Chat Transcript – November 5, 2007
Posted on November 6, 2007
santo hi mike
Lon hi mike
Mike_Summey Hi Everyone
Mike_Summey Roger will be here shortly.
rosebud Hello, all.
Mike_Summey How about the news from CITI today? Did you see it?
Lon no, what’s up?
rosebud Haven’t seen it.
Mike_Summey They canned the CEO and are taking a huge write-down due to the subprime market.
Mike_Summey Hi gggg
Lon wow
Mike_Summey I believe the number was $11 Billion…that’s with a “B”
gggggg hello
Mike_Summey Hi oz
Lon Mike, did you and Al ever decide on a date to have your debate on owning property free and clear vs. carrying a mortgage?
oz Hi Mike
Mike_Summey Lon, not yet we haven’t. We’ll try to schedule it soon.
Mike_Summey Hi Doug & Corey
Doug_in_CT Hi Mike
corey Hi Mike
Mike_Summey Thanks Doug for the edit corrections on Roger’s article.
Doug_in_CT You got it
Mike_Summey There’s Roger
Doug_in_CT Not just another pretty face
Roger Dawson Hi Mike and everyone.
Lon hi Roger
santo hi roger
rosebud Hey, Roger.
Mike_Summey I’m trying to persuade Roger to put more articles on the website. Maybe all of you can help me.
oz hi Roger
Mike_Summey Corey, we haven’t seen you lately. How’s everything going?
Mike_Summey Hi Jim
jimNC hi!
corey Great mike. I just got back from Winnipeg Canada. Hottie is in Wisconsin tonight. Real estate has been good
jimNC audio book/offer generator came today
Mike_Summey Big article in our local newspaper this week “Asheville Flooded with Million Dollar Homes.”
Mike_Summey Hi Penny
Mike_Summey Corey, were you working in Winnipeg?
rosebud I was out looking at property this weekend and called three different realtors on their listings. Each one indicated right up front the sellers’ anxiety and willingness to negotiate.
corey mike yes and it was cold
Penny Hi Mike & everyone.
rosebud Read the article, Mike.
Mike_Summey Corey, did you see the news about the hail in South America, Columbia I believe. 5′ of hail in one storm.
rosebud Hello, Penny.
Roger Dawson Hi Penny
Lon anything left of the amazon?
santo mike how is the new project coming along
Mike_Summey rosebud, you’re going to see it get much much better for us.
Penny Roger & rosebud
rosebud I know you’re right. I was amazed at such immediate disclosures.
oz yea Mike, I never saw so much hail…
corey Mike, yeah i saw that was very small hail just a lot of it. I chose canada over spain. I chose the closer of the two. Coming into my off season so plan on trying to purchase as many homes as possible
Mike_Summey santo, the marketing package and the computer generated fly around and tour of the new building will be on the website by tomorrow. I’ve already proofed & approved it. It was supposed to by on by now but the webmaster didn’t make it.
Mike_Summey Hi eryk
Roger Dawson Interesting article in the LA Times this Sunday about how rents will rise because of increased foreclosures. Many owners will become renters and won’t be able to buy again for years because of their ruined credit rating. The demand for rentals will exceed the supply and rents will rise.
Mike_Summey corey, this winter and next spring are going to be very good. The best time for long-term investors in probably 50 years.
eryk76 hello Mike and everyone
jimNC good time for me to start i guess
corey Mike I am excited to make lot of progress on retirement from this situation
santo mike, in buffalo, i think everything will stay the same
Mike_Summey Roger, I received an email today from someone in S Florida who said rents were falling due to the overbuilding and huge inventory of unsold units. That will be a problem in a few markets, but in most of the country the rental market will be strong and gettign stronger.
rosebud Well, Santo, you’ve already made some terrific deals!
Mike_Summey santo, you’re probably right.
santo rorebud, i will continue if it stays the way it is
rosebud Absolutely. I’m glad I’m getting into it now.
Mike_Summey Week after next, November 19th, mark it down! I have two guest from Experion, the credit people, who will be in the chat to answer your questions about how the credit reporting companies work and how you can improve your credit scores.
rosebud That’s the Mon. before Turkey Day?
Mike_Summey rosebud, that’s right!
Roger Dawson Mike, there was so much investor buying of condos in Miami that I think the entire state will be a disaster. Half of the condos being sold in Miami went to speculators who had no intention of occupying them. When that inventory gets foreclosed on the whole state will suffer.
Mike_Summey Roger, I have a big speaking engagement Thursday. I’m speaking to the 8th graders at a local middle school.
santo mike, i hope to add two 3 family houses in the coming year, to add to my 12 units
corey Mike that is impressive with the guest from Experion. Looking forward to that
Mike_Summey Hi Phoenix
Phoenix Shredds Hi Mike
rosebud I bet you’ll get enough material from that appearance for a whole month’s articles.
jimNC one of my customers just sold her condo in miami. took 1 yr, and 100K price reduction
Mike_Summey Corey, don’t miss it. It should be a good one.
Roger Dawson Congratulations Mike. I’ll be speaking to 350 real estate agents in Wilmington, NC. Bet I sell more product that you do!
Mike_Summey rosebud, you may be right.
Mike_Summey Roger, let me speak to the same group & I’ll take that bet.
rosebud Mike, you may light a fire in some of those students’ minds.
Roger Dawson I tried speaking to school kids and couldn’t do it. They have a 15 second attention span.
Mike_Summey I have a friend who has a townhome in Charleston, SC who is trying to sell it. A year ago they were asking over $300K…turned down and offer of $279K…today the listing price has dropped to $239K & still no takers.
Doug_in_CT I saw an article in the San Joses Mercury News entitled: Demand pushes rental prices higher and described how landlords are positioned to benefit from higher rents: 1) great demand when prices are not rising so quickly and people sit on the sidelines in expectation of lower house prices 2) tight lending market keeps demand strong for rentals.
Mike_Summey rosebud, I spoke at the school last year and the kids were very receptive. I’m looking forward to it.
rosebud My sister’s a school teacher and I never underestimate kids of any age.
Doug_in_CT The article was national in scope: here is the URL: http://tinyurl.com/2spajl
jimNC i WISH someone had taught me these principles when i was in school
rosebud Thanks, Doug. I’ll check it out.
Mike_Summey Doug, it sounds like the writer hit the nail on the head. I’ve always said that the rental market runs innversely to the sales market.
Mike_Summey Hi broadway
broadway hello mike and all
rosebud Mike and Roger, what’s been your experience buying foreclosures?
Mike_Summey Jim, I plan to make about 5-6 key points with the kids that I feel sure they will be able to grasp. I hope they stick.
jimNC i’ve always had interest in rentals, since in my 20s. but everyone tries to scare you out of it
rosebud The naysayers will tell you if it could be done, everyone would be doing it, but not everyone is suited to it.
Lon Mike, would it be feasible to open a HELOC on a property, then use the vacancy and maintenance reserves to help pay down the mortgage faster, then when the vacancy or maintenance monies are needed, use the HELOC to pay for those, then apply the reserves to the HELOC until it is paid off and then start applying to the primary mortgage again?
Mike_Summey Jim, the people who don’t have any confidence in their abilities are the ones who are the naysayers. Prove them wrong. That’s what I did.
jimNC i plan to. once you meet a couple people who have done/are doing it, you begin to wonder…
Mike_Summey Lon, that is certainly one way of doing it. I do something similar with a large credit line I have, but I also keep a sizable amount in cash on hand just in case something happens to the credit line. Banks have been known to terminate them or sell the loans to a less than friendly bank.
broadway I was wondering if anyone is finding financing starting to loosen up over the last 30-60 days
corey jimNC the whole tenant thing for me has been easy. I haven’t had all the problems you hear about. We just followed Mikes advise and so far it has been to easy. I know some day I will get that bad tennant but so far we are very happy with the results from what mike teaches
jimNC just wish all the money i spent on cars/motorcycles/girls etc had gone to buy starter properties. i’d be half way there by now!
rosebud Corey, you’re using a management firm?
corey yes
jimNC i can see where prop mgmt could be the key
Mike_Summey broadway, there is no credit crunch for people with good credit and financial reserves. The crunch is for people looking for 100%+ financing, interest only loans and other non-conventional types of financing. Those type loans are gone for the foreseeable future.
santo mike, whatever happened to the guy who was on the chat, a few chats ago, his name was Shane from Kentucky, he said he was closing on a 72 unit apartment complex, to add to the 278 units he had already, i think he said he had 25 apartments, have you heard anything about him
rosebud Hi, Al.
Mike_Summey Hi Al
Al Lee Howdy, Mike, Roger, everyone
santo hi Al
Phoenix Shredds hi Al
Al Lee Hi, santo
Roger Dawson Hi Al. How you doing?
Al Lee and Phoenix
Al Lee am doing fan-tas-tic!!!!!
Mike_Summey Al, there was a question earlier about when we were going to have our debate about financing methods.
Mike_Summey Hi Alex
rosebud Hello, Alex.
alex hi
Al Lee Mike, Yes, we do need to get cracking on scheduling that.
Al Lee Let’s discuss this week.
Mike_Summey Okay
jimNC i keep finding on most potential deals that property mgmt fee is difference between positive cash flow and breakeven or neg cash flow. are others seeing this, or am i not being creative enough?
broadway I’m here in the midwest and I’ve had people with good credit run into some issues. It may have been banks correcting their work and not the customer though. Just thought I’d see if others have experienced any issues
Mike_Summey Jim, property management costs whether you do it or others do it. If you do it you are taking on a second job and unless you pay yourself you are working for nothing.
Al Lee broadway, yes, people with good credit cang et loans at good rates, but it takes longer and is more work than it was before the sub-prime collapse.
jimNC good point mike
Al Lee “No DOc” loans are virtually non-existent even with good credit.
jimNC have a 19mth old and demanding job. don’t need any more
santo Al, you must try to get Carleton Sheets in this debate
broadway al lee, I agree with that 100%. I’ve not seen much of a problem personally
Mike_Summey broadway, there are some banks that are upside down in their real estate protfolios and that could be the problem. Just find a bank that is not.
Al Lee That means you have to do the long process to get a loan, full documentation
Phoenix Shredds Mike, last week you recommended Mindset to me (I’m reading Secrets to Investing). What are the characterizing differences between the books? Motiviational versus more technical?
broadway That’s what I’m thinking too. There are some banks here that have really slowed down on their mortgage lending but I think it will begin to move.
jimNC relationship with a banker should help expedite loans…right?
broadway jimnc, it makes a HUGE difference
Al Lee santo, good idea! Mike might be able to get Carleton to join us
Mike_Summey Phoenix, the books are totally different. Maybe someone else in the chat can tell you their feeling about them.
Al Lee Mike coudl let him win at golf once in a while.
Phoenix Shredds Ok. Anyone in here want to explain the differences between the Mindset book and the Secrets to Investing in Real Estate book? I’m currently reading Secrets to Investing.
Al Lee broadway, interest rates are good if you have good credit.
Mike_Summey broadway, there was an article last week about Bank of America closing their retail real estate loan section and laying off 3000 workers.
rosebud Read that article on BofA. That’s also the bank that was making unsecured loans and extending credit cards to illegal aliens.
broadway yes, I thought it had something to do with a subprime portfolio they purchased
Al Lee rosebud, you are right–they deserve it then.
Mike_Summey Would someone who has read both Mindset & the Real estate book tell Phoenix the difference between them. It would be better coming from a reader than from me.
Phoenix Shredds Thanx, Mike
Al Lee Mike, I (of xourse) have read both.
Al Lee of course
Doug_in_CT Phoenix, you read the Weekend Millionaire to read “how to do it” i.e. spread seed, be patient, be persistent, spread more seed, negotiate wisely, etc. You read the Millionaire Mindset to get a little of Mike’s biography and how to “think like a long term, goal setting, persisent, determined eventual millionaire.”
rosebud Sorry. I’ve only got the real estate book. Don’t want to get confused just starting out.
Lon Jim, the prop. mgt fee shouldn’t hold you up. You know the numbers that work, you just have to negotiate with the seller to get them there. You can always use the gambit “I really like your house, but there is this other one I am looking at that just makes more sense.”
Roger Dawson Phoenix, Mindset tells the story of Mike Summey’s rise from extreme poverty in the coal fields of West Virginia to owning Asheville, NC. It eaches you how to think like a successful person and avoid the traps that stop poor people from succeeding. If you don’t love it, I’ll give you your money back.
Mike_Summey Everyone should read Mindset first. I wish we had written them in that order. The real estate book will mean more after reading Mindset.
jimNC yes lon, you’re righ
Al Lee the Mindset book is not specifically about real estate, but more about having the right attitudes toward life in general. The right attitude, though, wil lead you to success and real estate is one of the best places to seek success.
jimNC right
Mike_Summey Hi willy
Mike_Summey Well said Al. Thanks!
willymiranda hello Mike
rosebud Roger, I like your comment 
Phoenix Shredds Excellent. Thank you very much Mike, Doug, Roger, and Al.
Mike_Summey I just shipped an Offer Generator and one of Carleton’s Toolkits to Ireland today.
rosebud Guess I’ll order the Mindset from BAM now.
Al Lee that soudns like so much blarney
alex However, you should read all three books, one complements the other. I read all three books and am now re-reading the the WM Secrets to Investing in RE.
Roger Dawson The Irish probably thought that a generator was something to make bombs with.
Phoenix Shredds Mindset sounds like the right read for me at this time being 23 years of age and unsure of my future.
jimNC phoenix…i’m 35 and just getting started. wish i was your age when i started
Mike_Summey Phoenix, I think you will find Mindset will help you take the actions needed to be successful in real estate investing as well as other endeavors you choose in life.
santo roger, i have a generator system in my 1941 oldsmobile
Penny rosebud, unless you have major discount card with BAM you’ll probally do better ordering the book on weekend website or better yet Sam’s Club.
Penny f you are in Asheville you can even get a signature copy at Sam’s
Phoenix Shredds Hey Jim, it’s never too late to start. My grandma was 51 when she decided to go to college to become a nurse. She’s been a nurse for nearly 30 years now.
Roger Dawson When I was 23 I was at a cocktail party and someone said that if you bought real estate and held it for two years, you would break even. After that it would continue to build wealth for you. I bought my first house within a month.
rosebud Well, hey, I’ll get a signed copy, ’cause I’m there.
Mike_Summey I’ll be doing a book signing at the Sam’s club in Johnson City, TN the first weekend in December.
Al Lee Phoenix, a man can flop around doing different things to find what he likes until about age 27. Then he needs to get serious and choose a path and start down it.
Penny I know, thats why I mentioned it
rosebud Thanks, Penny.
jimNC i would’ve started sooner. i wanted to pay off all debt first. no debt now, cept my house.
rosebud Jim, good planning for one so young.
jimNC thx…it was tough but satisfying
Phoenix Shredds Al, what makes 27 such a distinct age for the decision? But I do agree, I’m just curious to why 27.
Mike_Summey Everyone, if you use the Offer Generator to construct your offers, you will be able to make more offers, quicker and you won’t make a lot of the mistakes new investors make. You’ll get a lof of offers rejected, but as time passes I believe you will find more and more being accepted.
Al Lee Women are different, they can do it about any time. Men hit a turning point in their maturing at about 27 and need to get focuses or are likely to wander aimlessly for the rest of their days.
broadway Mike, can you say via this chat what factors the Offer Generator uses to come up with the results?
Mike_Summey Al, that’s why Mindset is such an important book. It can help young people at age 18-20 get started on a track it takes most until age 27 or later to get on.
jimNC having a kid really cemented it for me. you realize that being on someone else’s schedule sucks, and don’t want to live that way forever. that’s what has gotten me to get serious about this anyway
rosebud You’ll be glad you did.
Phoenix Shredds Interesting. Good thing I plan on reading Mindset, than.
Penny Al I must have high levels of male hormones, I was age 27 when I decided what path I wanted to take. 
Al Lee I pick 27 because I have seen many guys suddenly change and get serious at just about that age. Most males still think like boys until 27 (not a bad thing, just a fact of life). Then, they start thinking like men and if they are not moving on some planned course, they can start to see themselves as failures–a self fulfilling prophesy.
Phoenix Shredds That makes a lot of sense.
Penny guess it doesn’t really mater what age, as along as a path is chosen, right?
Al Lee I think some women are mature at 16–not many men, though.
Mike_Summey broadway, it lets you enter estimated rents and expenses, computes the Net Operating Income (NOI) and then walks you through the process of balancing price and terms to create dozens of different ways to buy a property that will all cash flow. It even lets you print the offer letters ready for your signature and presentation to sellers.
Mike_Summey Hi Kim
jimNC just got offer generator today. going to open it up after this chat
broadway Super, thanks, I’ve got to get that this week!!!
Mike_Summey Who in the chat uses the Offer Generator?
rosebud I have it. Haven’t used it yet to make an offer.
Mike_Summey rosebud, what are you waiting for?
Lon Mike, when estimating rents, how do you handle a situation where you buy a property when the rents are high and in 5 years or so, they go down? Do you get a range of what the property will rent for in a good and bad rental market and use the low end for your NOI calc?
jimNC do most of you work with an agent? or not? hard to find one that “gets” it
Al Lee I had an interesting conversation with a company that will probably start airing a radio show on my online network. They will send me a “pilot” tomorrwo and I will put it on the air to be played as one of our recorded programs. “Hot Chicks Stock Picks” is the name of the company and it is a female-owned and staffed financial advice company.
rosebud I just finished reading your book a couple of weeks ago and started farming an area. I’m taking your advice and moving slowly, I know.
Lon Jim – there are some out there who get it, I haven’t worked with any yet.
Roger Dawson A friend of mine is flying in from London this evening and I need to meet him at the airport so I need to leave the chat early. See you next week and don’t forget the credit rating company guests the week after that.
Mike_Summey Lon, I’ve never had a year whne I reduced rents. I’ve had a year or two when vacancy rates increased, but not a decline in rents.
Al Lee Go to www.WealthRadio.BIZ to hear it. I do not yet know exactly what time it will be run.
rosebud Bye, Roger.
jimNC what is best reason for using one?
Mike_Summey Hi Bill
jimNC no one answers…lol!
Al Lee I, myself, own very little stocks and am planning to liquidate the little I have left and put it into real estate–where it actually makes money.
Phoenix Shredds What exactly is the offer generator? I understand the function of it, but my question is how to access/use it?
Lon Jim, if the house is listed is a good reason to use one.
Mike_Summey Jim, I prefer to use real estate agents as they do most of the legwork. I feel like they earn their money, especially since the seller is paying them.
rosebud I lost a ton of money in the market in my SEP IRA after 9/11, so I pulled out and don’t intend to go back in. I’ll stick to real estate.
broadway jim, in my area there are some realtors that deal with the “rental house” type of property
Lon Don’t sign a contract with a buyer’s agent unless you want to pay them commission on all of your deals, even the ones you found on your own.
Al Lee rosebud, I understand. I have some money left in stocks because of an insurance program I have. I am working on replacing it and withdrawing all the money so I can use it more wisely.
rosebud Amen.
Mike_Summey Phoenix, it is the easiest program ever to use. It has pop up help that is available for every box where an entry has to be made. If you don’t know what to do, just place the cursor on the label and help will pop up explaining it. When you are familair with the program you can turn off the pop up help by simply clicking on the help button in the top left corner of the screen and click on “help off”
jimNC finding/inspecting properties and then bringing in agent to present offer…is this proper etiquette? I feel like i need to bring the agent with me from the start, which can really slow you down
Bill Mike/Al – do you have many properties out of state? Any that you have not visited and/or relied on an agent’s advice to purchase?
Al Lee I actually have done better than most people in the stock market. I invested $200k ten years ago and today it is workth $150k.
rosebud Yeah, you did good.
jimNC rather “shop” on my own and call my agent if i really want to try to buy the property
Lon That sounds about right, Al.
Phoenix Shredds Sounds extremely helpful. Thanks Mike
Al Lee Bill, I rely on my property managers for all my properties. I have dozens of hosues I have never seen and don;t care to see.
Al Lee I particularly don’t want to meet the tenants.
Mike_Summey Just FYI for all of you. For the first 20 years of my real estate investing career, I averaged in excess of 100% per year compounded return on investment. I tell stock brokers that and they don’t believe me, but I know what I did.
Lon Mike, how do you tell when you can raise rents on a property and when you can’t because the market won’t support it?
jimNC are these stockbrokers still working for someone else?
jimNC 
Al Lee Bill, we have a program for out-of-state investors at www.buyRentHouse.net
rosebud I can say that I sold a house years ago on a lease/purchase and the people trashed it. Even with the repairs I had to make, I still made money when I sold it.
Mike_Summey Jim, there’s nothing to presenting an offer. Take an agent with you the first time or two if you want, but you’ll soon see that it’s very easy. Just give the sellers the written offer and shut up. Let them look it over and wait for them to ask questions.
Bill i have about 12 properties in 4 states other than where I live. haven’t seen a single one. I’m always skeptical going into a new area, though.
rosebud I had to foreclose and take it back, then sell it.
broadway wow mike, I guess after 20 years you really learned how to make money then huh??
jimNC okay mike
Al Lee Bill, where are your houses?
jimNC the agent doesn’t get miffed if you present offer thru them?
Bill N. dallas (little elm), tulsa, nashville, Independence, KS
jimNC i meant do NOT present the offer thru them, sorry
Mike_Summey Lon, I raise rents a little every time the lease renews. It may only be $5-$10 a month or it may be $25-$50 a month. What’s important is that you keep up with inflation each year and don’t get yourself in a position where you will run off a good tenant with a rent increase.
Penny that is what you refer to as a nuesance rent increasem, right Mike?
Mike_Summey Jim, do you mean to the listing agent?
Penny increase
Mike_Summey Right Penny
Penny plse excuse the spelling
jimNC no, to your agent, as the buyer. my questions were referring to using a buyers agent…sorry for confusion
Mike_Summey Just enough to keep up with inflation, but not enough to run off the tenant.
Al Lee Well, I have family obligations right now. I need to sign off
Penny gotta run all, goodnight
Al Lee Goodnight, all
rosebud I’m signing off, too. Goodnight, all.
alex gotta go see you all next week
Mike_Summey Jim, if you use a buyer’s agent, let them present the offers. That’s what you are paying them to do. You may ask to accompany the agent to present the offers so you can learn how it is done.
Bill on that note…gnite all.
Mike_Summey Wow! Time has flown by tonight. I have to run also. See you next week.
oz g/night all
Mike_Summey Goodnight everyone.
broadway gnite all
Lon see ya mike
jimNC good night thanks
Mike_Summey The rest of you can stay and talk amoung yourselves as long as you want.
Mike_Summey Goodnight
Kim Bye!
willymiranda Thanks
Phoenix Shredds Doug, thanks for the input on the books earlier.
Phoenix Shredds everyone
Phoenix Shredds goodnight everyone*
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