Chat Transcript - March 10, 2008
Posted on March 11, 2008
year2112 hello jeff
Jeff S CPA hi
year2112 This is my first time visiting this chat
Jeff S CPA Welcome..
year2112 long have you been participating here?
Jeff S CPA I’m relatively new myself.. i started about 2 months ago but missed the last 3 weeks due to work
Jeff S CPA I am one of the few who don’t have an investment property yet
year2112 i literally just put down the book on negotiating. It was a great read
Jeff S CPA i want to read that one.. i’ve read the other 2
year2112 So far it’s been the only one i have read.
year2112 i am looking forward to reading more
Jeff S CPA good, the other 2 were good as well
year2112 great.
Jeff S CPA for the most part your questions will be answered here but sometimes it gets tough..
year2112 Are the discussions here usually good
year2112 ahh great
Jeff S CPA for the most part yes
Jeff S CPA as i said… i don’t have a property so i don’t have as much to contribute
year2112 i do not have one either. i am new to investing and have been focused on wholesaling as a way to get in the game. hence , the negotioating book.
Jeff S CPA right… good idea, nice way to start
year2112 what market are you focusing on
Jeff S CPA rental real estate property
Jeff S CPA i’m looking into las vegas even though i live in DE but that might be too far
year2112 I’m not sure if there is such a thing as too far. It just might be a bit more challenging than buying next door.
Jeff S CPA true…
Jeff S CPA i am going in 2 weeks i hope to check out some properties while i’m there
year2112 Im sure as a CPA, you understand the benifits of conducting business while on any trip. At least slow down as you are passing a couple
Jeff S CPA yes i will.. i am actually meeting a real estate agent out there to show me around
year2112 Great.
VetInvestor Hello from Virginia guys
Jeff S CPA Hello from DE
year2112 hello form NC
Jeff S CPA all east coast
VetInvestor seems like it
VetInvestor Newbie here. I spend a lot of time on Flippinghomes.com. I read Mike and Rogers book recently
Jeff S CPA i’ve only been on about 2 months
Jeff S CPA usually the chat has started by now..
year2112 I was just driving through virginia last night on the way back from Snowshoe Wv What do the signs that say welcome to “Anytown” a certifide business carea mean?
VetInvestor You got me
VetInvestor hello mike
year2112 oh well i saw them a lot. Just curious
mikel Hi
VetInvestor I’m in the VA Beach area of Virginia
year2112 ah , might be different there
mikel I’m a first timer. Thought I would see what I could learn
Jeff S CPA wow.. i’m the veteran so far and i’m relatively new myself..
VetInvestor Welcome. This my second chat so I’m new also
year2112 hello santo
santo hi, 2112
santo hi Lon
mikel Hello Sandy
year2112 Hello lon and sandy
santo hi, mike
Lon Hi Santo. I looked up those houses and 3 out of 4 were in the zip codes you gave me.
Mike_Summey Hi everyone, Sorry I’m late. I was having computer problems.
year2112 hi mike
alex hi mike
Jeff S CPA Hi Mike
Lon hi year2112
meowka01 Hi Mike
Lon hi mike
santo Lon, stay away from those zip codes
mikel Hi Mike
Lon will do Santo
Mike_Summey I’ve been having Internet connection problems this afternoon, so if I go away, just bear with me. I keep getting dropped.
VetInvestor Hey Mike. Same here
santo mike, we can’t have that
Mike_Summey Hi year 2112, alex, lon, meowka01, Jeff, Santo & who ever else I missed.
Mike_Summey I didn’t have time to check things out before the chat. I finished signing contracts on 11 houses just 10 minutes ago.
Mike_Summey Hi rggame
rggamel1 HI Mike
Mike_Summey Santo, I did a radio show this morning from Buffalo. I told them I had heard Buffalo was a great place to invest.
Mike_Summey Hi corey
corey Hey Mike
Mike_Summey Hi broadway.
broadway Hello Mike and all
santo mike, yes it is
alex On March 20, 2008 I am going to listen to an REIA speaker, named Will Lansing. He is going to speak on “Wholesaling”. This is being put on by a REIA in norhtern Virginia. Will pay $20.00, since I am not a member, yet. Has any body ever heard of this person, “Will Lansing:?
Mike_Summey I have my dinner sitting here beside me. I didn’t get a chance to eat before the chat.
Lon Alex, is he local or national? I’ve heard of quite a few of the national speakers, but not him.
Mike_Summey Alex, I’ve never heard of him, but I don’t know anything about wholesaling either.
alex I do not know.
Mike_Summey Hi sparky
Mike_Summey Hi Penny
sparky37 hi mike
VetInvestor Alex, I’m in VA Beach area of VA. Never heard of Will Lansing though
Penny Hi Mike
Lon alex - www.willlansing.com
Mike_Summey Roger is speaking in Palm Springs tonight so he won’t be with us.
sheseltine Good evening all!
Mike_Summey Hi sheseltine
broadway Mike, will you be doing any more radio shows with Al in the near future? I’ve listened to several of his shows on his website and they are very informative
alex thanks Lon, will look him up, after the chat.
meowka01 Does anyone know where the best place to find Hard Money lenders would be? I have several small deals that make good money under contract and wish to rehab them for a flip?
mikel Mike, I’m a new timer so this might be obvious. I know you factor a percentage (5% or so) for maintenance. How do you account for large, unexpected expenses ex. new furnace, in your cash flow or do you just have to come out of pocket?
Mike_Summey broadway, Al is not doing the show right now. He has some problems he is trying to correct so he has stopped doing the show for the time being.
Lon meowka01 - do you have a local REIA in your area? You can usually find one through them.
sparky37 meow, what part of country?
meowka01 New England
sparky37 Mass?
meowka01 REIA. I will check.
Mike_Summey meowka, most of our Weeknd Millionaire followers are long term investors so I’m not sure you’ll get much information here on hard money lenders. I’ve never used one.
meowka01 I want to flip to generate cash so that I may then buy and hold.
alex Mike, please correct me if I am wrong, but this is not the right time to flip.
Mike_Summey mikel, your maintenance reserve should include a reserve for large expenditures. What gets most new investors in trouble is failing to reserve enough for these bigger items. They only worry about what happening right now and don’t look ahead.
Mike_Summey Hi Doug
Doug_in_CT Hi Mike,
Mike_Summey meowka, we have a list of REIAs on this website.
Lon meow - do a google search on hard money lender and your city and you should find some.
Mike_Summey Hi Rod
Rod_NY Hi Mike
Rod_NY Sorry I’m late
santo mike, when you were on the Garrett Sutton show, I asked you what you thought about a 14 unit property–price $269,000—gross rents, $48,600–noi,$28.769—-I sent you some papers on all the bills, you should get it in a day or two, let me know what you think of it
meowka01 If you buy at a very low price you can then sell at a very low price.
Mike_Summey Hi EMP
meowka01 Thank you!
EMP Hi
Mike_Summey I’m currently evaluating a website that has links to all typs of real estate information. If it checks out, we’ll add a link to it from this site and send an email notifying you about it.
mikel Thanks Mike. I’ll factor a larger maint. expense
Lon alex, you can always flip to investors like us, if the numbers are good.
alex ok
Mike_Summey santo, it’s hard to evaluate a property like that from a distance. I would have to look at it and do a thorough inspection before I could give an opinion. My advice is to err on the side of caution, especially with a larger property like that. A good friend of mine was doing great with SFHs so he jumped in and bought a 20 unit building. It almost took him under and caused him to lose several of his SFH.
santo thanks mike
Mike_Summey meowka, just FYI…if you have to sell a prperty to make money on it, you’re not an investor you’re a speculator. There’s a huge difference.
meowka01 I would love to flip to an investor. If anyone is interested I could call you with all the information. My number is (802) 353-1415.
meowka01 Can you be a speculator as a means to be a investor?
mikel Mike, If you had the option of focusing your time on the Greenville, SC market or the Asheville market for viable SFH’s, would you have a preference?
Lon mikel, are you in the Gvl area?
mikel No, in Asheville, but I spend quite a bit of time in Gvl
Mike_Summey meowka, you can if you can stand the risk. Right now I know dozens of people who were flying high a couple of years ago that are on the verge of bankruptcy.
meowka01 I would like telephone numbers of anyone else willing to purchase a property with good numbers.
Mike_Summey mikel, I think Greenville, SC has more opportunities than Asheville.
Mike_Summey mikel, Greenville did not see the huge run up in prices Asheville experienced. We are in for a big correction here.
meowka01 I feel that a couple of flips would put some money in my pocket which would then allow me to focus on the long run which I do prefer. But I need to put food on the table today.
Jeff S CPA Mike, any geographic areas you would favor right now?
mikel Lon, are you in Gvl?
santo mike, can’t you be a sucessful investor if you flip properties, and also buy and hold—one of carleton sheets students has 30 rental units, plus he buys and flips properties so he has cash for his buy and hold properties
Lon meow - long distance investing is not for everyone. If there is a REIA in your area, you need to be involved, get on their mailing list or yahoo group if they have one. This is where you will find most of your buyers for your properties.
Mike_Summey meowka, you might want to give your email address for anyone who wants to contact you. The transcript from tonight’s chat will be posted for everyone to read tomorrow. There may be people reading it weeks later who might want to contact you.
Lon Right now I’m in Minnesnowta, but I live in Simpsonville.
meowka01 My address is: Sojournbg@hotmail.com (802) 353-1415
mikel Lon, what has your experience been investing in the G’ville area?
Mike_Summey santo, there are people who both buy and hold and flip. Personally, I’ve always found it takes less effort and less risk to find deals you can structure to buy with little or no money down that the time, effort and risk involved with flipping. Especially in times like we are currently experiencing.
meowka01 Thank you
santo thanks mike
Mike_Summey Jess S, the central part of the country is better than either coast, but there are deal everywhere. You Just have to locate them and the best way to do that is to keep making offers the work for you and don’t worry about asking prices.
Lon Mikel, I have one rental property so far and it’s working great. The areas you probably want to stay away from are areas NE of downtown. I am on the search for the next one.
Jeff S CPA Thanks Mike… I am going to Las Vegas in a couple weeks and was going to take a look around
santo mike, I just got my first s.s. check feb. 28—welcome to the club
mikel Thanks Lon.
Mike_Summey I’ve said many times that most people work 40 hours a week, 50 weeks a year for 40 years and end up with little more to show for it than a monthly Social Security check. If you would spend just 4 hours a week looking at properties and making offers and it took you and entire year to buy your first property, in 15 years, that one property could well pay you more than the Social Security check you work your entire life to get.
Mike_Summey Thanks Santo. Just got mine started too.
broadway Mike, that is the absolute truth. funny thing is, you would not even be trying very hard getting one property per year. Once a person started and did it right, they’d have much more fun doing more and more
broadway To me, you control your own destiney(sp) with rentals
santo mike, but they are still not giving my wife her $943 a month because they can’t find her birth certificate
Mike_Summey The problem with most people is that they are looking for the magic bullet that will make them rich with little or no effort. It ain’t gonna happen! Investing in real estate and doing it right is a slow, but very risk free way to build wealth. My dad used to always tell me not to hurry up too fast too slow. Today I understand what he was talking about.
Mike_Summey broadway, you are so right! It took me a year to buy my first property, but I bought 2 the second year and 4 the third year. As you gain experience you get better and the deals come easier.
Mike_Summey Santo, I’m sorry, bt there’s not much I can do to help that situation.
Mike_Summey broadway, just think of it this way, with wealth you control circumstances, without it the circumstances control you.
broadway To me, it’s the easiest way to make money if you work hard at trying to do it right. I think you are the first person I’ve come across that matches my philosophy so close. Not to say others are wrong
broadway Mike, that’s so correct
Mike_Summey broadway, I’ve taken the slow methodical approach and my net worth surpasses nearly all of the real estate gurus you see on TV.
mikel Mike, I was a little unclear about the ability to do a deal with owner financing if they don’t own their home free and clear. Can they still do this?
broadway Mike, I don’t doubt that for a minute.
broadway I bought my first property 2 years ago; a condo in Branson. It’s rented and I’m working on 3 more sfh in Springfield now
Mike_Summey mikel, a seller can only finance the equity they have in a deal. To get large or full owner fianancing, you have to find sellers with equity. You might be surprised at how many homes are owned free and clear.
santo mike, is it true that if you have your properties under a LLC, when you go for another loan to buy, thosehouses don’t show on the report–what I mean is the debt
Mike_Summey As you gain experience it get easier to make deals. It’s like learning to walk. those first steps are very shaky, but you keep at it and pretty soon you are running all over the place. The same thing happens as you learn about investing.
Mike_Summey santo, on my personal financial statement, I only show the net equity I have it each LLC, but I attach a schedule to the statement that shows all of the properties in each LLC, the value, the loan amount, payment amount and interest rate. Technically I don’t have to do that, but the banks will usually want to see whats in an LLC when you show the equity on your personal statement.
mikel Thanks Mike. I’ve purchased a couple of “investment” properties in the past the uneducated way. I’m looking forward to negotiating in a new manner.
santo thanks mike
Mike_Summey I just signed the contract on 11 new homes just before the chat began. All 11 are cash deals, no contingencies. I will pay for them out of a line of credit I have and then obtain permanent financing in a few months once I have them all rented. I will use the permanent financing to repay the line of credit.
Lon that’s a big line of credit
Lon 90 days Mike?
mikel Mike, what are your thoughts on a seperate LLC for each property? Is it necessary?
Mike_Summey Being able to make cash deals is the big advantage to having a line of credit. As your equity builds and you gain experience you will be able to get a line of credit to use this way.
meowka01 Although there are many creative ways to buy 11 homes it is telling that you chose cash to purchase. Was the seller in distress?
meowka01 Mike, How much under the market would you say you were able to get with that cash deal?
Mike_Summey Lon, yes, I have a very large line of credit that renews every 3 years. I pay interest only when I pull from the line, but I also term out loans as soon as practical and repay the line. It is a buying tool, not permanent financing.
Mike_Summey Hi smater
smater hi there
Mike_Summey meowka, the purchase was about 30% off the asking price.
sparky37 Cash is king!
meowka01 Have you purchased from auctions much?
sparky37 Mike was the 11 properties from 1 seller?
Mike_Summey When rented, the houses will easily support 100% financing on permant laons. I will wait until they are rented so the loan can be based on cashflow, not appraisal.
Mike_Summey sparky, yes.
sparky37 so win win for you and seller
santo mike, were the 11 houses SFH–or multi’s
Mike_Summey meowka, I’ve only bought a couple of properties at auction. My experience has been that novice buyers get carried away at auctions, especially ifit is a good property, and they pay too much.
Mike_Summey SFH
broadway Mike, I know you personally would not have a problem getting the houses financed with perm financing, but is there a minimum positive cashflow rule of thumb number you look for personally? I know more is better but I’m working to get to the point of financing the deals like you are and I don’t want to get caught short.
sparky37 Mike, I know u say stay close to home but here NJ/NY prices are still too high any thoughts on going further away from home?
santo gotta go, nite all
Mike_Summey broadway, if you allow for maintenance, taxes and insurance and then reserve adequately for maintenance, both current and deferred maintenance, and you can buy so that the NOI covers the debt service initially you probably have a good deal. Then the longer you own the property the wider the margins become as the rents go up and the mortgage pays down.
Mike_Summey sparky, are you looking close to a major city?
Mike_Summey Hi eric
rggamel1 Mike, If you are not concerned about reselling, why do you focus on SFH? Wouldn’t you get higher NOI on multi-family?
broadway Ok, I do all that so I should be ok then. The reserves are a big deal to me. I don’t like surprises and try to avoid that as much as possible
eric_montreal Hi Mike!
sparky37 live close to nyc but looking to invest 1 to 1/2 hours away
smater In Canada they extended a mortgate from 30 to 40 years….Is 40 years too much
eric_montreal smarter: My vision is that the longer the better, since it reduce your monthly payment, which increase your ROI… But there is the equity factor though which I’m not sure…
Mike_Summey rggameel, I don’t justfocus on SFH. I buy multifamily, commercial, office buildings, etc. I just encourage new investors to start with SFH until they get some experience. For me if it will cash flow, I don’t care what type property it is, but that comes from over 35 years experience.
smater I am living in this house and am thinking of borrowing equity to purchase a SFD
alex good night, all
Mike_Summey eric, I have used 15 year financing on investment properties for over 30 years. Personally if I have to finance longer than that to makeit work I’m suspect of the deal. Maybe it has something to do with my age now, but I used that same guideline when I was 35.
meowka01 What is your opinion with regards to systemizing the buying process? Is it possible to take a good idea and “cookie-cutter” the method? If so what method would be most conducive?
Mike_Summey Hi cgilly
broadway Thanks for the chat Mike and all. Good night to all and see you next week
mikel Gotta go. Thanks everyone for the help.
Mike_Summey meowka, I don’t like the cookie cutter approaches so many gurus talk about. My experience is that every property is different and every seller is different, so conceivably there could be as many different ways to buy properties as there are combinations of property and people. Does that make sense?
Lon eric, usually a 40 year comes with a high interest rate. If you’re not opposed to a 40-year term, you’d want to choose the one with the lowest payment, but keep in mind what Mike said, if you have to go 40 years to make it work, it may not be a good deal.
Jeff S CPA alright.. i’ll see you guys next week
meowka01 Yes, I was affraid of that answer.
Mike_Summey Wow! Time has flow by tonight.
Lon it sure has
eric_montreal Mike: Oh, I see. I’m sure you are right, since I didn’t buy my first house yet. So I was thinking that since it gives less expenses it was better.
Mike_Summey I’ve got to run too. See you all here next week.
smater thank you for your time
sparky37 bye Mike
meowka01 Thank you!
Lon bye mike
Mike_Summey Goodnight all!
eric_montreal Thanks for your time Mike. I hope I’ll be able to join the chat sooner next time
eric_montreal Anybody investing in Canada here?
Lon Not at the moment. I lived in T.O. for a while, but that was before I was an investor.
eric_montreal Lon: where are you living now?
Lon South Carolina
eric_montreal Tired of snowstorms? 
Lon That’s why I moved south! I grew up in Wisconsin. I’m up here visiting family tis week. Too much snow.
eric_montreal It is the apocalyps right now in Montreal
meowka01 Goodnight all!
Lon bye meow
eric_montreal Ciao meow
Lon you didn’t just do that…
Lon did you rhyme on purpose?
eric_montreal oh, no… Is that related to a inside or an ad I never heard about?
Lon no, I just couldn’t believe you rhymed that. I guess you’re a “poet, and don’t know it”. Booooo
eric_montreal hehe…
Lon I thought in Canada that was “eheh”.
eric_montreal Alright. I’m leaving now… see you next time!
rggamel1 Eric, Thanks for the laugh and good luck with the snow!
Lon see you in 2 weeks, I have my REIA meeting next week
eric_montreal thanks rggamel1
eric_montreal Don’t know when I’ll be back. I usually have other meeting on monday night, unfortunatly.
eric_montreal Take care everybody, happy investing!
Lon Doug, are you awake up there in CT?
Doug_in_CT Yeah, I Lon, I was s distracted for a few minutes.
Lon ok, just checking, I don’t remember you typing anything tonight.
Doug_in_CT I grew up in Wisconsin too. Madison area.
Lon Ah, Mad-town. I like it there, when I get a chance to visit. Worked at AmFam a couple of times. That’s a huge campus.
rggamel1 See you all later.
Doug_in_CT Yeah I was raised in the volitile 60’s. We had Paul Slogin as our Major. He was elected Because he was convicted on several occasions of use of illegal weed.
Lon interesting
Doug_in_CT So it is a was a very liberal town.
Lon it still is as I understand it
Lon well, in the words of Darrell Waltrip, I need to “boogity boogity boogity”.
Doug_in_CT OK see you in two weeks…..in the old chat room.
Lon bye
Doug_in_CT bye
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