Usually it’s the other way around.
Elizabeth Home Equity Line of Credit.
rosebud Thanks, Elizabeth.
Elizabeth You’re welcome, Rosebud. 
Elizabeth Thanks Mike.
Al Lee Be careful if yo HELOC is an adjustable rate loan. Rates are still pretty low and may go down in the shrot run, but will eventually go up.
Mike_Summey Elizabeth, you can use a free and clear property to get a business revolving line of credit that acts like a HELOC.
Zoe Maria, at it’s basic form - all it means is that I receive title to the property but actually take over the sellers existing loan, making payments on them
Elizabeth Who do I get it from ? Discover or Quicken Loans?
Al Lee Roger is in California.
wood I am facing a problem,now I work in a small city,and I am planning to go to a big city.I cannot decide,because each choice has its benifits.,Everyone,any suggusetion?
Roger Dawson I agree Mike. I don’t think we’re at the point yet where homeowners are becoming renters. Maybe in another six months.
Mike_Summey Zoe, just FYI, that is illegal in most cases unless you get permission from the lender.
oz Elizabeth check both for best deal
Elizabeth Thanks Oz.
Al Lee Mike, are you referring to Subject-to?
Mike_Summey Al, yes.
Zoe Thank you Mike, I have checked with these particular lenders and it is ok as long as the paper work is done by an attorney
Roger Dawson There are seminar promoters out there that teach you how to hide the property transfer from the lender. We don’t think that that is legal, ethical or smart business.
Al Lee Right!, it is not illegal in Texas, but probalby will be soon. It probalby does violate the terms of the mortgage, though, already.
oz Your welcome elizabeth, hope it helps.
rosebud Al, what’s the name of your program and what time is it on?
maria wood, I think any thing will work if you want it to. choose what makes you feel happier
Al Lee The problem is that unscrupulous buyers wil buy a property and lease it, trying to sell it at a profit, and jsut not make any of the payments.
Mike_Summey Everyone, jsut because a loan has a due-on-sale clause that doesn’t mean it is not assumable. In most cases it merely means that you will need to qualify to assume it.
Elizabeth How do you do that?
Al Lee rosebud, go to www.WealthRadio.BIZ and you will be able to listen to either reocorded or live shows. My live show is Sundays at 2pm Central, 3pm Eastern, Noon, Pacific time.
Mike_Summey wood, only you can make that decision. I’ve learned that you can find good and bad in all places. It up to you which you seek out.
wood thanks maria
rosebud Thanks, Al. I will check it out.
maria wood, you’re welcome
Al Lee rosebud, during the live show you can send instand messages to the host (me, in this case) and make comments or ask questions.
Al Lee instant
Mike_Summey As the market continues to cool, don’t be afraid to make offers at 50-60% of asking prices. You never know what sellers situations are until you put a written offer with a check in front of them. I’ve bought several properties like that.
Elizabeth Mike, how do you find your properties? MLS? FSBOs? Do you do short sales?
Mike_Summey Elizabeth, all of the above and more. My most success has been from getting out a riding neighborhood and talkig with people.
Mike_Summey Hi zert
zert hi Mike and everyone
Elizabeth And you find motivated/distressed sellers that way?
Zoe Greetings Zert
Roger Dawson Hi Zert
oz Roger, how did you do fare with your ppoperty in the fire area?
maria hi zert
zert glad to be here. Always read the transcript when I can’t make it
Mike_Summey Elizabeth, I’ve found more distressed sellers that way that probably all of the other ways combined. Neighbors know what is going on in their communities and will share a lot of information if you will just ask.
Elizabeth OK. Thanks, Mike.
rosebud Mike, I’ve read your book and am going to read it again, but I’m going out this weekend to look at some duplexes in another town (Hickory). I’m doing this for my mother who’s 81 and in good health, very active and presently living in oneowned by someone else. Any suggestions for me other than what’s contained in the book or is this too vague now?
Mike_Summey rosebud, believe it or not, what we put in the book is exactly what I do. No hidden agendas. No untold secrets. It’s really rather simple. If you want to find properties get out a look and ask around.
rosebud Okay. Will do. I’ll use the OG if I’m lucky enough to find something promising the first go-round and come back next week with specific questions, maybe.
Mike_Summey A link to the marketing package for my new office tower will be on the website in the next day or two. Don’t miss it.
Al Lee santo, hve you filed for SS yet?
Mike_Summey rosebud, sounds good. Don’t try to over complicate things.
rosebud Simplicity is my mantra.
zert hey Santo - how are the Buffalo properties coming along?
santo AL, the people told to wait until i have my w2 form first
santo zert, cash flowing
Al Lee The nice thing is that your rental income won’t reduce your SS payments, but earned income will.
Mike_Summey Everyone, keep one thing in mind. Offers rejected today may be accepted in the months to come. Don’t get discouraged. Make offers that work for you and let the market come to you. Don’t streach yourself financially.
Roger Dawson Mike, I used the link on your new building and it worked fine, even on AOL which is not the best for videos. That’s a really impressive building you
Mike_Summey santo, are you working?
santo al, no more earned income for me
Al Lee santo, you will probably show a loss on your tax retrun for your rent properties.
santo mike, i retire dec. 19th
Mike_Summey Roger, that was the link that will be on the website soon. It is not active yet. I just sent it to you so you could see what I was planning to put on the website.
Roger Dawson Al, I think that it’s only true if file early. Once you reach 65 and a half you can earn all you want and it won’t affect SS.
Mike_Summey santo, retire from what?
santo al, what do you mean a tax loss, explain
rosebud Congratulations, Santo. I’m closing in on it myself.
alex I thought it was 70 and you could keep it all.
santo mike, the mta
Elizabeth MTA?
Al Lee Roger, once yo reach your fully-vested retriement age (66 in sant’s case and in mine) you do not get penalized for earning income. From 62 until that age, you do.
santo transit authority
Al Lee Your fully-vested age depends on the year you were born in.
Elizabeth Ohhh–thanks Santo.
Mike_Summey Al, I guess I’m safe. I haven’t earned any money in 11 years.
oz Alex, the gov’t just don’t want you to keep it all, in fact they’d rather you send it all in.
Al Lee santo, after you deduct all your actual expenses for interest, repairs, insurance, etc. etc. PLUS the depreciation allowance (!!!) you will probably show on yoru tax return (Schedule E) that you LOST money on yoru houses even thought you MADE money.
Mike_Summey Everyone is bound to be seeing the for sale signs go up all around. Are you making offers on them?
Elizabeth Um, no . . .
rosebud Not yet.
santo al, that is okay
Mike_Summey You can’t buy if you don’t try. Make the offers and see what happens.
Al Lee That is ONE OF the beauties of rental proeprty–tax-free income.
Elizabeth You mean on just regular, non-motivated-seller houses?
gggggg Mike can you make a offer for price, or do you have to include the terms in offer also?
Elizabeth Rental income is tax free?
Mike_Summey Elizabeth, yes! What is a non-motivated seller. The only way I’ve every been able to identify one was by making an offer.
Al Lee rental income is tax-free if you do it right, yes!
Elizabeth This is true.
Mike_Summey ggggg, all offers include price and terms. If terms are not specified, they are assumed to be cash.
Elizabeth What is right, Al?
santo al, i collect a pension from another job i retired from in 1994, and i will have a pension from the MTA, will tis hurt my tax status
Mike_Summey Al, it is tax deferred, not tax free. Eventually the tax is due.
Mike_Summey Roger, are you alive?
Phoenix Shredds haha
Phoenix Shredds I would hope so
Al Lee MIke, nominally it is tax-deferred; BUT, you can legally and properly defer it until after you die at which time you can legally and properly have it all forgiven through the stepped-up cost basis to your heirs.
Zoe Mike thanks for the legal advice. Goodnight and see you next week
wood bye all, I have to go to work
rosebud ‘Night, Zoe.
Mike_Summey Goodnight Zoe
Mike_Summey see ya wood
Mike_Summey Have a good day
rosebud I think we sent Roger to dreamland.
gggggg oh, its the terms I’m getting stuck on.
Al Lee I have some recorded radio shows that discuss the tax-free aspect of real estate on www.renthouses.org or www.WealthRadio.BIZ. All for free, of course.
Phoenix Shredds A little off-subject now because the weather conversation was while ago, but suddenly here we went from party cloudy an hour ago to heavy thunder and a downpour.
Mike_Summey Al, if you live long enough the depreciation runs out and the mortgage pays off. Then the income is taxable unless you buy more properties that provide depreciation and other deductions to cover the income.
Mike_Summey Where is that Phoeniz
Phoenix Shredds Sacramento
Phoenix Shredds Ca
Al Lee Mike, Right! But, if you just buy a few more properties using soem of the rent money you will get fresh depreciation to offset that income indefinitely. ALso, you can use Section 1031 exchanges to continuously upgrade your holdings with no tax consequnces and increasing deprecaition allowances indefinitely.
Mike_Summey I think Roger may have expierd.
Mike_Summey expired
Roger Dawson No Rosebud, I’m still here.
oz G/night all, got to run. Phoenix send some rain SOUTH… We need it
Mike_Summey G’night Oz
rosebud Goodnight, Oz.
Mike_Summey Hi IBMally
Mike_Summey YOu’re late! The chat is almost over tonight
IBMally Hello everyone
Elizabeth So if you use a 1031 exchange indefinitely, when do you get to spend all your riches?
IBMally isn’t it 9:00?
Al Lee Well, even if you are late fo rthe chat you can read the transcript on the website.
Elizabeth If that makes any sense.
gggggg set clocks back next week
santo nite, everyone
Al Lee Elizabeth, you can use a combinatin of 1031 exhange and refinance to extract cash equity with no tax penalty. Spend it now and still no tax!
Mike_Summey IBMally, where are you lacated?
rosebud ‘Night, Santo.
Mike_Summey located?
Roger Dawson I don’t believe in deferring taxes. It assumes that one day you’ll be in a lower tax bracket and I hope that’s never true.
IBMally Pittsburgh
Al Lee Roger, I am talking about deferring taxes FOREVER!
Phoenix Shredds Mike, your story about the wanting to be a millionare by 30 and retiring at 50 has been quite inspirational for me. I’m in quite a similar place to where you were when you were in your early 20’s. Right now I’m 23 and in the process of trying to figure out what I want to do with my life. Like you were, I’m not highly educated (high school diploma) and also on the artistic side (a musician).
Elizabeth OK, well thanks Mike and every one.
Mike_Summey IBMally, the chat starts at 8:00 Eastern - 7:00 Central
rosebud See you next week, Elizabeth.
IBMally Ok thanks, wrong time on my calendar, see you next time
Mike_Summey Phoenix, you must be reading Mindset.
Elizabeth U2 Rosebud.
Mike_Summey IBMally, logon an hour earlier next week. We’d love your input.
Phoenix Shredds Weekend Millionaire’s Secrets to Investing in Real Estate
IBMally will do
Roger Dawson Goodnight everyone. See you next week.
Phoenix Shredds Goodnight, Roger
rosebud ‘Bye, Roger.
Mike_Summey Phoenix, get Weekend Millionaire Mindset. It will give you a look at the big picture and I think you will enjoy the read.
Mike_Summey I’ve got to run for tonight. See everyone next week.
maria bye Mike
Phoenix Shredds Thanx. I’ll definitely take a look. Goodnight Mike.
rosebud Goodnight all. Thanks again for the food for thought.
Al Lee OK, I need to run now too. Please all try to listen (and give comments and questins) to my radio program on the web. www. WealthRadio.BIZ — Maybe we will talk about tax-free income next week.
Phoenix Shredds or not
Phoenix Shredds lol
maria night rosebud
Phoenix Shredds goodnight everyone
Al Lee Goodnight
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