Chat Transcript - May 5, 2008
Posted on May 6, 2008
Mike_Summey Hi Jeff & Santo
Jeff S CPA Hi Mike
santo hi, mike
Jeff S CPA I bought the offer generator, but i haven’t downloaded it yet
Mike_Summey Any good news from either of you this week?
Mike_Summey Jeff, shame on you! It won’t do you any good in the box.
Jeff S CPA HA!! I know.. i’ll admit i put it on the back burner, i’ve started a new consulting contract this week
santo mike, going out tomorrow to buy your new book—can’t get it on your site
Mike_Summey You’re going to love it once you start using it. I use it to calculate all of my deals now.
Mike_Summey Hi Roger
Roger Dawson Hi Mike Jeff, Santo
Mike_Summey Hi Oz
Jeff S CPA I”m sure i will, Hi Roger
santo hello, Roger
Roger Dawson Hi oz and Jeff
Mike_Summey Santo, why can’t you get it on our site?
Mike_Summey Hi Mac & Kel
Mac Hello Mike
oz Hi Mike and all
Kel Hi Mike
Mike_Summey Hi Al, how are things in TX?
santo mike, everytime i try, it tells me to put in a new address–It says it has my address already
Al Lee HI, Mike, Roger, santo, everyone
santo hi Al
Mike_Summey santo, all you need to do is use your existing account to order. You don’t have to set it up again.
Roger Dawson Hi Al.
Al Lee Texas is still the best state in the union. NC is not far behind, though.
Roger Dawson So California is chopped liver?
Kel Mike when you get seller financing, how is the seller prevented from getting a bank loan on the house. Similarly, should you ever try to get seller financing on a house that is not totally free and clear?
Al Lee California is OK, too, Roger
Mike_Summey I celebrated buying 14 houses in the past month by going out yesterday and buying a new motorcycle.
santo mike it won’t continue unless I type in my address
Al Lee I have wroked all day today and most of yesterday preparing for and overseeing my daughter’s 10th birhday party at our pool. What a job!
Al Lee The clean up is horrendous!
Al Lee Next year we do it at the country club…
Al Lee Harley?
Mike_Summey Kel, I’m not sure what you are asking about a seller not being able to get bank financing. I have purchased many properties where the seller carried part of the financing. The bank usually has a first mortgage and the seller takes back a second.
Mike_Summey Hi Lon
Lon Hey kids
Mike_Summey Kel, banks don’t like to finance 80-90% of a deal and have the seller carry the balance, but they don’t mind at all financing 20-50% and letting the seller carry the balance.
Roger Dawson Al, Oklahoma is OK. California is great.
Mike_Summey Al, Honda Goldwing…loaded.
Mike_Summey santo, have you logged into your existing account.
Mike_Summey santo, you have to do that before placing your order.
Al Lee I don’t ride a bike; but I have heard those things are really nice.
Kel I guess I don’t fully understand who holds the title in seller financing. Does the seller still own the home until paid off or is like a bank finance where the buyer by title owns the home?
Al Lee I need to go get an adult beverage. BRB
Mike_Summey Al, I’ve ridden all my life.
santo mike, I did not see that on the screen
Roger Dawson Kel the title to the property is held by a neutral third party (the trustee) until the loan is paid off. Then the trustee transfers clear title to the buyer.
Mike_Summey Kel, seller financing works just like bank financing. You get title to the property and depending on which state the property is in the seller’s loan is secured by a mortgage or deed of trust on the property. If you default, the seller has to foreclose just like the bank.
Kel Thanks, I did not understand the process.
Mike_Summey santo, I think that’s what you need to do. We have several customers who have placed repeat orders using their initial account.
Al Lee santo, is you SS problem all fixed now?
Al Lee your
santo mike I will try again
Roger Dawson The trustor (seller) transfers title to the trustee (neutral third party) who eventually transfer title to the beneficiary (buyer).
santo Al, yes it is—-and no more chest pains!
Mac Anyone have experience selling with a wrap using a contract for deed? I have some properties I’d like to sell and may need to help the deal with financing.
Al Lee santo, that si great news all around
Kel Roger, a couple of months ago I offerred 102,530 for a house listed at 145,000. Usually I get no counter offer. In this case they countered at full price. I took that to mean they did not want to negotiate and I let it go. Now I wonder if I walked away too soon? Do you think they were negotiating or just brushing me off?
Mike_Summey Kel, one reason banks don’t mind financing 20-50% and letting the seller carry the balance is because they have two people securing their loan. A seller is not going to let a bank forclose on a small loan and wipe out their larger loan. That’s the only type arrangement I’ve found where you can get 100% financing and still make the numbers work. You do that by getting very favorable terms on the seller portion.
Mike_Summey Hi Penny
santo Al, $11,316 was an amount i could walk away from–thats yearly
Al Lee Kel, I woudl definitely have called their bluff and countered at either your original offer or just slightly above that.
Roger Dawson Mac, a wrap implies that the underlying lender will not be informed of the transaction. Don’t do it. It violates the original loan contract and they can do nasty things to you like calling the loan or charging you a lot of points to rewrite the loan.
Penny Hello Mike
santo Al not walk away from
Roger Dawson Hi Penny
Mike_Summey Hi Elizabeth
Elizabeth Hey Mike
Penny Hi there Roger
Mac Roger, the bank is OK with it. I’ve talked to them.
Mike_Summey Hi Danko
danko Hi Mike. Hi everyone.
Mike_Summey Mac, selling with a wrap around loan with the bank’s permission is great for you, but very risky for the buyer.
Mike_Summey Hi Robert
Kel Thanks Al, that is what I have been thinking as well.
RobertB Hi
Al Lee Has anyone read about Las Vegas casinos filing bankruptcy? That is incredible. Do yo suppose they overspent when they built their multi-billion-dollar hotels?
Mike_Summey Al, I haven’t heard about that. Is it recent news?
Mac Mike, I understand. But I can offer him a higher LTV than than the bank and hopefully encourage him to buy.
Kel Roger, did you see this one? Roger, a couple of months ago I offerred 102,530 for a house listed at 145,000. Usually I get no counter offer. In this case they countered at full price. I took that to mean they did not want to negotiate and I let it go. Now I wonder if I walked away too soon? Do you think they were negotiating or just brushing me off?
danko Hadn’t heard about Vegas, but I did read that Jose Canseco lost his multi million dollar home to foreclosure this week.
Al Lee Kel, it is not too late to issue another offer. It doesn;t cost anything. I would not worry about insulting the seller or making myslef look silly. It is money!
Mike_Summey Kel, was your offer a cash offer?
Al Lee danko, I heard that too. I have known a number of former pro athletes and most of them are BROKE!
Jeff S CPA Al, Really?? I’m going to Vegas in a couple of weeks, which casino’s were filing for bankruptcy??
Lon Mac, you can sell the home to your buyer for less, charge a higher interest rate and still make money.
Kel Yes cash. As is. no contingencies
Al Lee Tropicana
Jeff S CPA OK, that was an older one at least..
Al Lee I don;t konw of the others; but Mirage is cutting expenses big-time
Jeff S CPA I think someone will sweep up that land quick..
Mike_Summey Kel, if the seller countered at the asking price, then use the Offer Generator to calculate how you can pay the full price and still make the numbers work. That’s the flexibility the program gives you.
Jeff S CPA Al that’s interesting, i was looking to buy in Vegas because i figured there would always be jobs there…
Mac Lon, agreed. But will this work for investment property? Is it likely to attract a buyer/investor?
Mike_Summey Kel, not every seller wants cash.
santo Al, got back my tax return from the fed–$8000. that was what i had in exspenses last year on my 6 properties—that $8000. is just enough for the down payment on my next 2 fam.–price is $40,000–plus the seller will pay my closing costs
Al Lee Jeff’s CPA, I would not buy in Vegas!
Kel I think it was probably financed to the full amount and they couldn’t take that much less
Jeff S CPA Really????? Why not, i would love a good opinion!
Lon Mac, not likely another investor, but an end buyer. It’s very attractive right now since you are being the bank, you likely don’t have as many rules as banks do.
Mike_Summey Kel, the best way to find out for sure is to counter at full price with discounted terms.
Al Lee santo, you remember me talking on the radi about the tax advantages of owning real estate, don’t you? There is nothing to compare to it.
Al Lee radio
danko Don’t buy in Vegas, but the Twin Cities is like a garden. Minneapolis/St. Paul metro is 7 counties…there are 4280 residential properties for sale in my county alone.
Kel Mike, how do you feel about college area rentals, it good, bad or neutral?
Mac Lon, that’s what I think, too. I’m going to try it and see what happens.
Elizabeth Mike, have you ever invested in anything other than residential, such as self-storage?
Roger Dawson I heard that forty percent of the homes in Vegas are in foreclosure so buyers can expect some real deals.
Mike_Summey Kel, I just closed on a property last Wednesday and the seller had to bring almost $10,000 to the closing to put with what I paid to pay off what was owed.
Jeff S CPA Roger, that’s what i thought, i was there 6 weeks ago and there was a lot to choose from
Mike_Summey Kel, I love college rentals in solid concrete buildings.
Al Lee Roger, that is fine, but Vegas prices have been inflated so much in the past few years that a 50% drop might not be enough to make them a good buy.
Kel That is funny
RobertB Is Vegas population contracting or are former owners now renters?
santo Al, you are so right—that’s why I call you the Albert Einstein of real estate theory
Jeff S CPA I figure the job market out there will always be good
Mike_Summey Hi Alex
Al Lee santo, sometimes my hair looks a bit like Albert’s–my wife makes me comb it then, though.
alex hi, thank you
Jeff S CPA I think they are building new casino’s still, which will increase demand
Mike_Summey Al, I was on the Frankie Boyer Show from Boston today. I do her show the first Monday of every month.
Al Lee construciton is slowed down on most projects and halted on some. Only a few are still proceeding. They are having a bad time trying to get financing fo rthe projects because of big defaults by Tropicana and others.
santo Al, I am also looking at a 3 fam. for $55,000
Mike_Summey Hi sackos
Al Lee Mike, does she webcast it?
sackos Hello
Jeff S CPA Thanks for that update Al, i’ll keep my ears open
Mike_Summey Al, yes she does. You can find it at frankieboyer.com or WBIX.com
Al Lee santo, you have a “core compentemcy ” that you have developed and you should keep with it. It is working for you.
santo Al, I hope so
Al Lee Mike, if you tell me before goin on I could call in and we could have a lively debate on something to get people’s juices flowing.
Mike_Summey Al, speaking of tax benefits, my youngest son bought his first house last year and as a result, he got a refund of over $2000. That’s ablut all he paid in taxes.
Kel Mike and Roger, I got an estimate today on some landscape lighting that was 3 times what I expected. Since the bid was in email the seller couldn’t see my shock. I almost sent reply of NO THANKS. But since I am currently reading secrets to Negotiating, I instead sent an email back that “you will have to do better than that”.
Mike_Summey Al, I’ll try to do that next month.
Mike_Summey Kel, good response.
Al Lee santo, some people feel the need to “progress” on to bigger things because they have done well at smaller things. I say, just do more of the smaller things that work for you. Donald Trump will probably be broke again; but you will just continue to build your estate.
Kel We’ll see if it brings him down 60%? I think I will not be getting new lights.
Mike_Summey Al, that’s good advice for santo. I still buy a lot of single family houses even though I own many apartment buildings and commercial properties. It’s hard to beat any deal that makes money.
Mike_Summey Kel, is he the only source.
Mac Kel, great position. If the guy knows you’re willing to walk away, you’re in a powerful negotiating position.
Roger Dawson That’s good Kel. Back to the offer you made that was rejected. I would deduct $1000 from your former offer and resubmit it. You might be surprised at how flexible they’ve become since you first made an offer.
Mike_Summey Kel, sometimes I’ll email a request for bids on a job and send it to several competing companies. Then they can see that I have options.
Elizabeth Mike do you own any self-storage?
Kel Mike_Summey , I’m sure there is someone else but haven’t gotten that far yet.
Mike_Summey Elizabeth, yes I do.
Elizabeth How do you like it?
Al Lee Roger, I learned that trick on I Love Lucy !!!
Mike_Summey Kel, do your homework first. Don’t go ready-shoot-aim! 
Mike_Summey Elizabeth, my storage units only rent to commercial clients. Some of them have been tenants for over 20 years.
Kel Mike, I didn’t really expect to be negotiating this. I just thought it wouldn’t be that expensive and I would say okay.
santo Al, your right on that—-up in buffalo ny whwere I invest in, a lot of the sellers are investors moving on to bigger properties–also people who are retiring and moving to florida–those people are very motivated to get to the warmer climate fast—3 of my houses are from investors—3 from retirees
Mike_Summey santo, you bought all of those in a year didn’t you?
Elizabeth Wow–that sounds great
Elizabeth .
santo mike, 11 months
Mike_Summey santo, imagine what you will have if you do the same thing for the next 5 years.
Mike_Summey Right now there are so many people in trouble with properties that I wouldn’t be concerned about making any kind of offer. As Roger says, you don’t know what someone will do until you ask.
Al Lee If anyone is interested in new-construction rental property in Dallas, go to www.buyrentHouse.net. Then go to the bottom and click on the current project (Ravenview). We are approved by the city for 2 more houses. We are building 7 now, will start 3 more presently. Of the three, one is sold and two are available. One of th eguys who is buying two of the first seven might by the last two; but has not yet committed.
Kel Mike, Roger, Al, How do you all feel about appliances in rentals? My last purchase had washer and Dryer left in the house and they worked great. My management company recommended taking them out so I wouldn’t be responsible for repairs. Is that the best approach?
santo mike I had $60,000 from a annuity account that my boss paid into over 25 years on the job–so this was all the bosses money that paid for the downpayments on my 6 properties–12 units
Al Lee Kel, I have done lots of things. One way is to rent the appliances separately to get more rent.
Mike_Summey Kel, I’d keep the washer & dryer and have the management company tell the new tenants that the units don’t normally come with the rental, but that you are willing to leave them as long as they last. I wouldn’t recommend putting washers & dryers in rentals, but if you get a set for free, use them as an enticement to get a new tenant.
Lon and charge an extra $10 or more per month for their use.
Kel Do you feel the same about refridgerators?
Al Lee If you rent them separately, when they quit you just say “oh, well” go call Aaron Rents, or whomever rents appliances.
Mike_Summey Good thought Al.
Mike_Summey Just be sure the tenant understands that the applaiance are not part of the rental.
Al Lee With the houses we build, we include a new refrigerator, washer, dryer because it makes it much easier to lease on Section 8/
Mike_Summey Hi steve
steve hello all
Mike_Summey Al, some people like Section 8 and swear by it. I’ve not had good experiences with Section 8 tenants.
Kel One challenge I have now is finding an agent that will stick around for more that a few weeks of low offers. They start out strong and get tired of the rejection fast.
Al Lee Mike, the tenants are not so bad if you screen carefully. It is, however, a pain in the neck (or lower) to deal with the agencies.
Al Lee Fortunately, your property manager does that dealing with the agencies.
Mike_Summey Kel, that goes with the turf. Eventually you will find an agent who will hang in there with you. Especially after they find out you will actually buy properties.
Mac Mike, I haven’t either. It’s great that the rent gets paid on time, but the tenants don’t take very good care of the house and I give up some of the profits to repairs when they leave.
Penny good one Al
Al Lee Thanks, Penny
Al Lee I didn’t even know you were listening in. You are quite as a mouse
Al Lee quiet.
Penny yes
Mike_Summey Mac, that has been my experience also. On average, the damage done by Section 8 is far greater than non-subsidized tenants. I’ve found that I’m better off with a month or two of vacancy than thousands of dollars in repairs.
danko I think it was correct to say she was quite like a mouse, too
Al Lee danko, is that nice?
danko sure it
danko it’s nice…I meant it to be.
danko mice are quiet and she was quite like a mouse
Mike_Summey Somebody talk to Roger before he goes to sleep.
danko ROGER!!!
Penny not to worry guys, quiet is correct. Just observing
Al Lee Mikce also gnoaw on wires and cause major repairs to be needed.
Al Lee Mice gnaw
Lon It’s almost 6 PM where he is, that’s about his bed time.
santo mike, you had bad luck—up in buffalo, the tenant does damage to the place, that person loses his voucher for sec. 8, they can’t get another apt., so they have to go back to the shelter where they came from–and the don’t want to do that—the 3 evictions i had last year went well–just a minor sweep up.
Al Lee OK, I did find the adult beverages and and typing at light speed is not working out for me as well as before.
Mac santo, I’m talking about the case where the tenant lost the voucher and had to move out. The unit’s a mess after they leave.
Al Lee santo, that is how it is in Texas. The tenants are careful NOT to damage the property because they would get kicked off the gravy train.
Mike_Summey santo, I understand that things are better in some areas than others. Here, our magistrates are very tenant friendly and don’t seem to help landlords if there is any possible way around it.
Mike_Summey WAKE UP ROGER!!!
Al Lee Texas is the MOST landlord-friendly state in the union
danko He fell asleep at his keyboard
Mike_Summey Al, how about shipping a bit of that up here to NC.
Kel Thanks again to all for the great advice. Goodnight.
Penny I think Rog went to refill his wine glass and forgot to come back.
danko He’s busy making offers on properties…don’t bother him right now
Penny almost time to sign off anyway. Work tomorrow, early rise. Goodnight all, see u guys next week.
santo mike, in nyc—It’s bad for landlords, the tenant can squat for a year or more waiting to go to court
Mike_Summey Goodnight Penny
Penny 
Mike_Summey santo, union influence?
danko I’m going to go, too. Now that winter is almost over, I
danko I’m going to be looking at more properties
Al Lee Mike, just fly that twin turpo-prop down here to ADS and I will show you where we can built you some great properties in a landlord-friendly environment.
danko have a good night all….bye til next week.
Al Lee Goodnight, Penny
santo mike, no–backed up court cases
Mike_Summey Next week I want to hear that some of you put something under contract. The deals are fantastic right now.
Al Lee A NJ lawyer told me once that not holy can a tenant not pay rent and avoid eviction, but after some period of time not paying rent they were squatters and coudl clai title to the property.
Mike_Summey I’m going to make an offer this week to someone who wants to sell 11 rentals.
steve mike - with prices all over the board, when do YOU stop negotiating?
Roger Dawson I’m still here. I got a phone call and a couple of Emails that I had to deal with.
Roger Dawson With which I had to deal.
alex Mike is that an apartment building with 11 apartments or 11 SFH’s?
Al Lee The ONLY state I woudl own residential property in is Texas. I do own coe commercial property in other states.
Lon Nice grammar fix, Roger.
Elizabeth Al, how can that be true?
Mike_Summey steve, I stop negotiating when I’ve exhausted all possibilities of buying in a way that will cash flow.
Al Lee My keyboard can not kepep up with me, so you have to make allowances.
Mike_Summey Alex, 11 SFHs
santo mike, you give me great motivation!
alex thanks
Mike_Summey Thanks santo
Mike_Summey I think the times are going to be so good for investors that I may double my holdings in the next two years.
Al Lee santo, my son boxes. I showed him the photos you sent. His buddy’s father (name is Tuifferelli) knows some ot the guys in you photos.
steve mike - assuming the numbers work with their asking price. I have the offer generator working overtime.
santo mike, I see $1,000,000 a month coming
Mike_Summey Me too santo
Mac Goodnight, all. I enjoyed it, as usual.
Roger Dawson Al, Texas has personal liability laws for real estate loans doesn’t it? Some of those defaulting property owners are going to get a big shock when they have to pay taxes on the debt reduction and deficit judgments.
santo Al, got my 41 olds all shiney again and ready to go
Mike_Summey steve, as long as the numbers work and you can put the deals together keep buying. Just be sure you get them rented as you buy.
Mike_Summey Roger, doesn’t the IRS hit everyone with taxes when a debt is written off?
Roger Dawson Yes, they do Mike.
Al Lee Roger, I have NEVER known anyone to be assessed taxes for such things. I have knowne people to have foreclosures, but NEVER anyone to be even asked to pay the deficiency. Now, on commercial property that is different, but on residential property–NEVER!
Roger Dawson Debt reduction is considered income.
Mike_Summey Al, if a property is foreclsoed upon and the lender does not seek a deficiency judgment against the borrower, they are supposed to send a 1099 for the amount written off.
santo nite all
oz gotta run, g/night all
Jeff S CPA see you guys next week
alex goodnight all, thank you.
Mike_Summey I’m outta here too. Long day tomorrow so I’m headed to bed. See you here next week.
Al Lee OK, goodnight all
Lon Daisy, missed it by an hour.
Lon good night Roger
Lon Daisy - see you at 8:00 PM EST next week
DaisyNH7 Man I spaced tonight, got caught up with trying to put baby down
DaisyNH7 Hey maybe you can answer the only one question I had tonight
Lon I’ll try
DaisyNH7 If you don’t mind
Lon go ahea
Lon ahead
DaisyNH7 I just bought the offer generator and the newest book
DaisyNH7 What is the average for maint reserve and for vacancy rate?
DaisyNH7 The newest book has not arrived yet, so I am not sure if it is in there.
DaisyNH7 Roger or Lon
Lon Maint. reserve is usually 10%, vacancy rates can vary depending on where you’re investments are at. 10% is a safe number, you can put 5% if people don’t move much.
DaisyNH7 I plugged in a number for $204K with rent at 1200 and i t
Lon and it didn’t cashflow, right?
Lon a general rule of thumb is, if you’re loan is $100,000, the rent should be $1000 per month, but with the offer generator, even that’s not enough.
Lon where did I lose you?
DaisyNH7 I got stuck
DaisyNH7 computers…
Lon I know
DaisyNH7 Can I give you my email address and we can chat later in the week or next Monday
DaisyNH7 I really appreciate your time with this
Lon sure, you can reach me at lonpeper@charter.net
DaisyNH7 Great, I am DaisyNH7@bellsouth.net. Feel free anytime
DaisyNH7 I won’t be late next week, thank you so ery mnu
DaisyNH7 thank you very much
Lon you’re welcome, I look forward to conversing with you via email.
DaisyNH7 likewise, I hearing the baby crying (or is that the husband crying trying to put the baby back down)
DaisyNH7 have a good night
Lon ok, go take care of your babies
DaisyNH7 boy do you know my family or what
DaisyNH7 goodniight
Lon
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