Chat Transcript - April 21, 2008
Posted on April 22, 2008
FOR THOSE OF YOU WHO MAY HAVE TRIED TO GET INTO THE CHAT AND COULDN’T, PLEASE ACCEPT OUR APOLOGY. WE HAD OUR WEB SERVER CRASH JUST BEFORE THE CHAT WAS TO START AND IT TOOK A FEW MINUTES TO GET IT BACK UP
Kel Hello, did the site just come up? I couldn’t get in for awhile
Kel Hey mike, I haven’t gotten in before you yet.
Mike_Summey Sorry! We had a problem with the web server. Our webmaster just go it repaired.
oz I think so, i too had a problem accessing it, sent Mike an email. re same. Looks like Mike too had problems getting on. Hah the answer just came up.
alex me too
Mike_Summey No one could get in until just a couple of minutes ago.
alex hello everybody
Roger Dawson Good evening everyone. Sorry for the delay
oz Howdy to you too, all of you.
Mike_Summey Hello everyone. We’ve been in scramble mode for the last few minutes trying to figure out why the web server crashed.
Mike_Summey Hi Eddie, Penny
Roger Dawson Hi Penny
EDDIE-NC hey everyone
Penny hello Mike, glad you guys got the site back up.
Penny u 2 Roger
Mike_Summey Since I sent the chat reminder this morning, I received an acceptance of my offer on one of the houses I referred to in that email.
Mike_Summey Hi brfuchs
alex Where can I find an example of a Lease Option contract. I know that I have to have a lawyer to write one for me, but I want to see an example of one favoring the investor.
Kel Mike, tell us more.
alex I want to put an ad in the news paper that I am looking to buy a house on a Lease Option.
alex I live in Northern Virginia, could some tell me how much a lawyer will charge me, more or less?
Mike_Summey Kel, I sent the offer yesterday giving them until the close of business today to respond. My offer was for cash…close by April 30. Late this afternoon I received an acceptance with the notation that the seller was going to have to bring $8,000 to the closing to pay off the existing loan.
Mike_Summey Hi daisy
DaisyNH7 Hi there Mike
Mike_Summey alex, I don’t have any experience with lease options. I’ve never done one. Maybe Roger can advise.
Roger Dawson Alex: you can download a lease purchase contract for $39 at www.lease2purchase.com/contracts.php
brfuchs Hey Mike, here in Asheville as well. Are you finding the deals here in Asheville, surrounding areas or SC? Just word or mouth, MLS, advertising?
alex Thank you, mike for your honesty. I am just trying to see how/what I can do to get into my first own house and get others for rentals.
Mike_Summey Hi Sandy
Mike_Summey brfuchs, this house is in Anderson, SC. I have a block of properties there as well as near Asheville.
Sandy Hello. You can ignore my email to you
Kel Sounds like they really wanted out of the house. My run lately has been less motivated sellers and some even offended by lower than expected offers. I guess they should be getting more motivated as this market continues.
Mike_Summey Sandy, will do! We had a problem just before the chat started. The web server crashed and had to be rebooted.
Roger Dawson Alex, be sure that you put the purchase price into your contract. Don’t do it based on the appraised price or negotiated price at the time of your purchase.
Mike_Summey Kel, I can assure you sellers will become more motivated.
Mike_Summey Hi david
alex thanks, Roger
Mike_Summey Hi Doug
Sandy I’m still getting a squeak…also it says welcome every time someone logs in
Mike_Summey Hi Al
davidoro hola. late but want to see who’s buying what.
Roger Dawson Hi Doug
Al Lee Howdy!
Doug_in_CT Hi Rog…
Roger Dawson Welcome, Al.
Al Lee I almost missed the chat again this week, but got home in time to join late.
Mike_Summey All you late arrivals, did you have problems earlier like the rest of us?
davidoro mike — your website was down for sevral minutes
brfuchs Where are the deals coming from Mike, just word of mouth?
Doug_in_CT My problem was Little League….my 9 year old plays second base.
Kel Mike, I ordered the book during last weeks chat. It came last Friday(Quick). It is a good read. Already it has been helpful.
Mike_Summey Al, I just got another deal under contract today. That’s 14 in a little over a month.
Al Lee Mike, you are HOT!
Doug_in_CT On a roll
davidoro Mike - California still has 30% drop a head of it.
Al Lee I mean that in the LEAST personal sense, of course.
Mike_Summey Kel, thanks. Do you have the other books and othe Weekend Millionaire tools?
Mike_Summey david, I’d agree with that.
davidoro Sacramento area - where my dad lives - used to have good rent/mortgage ratios. But then it got crazy. They are a lot closer than 2005, but still off.
Kel Mike, I started with the Audio when it first came out. Then added the Offer Generator and now the last book. I already have a bad case of the mindset according to my wife.
Al Lee The Dallas/Fort Worth area never experienced the crazy appreciation, so we have not had the crazy price declines. In fact, the area is still growing like always. It is different from every other major metro area.
Mike_Summey david, just keep watching the market. Rents are rising and purchase prices are falling. When the numbers get right people will start to buy again, but I don’t think we will see a bottom until late 2009 or early 2010.
davidoro Example - Dad’s house in 2005 appraised for $350k. Rent then and current rent $1450 (that’s the high end). Same house probably appraises for $225k. Using your system, I say that house is worth $150k at current rates, although I think it’s closer to $100k if I really want a deal.
Mike_Summey Kel, sounds like a smart wife to recognize that! 
davidoro appraisal now is $225k
Mike_Summey David, California prices got to be ridiculous.
Mike_Summey Hi Dean
DeanC hello!!
Mike_Summey Hi adaltas
adaltas Hi Mike!
davidoro when i read your book in 2005, i was like this guy Mike is nuts. you can’t make the numbers work in California. But pretty soon, Mike, pretty soon, you’ll go from Nuts to Genius. Mark my word. 
adaltas Yeah, I’m in CA - Los Angeles.
adaltas Higher prices but then again, higher rent too!
Mike_Summey Last Thursday I received fromhe builder who built the houses I bought from the bank that foreclosed on them. He found out that I had purchased them and he wanted to let me know he had 13 more that were about to go into foreclosure. Wanted to know if I wanted to make a deal.
Mike_Summey Thanks David!
Doug_in_CT Do you still have enough Powder Dry, Mike?
Kel Mike, can you run down one of your recent purchases? Expected rent, purchase price, terms, amortization etc. You may not have all that handy but would be interesting.
Roger Dawson Mike hates it when I rule rules of thumb, but if you buy a rental for 100 months of current rent, you’ve probably got a good deal.
wendystep Mike, how are you handling the appraisal situation on this deal? Lately, when I see a good deal, and the appraisal comes back at that number, you can’t
Kel Roger, I agree that rule would be a good deal. But it doesn’t usually get me to where the NOI works. That seems to be an extremely good deal.
wendystep sorry, create any built in equity.
Mike_Summey Kel, I just purchased one house for $95,500. I closed on it on March 28th for cash. I just put $110,000 permanent financing on it April 17. It has already been rented for $1095 per month beginning April 20.
Mike_Summey Kel, I don’t like Roger’s rules of thumb because they don’t consider the wide range of financing options that can skew prices tremendously.
Mike_Summey Rules of thumb only apply if all deals are financed the same way.
Al Lee Some investors view “equity” as your money imprisoned in a piece of property becaue you get no return from it (except that you do not have the cost of interest on a mortgage for the amount of equity you have) and you can not spend it without going to some effort and expense to extract it by selling or refinancing the property.
Kel Mike, that is an excellent deal. That is the kind of motivation that helps me keep looking in the face of less acceptable deals that are more common.
Mike_Summey wendy, the house I just purchased had been on the market for $224,900 before it was foreclosed upon. I bought it for $95,500 because I was able to pay cash and close before the end of the month…which just happened to be the end of the bank’s quarter and they didn’t want to have it on their books and have to report it.
Al Lee Cask is King
Al Lee Cash is King
Mike_Summey Kel, most people would have been afraid to make an offer like that.
Kel Mike, what about longer amortization periods? Such as 30 years? I could make those all day long but at 40 now, I would be 70 when most were paid off. Or does the repayment accelerate when rents rise? What do you think?
Mike_Summey Al, equity is what let’s you enjoy the income from a property instead of paying it to a bank to rent their money.
Al Lee Mike, I was just relating SOME PEOPLE’s viewpoint. I like an 80/20 rule. 80% leverage, 20% equity.
Roger Dawson Kel: it’s highly unlikely that you will have the same mortgage for all 30 years. Somewhere down the line you’ll refinance to pull equity out. Then you can get a fifteen year loan so that the equity builds up faster.
Mike_Summey Kel, very few 30 year loans are ever paid off over that period. When I was younger I had several 30 year loans, but as rents rose I eventually refinanced the balance to a shorter term so I could get them paid off faster.
Mike_Summey Hi Jeff
Jeff S CPA Hi MIke, I had problems getting into the web site earlier, i guess i missed a lot
Mike_Summey Jeff, we had a server problem that kept everyone, me included, from getting in.
Kel So then it sounds like it may still be a wise investment choice to make it initially with a longer amortization to get the deal?
Jeff S CPA Ah ok, thanks Mike
adaltas I have a question
Mike_Summey Kel, just keep in mind you can always pay off a loan faster whenever you want, but if you lock into too short a term it may become a burden if the economy tanks.
Mike_Summey Hi IIfells
Mike_Summey adaltas, go ahead with it.
llfells hi sorry im late
davidoro mike so quick question - you bought that house for $95k in cash and then took a $110k loan outon that same house? Basically getting your $95k back and then some. is that correct?
adaltas My fiance and I are actually looking to buy our first home and before we ever discovered The Weekend Millionaire, our plan was to purchase a duplex in LA specifically because they are a good value, to be able to rent out and offset our mortgage - the plan being to move out in 5 years and then rent it out completely holding on to it forever as our first rental property. Does that sound like a good launchpad?
Kel Mike or Roger, I am looking currently at a REO listed at 136000, I think it would rent for 1000 - 1050. On a twenty year plan with current rates I can offer about $92,000. My luch wtih the banks so far hasn’t been great. Any thoughts to get acceptance?
Mike_Summey david, that’s correct. And with a rent of $1095 per month it will still cashflow with the larger loan.
Mike_Summey adaltas, I know many people who have started that way. If you can get a good deal on a duplex go for it.
adaltas We are actually in escrow on one (however rules have changed - the seller is countrywide and it was a short sale - now new policy may interrupt our purchase as the property is non-owner operated and all sellers not living in can not sell as a short sale)
adaltas Sad because the seller may well get forclosed on instead of my fiance and I coming in to be able to put a stop to that!
Mike_Summey Kel, if you could make an all cash offer for that amount just before the end of a quarter and close before the end of the quarter a bank would give it serious consideration.
adaltas Thanks Mike. That’s encouraging. It’s still technically a single family home, but obviously not a large complex. And of course we’re looking for properties with separate meters etc.
adaltas So we felt it was a reasonable approach.
Mike_Summey adaltas, why can’t they accept a short sale? I’ve never heard that.
EDDIE-NC adaltas my daughter is 21 and goes to school full time and also works two part time jobs just bought a duplex and lives in one side and rents the other. I am very proud of her on her first purchase. Also she did it on her own.
adaltas A mortgage broker contact told me they are paranoid that the seller is more likely to know the buyer if they aren’t living in, and might be trying to offset one bad purchase with another.
Al Lee davidoro, the new-construction hosue that you did not buy is now, finally, being built - http://www.buyrenthouse.net/RavenviewPhotos/
adaltas It’s a bureaucratic problem for us.
Mike_Summey adaltus, I would think Countrywide would much prefer the money from a short sale to putting the property in their inventory.
adaltas Frankly, it might be good on the whole (maybe) but it’s no good in this case for anyone.
adaltas You would think.
adaltas The selling agent has had trouble reaching people there - we were supposed to hear on 4/20 about our escrow but still we are without any kind of official response - or even unofficial!
Kel Goodnight all. Congrats Mike on the 14 recent houses. That is fantastic!
Mike_Summey adaltas, I’ve never know a lender with a conscious.
Al Lee I need to get back to family stuff here at home
Al Lee Goodnight, all
Jeff S CPA Mike, I’m thinking of buying the offer generator program, my guess is it’s fairly easy to follow?
Mike_Summey Everyone, sorry about the server problem earlier. At least we were able to get back online for part of the chat.
Mike_Summey Jeff, it’s idiot proof!!!
Jeff S CPA What a sell!
alex Mike I have budgeted and will buy the Offer Generator on 01MAY2008.
adaltas If we could appeal to a human at Countrywide, that’s where our sights are set for sure. That’s the trick.
Mike_Summey Jeff, every screen and ever label has popup help if you put the cursor on it for a few seconds.
Jeff S CPA sounds good… i’m looking at properties and i haven’t made any offers.. i assume this will help me figure out a good one..
Mike_Summey alex, good for you! You’ll find it very helpful. I’ve used it to purchase 14 houses in a little over a month.
davidoro Countrywide is swamped in foreclosures. they deserve what they are getting as they were the worst peddlers of liar loans. now thay can’t handle the monster that they created.
Sandy Mike, how many computers can it be installed on. (I have two computers…I am the only user. Desktop and laptop)
Jeff S CPA Mike, it does take into account all the things from your book such as property management, vacancy, etc..
Mike_Summey Sandy, you can install it on up to 4.
Sandy thanks
alex Thanks Mike, Roger, till next week, good night
adaltas Well if you have any special advice for cutting through the bureaucrats, my side-arms are my telephone and Google!
Mike_Summey Jeff, yes it does. It prompts you to make entries for all these things and then if you create an offer that will have a negative cash flow, it pops up a warning.
Jeff S CPA Thanks Mike, sounds like a good buy for sure.
adaltas I need to purchase that calculator too.
Mike_Summey Jeff, the biggest complaint I’ve received about the Offer Generator is that its too cheap.
adaltas LOL
adaltas That’s great.
Jeff S CPA Wow, that’s good.. we’ll see if i can find something else:)
Mike_Summey I know of nothing like it on the market today.
Roger Dawson Goodnight everyone. See you next week.
Mike_Summey Goodnight Roger
oz g/night all, gotta run.
Mike_Summey Jeff, when I recently help my son purchase his first house, he was very doubtful of the offers we created with the Offer Generator. His comment was, “Dad no one is going to accept one of these offers.” He had a house under contract within 4 hours of making that statement.
DaisyNH7 Can I buy the OG only on your website or can I buy it downtown at Barnes Nobles?
Mike_Summey Daisy, it is only available on our website. Sorry!
Jeff S CPA Impressive. Good to hear.
Jeff S CPA Now you can get away with some nice offers
DaisyNH7 No problem, I am going to get it this week. I think it will really help me with some offers.
Mike_Summey I spoke to the Georgia Bankers Association this past Saturday and several of them bought the Offer Generator.
Jeff S CPA Well thanks, good night, i’ll be ordering it this week!
DaisyNH7 If you are doing any presentations here locally I would pay dearly to come and see you speak live.
Mike_Summey I stayed a bit later tonight because of the problem we had with the server earlier, but I’m going to have to run now. Still have work to do tonight.
DaisyNH7 anything in the works locally?
Mike_Summey DAisy, you mean in Asheville?
DaisyNH7 yes.
DaisyNH7 I work in Biltmore
Mike_Summey The program I did Saturday for the bankers was at the Grove Park Inn, but it was not open to the public.
Sandy The Grove Park Inn is my favorite place in Asheville
Mike_Summey The rest of you can stay and chat as long as you want, but I have to leave now. Goodnight all.
Mike_Summey See you next week.
wendystep Thanks, Mike Goodnight everyone
adaltas Good to be on chat with you tonight Mike, I’ll add my congrats on your new buys!
adaltas (and Roger - even though he left when I wasn’t looking)
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