Chat Transcript - May 19, 2008
Posted on May 20, 2008
Roger Dawson Hi oz
oz hello mike,
Roger Dawson Mike, did you buy any properties this week?
santo mike ,sorry i missed last week but my wife was sleeping, and that is where my computer is
Mike_Summey Let’s talk about the economic stimulus checks that are in the mail now. What do you plan to do with yours?
oz hi roger,
john I plan on paying some bills
Roger Dawson I’ve got a problem with the Federal Government sending me money. I’ve managed to live in this country for 46 without any government handouts and I don’t want to start now.
santo mike, are the checks sent out by name, i have not recieved mine yet
Mike_Summey roger, I’m taking a breather & trying to get everything rented and finance that I’ve bought the past 2 months. I have a loan to close on Thursday to get back the cash I paid for the house 3 weeks ago.
Roger Dawson Great Mike
Mike_Summey Santo, I understand they are being sent out by SS number.
Mike_Summey Hi Mike & Jeff
MikeF Hi everyone!
jeff Hi everyone
Roger Dawson Santo, if you filed electronically they will deposit it to you bank account. If not they’ll send you a check.
Mike_Summey Doug, I missed you coming in. How ar eyou tonight?
santo thanks Roger
oz mike i too understand they are senfing them out by the last 4 numbers of the SS#
Mike_Summey Roger, I had a nice little note from my CPA attached to my tax return advising that I wouldn’t be getting a check.
Mike_Summey You don’t want to miss my weekly column that will be posted to the website a week from Friday. It is about the economic stimulus.
john I have about 75k in equity. However, I may not be able to get a line of credit. What is the best way to use my equity? Should I just keep refinancing as I go along?
Mike_Summey john, how many properties do you have?
Doug_in_CT Hi Mike, I am doing fine….Thanks for asking.
jeff just two
Mike_Summey Jeff, How long have you owned them?
jeff over a year
Roger Dawson Hi Penny
Penny Hi Roger. How goes it
MikeF Mike, i was reading some of the previous chat transcripts… you paid $95,500 for a house that appraised for about $229K from a bank short sale, I believe. I wanted to know, how did you come up with that number?
Mike_Summey jeff, when you are just getting started, things move a bit slower. You may have to wait a few months and then refinance one of the properties and pay off all or a good portion of the other one before you can use it to establish a line of credit.
Mike_Summey Hi Yameen & Penny
Mike_Summey Hi Sparky
sparky37 Hi Mike
Yameen Hi everyone!
Penny hello Michael and everyone.
MikeF Hi!
Mike_Summey Mikef, that was the amount the Offer Generator calculated I could pay based on the rent that could be charged for the house. I showed the bank the calculations and they couldn’t argue with them. Of course, being able to pay cash and clsoe in a week helped a lot too.
Mike_Summey MikeF, I ran the numbers through the Offer Generator, printed the offer letter from the program and that’s what I presented to the bank.
MikeF Mike, I tried putting your numbers in the offer generator too, but didnt know how you came up with that number. When I did a 13.5% return, then I managed to get it to about $95K
MikeF ok, got it! thanks
Mike_Summey MikeF, what did you use as the rent amount?
MikeF 1095
MikeF i used as net
Mike_Summey Hi Kim
MikeF because I didnt know all the details
Kim Hi Mike and all!
Mike_Summey MikeF, did you substract a vacancy factor and all expenses from that amount?
Mike_Summey Hi Linda
Linda Good evening Mike
MikeF no, I didnt know all YOUR details, so I just used 1095
jeff Mike, do you suggest I go for a line of credit asap, instead of refinancing all the time? I am thinking if I can’t get a line of credit, refinance to buy a house cash, and then refinance, and repeat all over.
Mike_Summey MikeF, every property is different. there are different vacancy rates in different markets. Management fees vary. Maintenance reserves can vary widely based on the age and condition of a property. Very few deals calculate same value even if the rent is the same.
shane backer hello all
MikeF thanks
Mike_Summey jeff, that is the ideal scenario, but it takes time to get the first property paid off so you can do that. When I started, it took several years before I had a free and clear property.
Mike_Summey Hi shane
shane backer how yea been mike
santo Mike, my attorney represents the bank I am getting my next loan from–this is a good thing, right
MikeF Mike, if you dont buy on appraisal values or asking price, how do you know you can get 100% permanent financing on your properties after you pay cash to acquire them?
Mike_Summey santo, I don’t know. Does he represent you or the bank?
santo mike, me I hope
MikeF sorry if I am asking too many questions but I couldnt wait for this chat so I can find some answers…
jeff Mike, ahh I see. So if I do get approval for a 75k refinance, and buy a property for 60k cash, I should be in the clear?
Mike_Summey MikeF, because I know that if I can buy based on what the Offer Generator calculates, I will get a wholesale purchase and you can usuall get 100% financing when you are buying at 60-75% of appraised value.
Mike_Summey Hi lar
shane backer mike, can you ever get the sellor to finance 100 percent of the purchase, or is this very rare?
shane backer I want to buy more properties.. but Right now i dont have any money for down payments, and the banks all stoped doing 100 percent financing
Mike_Summey shane, it is very rare to get 100% seller financing, but not that hard to get full financing if you combine a small (20-40%) bank first mortgage with the balance being carried by the seller.
MikeF Mike, so do you get an appraisal before acquiring the property?
Mike_Summey MikeF, no! Appraisals are only good for the banks and to put in the bottom of bird cages.
Mike_Summey HI alex
alex hi
shane backer so wait you are saying that i take a traditional mortgage for 40 percent of the purchase price and have the seller finance the additional 60 percent? I am a mortgage broker and never have done that for any of my cleints, also who takes the first postion the bank or the seller?
Mike_Summey Roger, are prices continuing to drop in California?
sparky37 Shane, bank is 1st position
MikeF then I am not understanding if you dont get an appraisal how do you know the banks will give you 100% permanent financing after you pay all cash to first acquire them.
shane backer if the bank is in first position then they want to see where the rest of the money is coming from and they want the down payment seasoned. I never though of trying to get it from the seller as financing.. what banks allow for this?
sparky37 community banks
Mike_Summey shane, the bank gets the first position. If you fog a mirror, you can get a 20-40% loan from a bank because they have not only you, but the seller too guaranteeing their position. The seller gets the money from the bank, so even if they have to take bak the property they only have to pay back part of what they got.
Mike_Summey Hi valgrn
Roger Dawson Mike, they’ve dropped 20% so far and experts are projecting another 10% before it turns around. But it
valgrn Hello hello
shane backer mike is there anywhere i can read about this in detial?
MikeF say this week you pay $100K in cash for a property and next week you want to put permanent financing on it, how do you know the bank will lend 100K for it if you have no appraisal
Roger Dawson But it’s very much by area. Beach properties have held their price and sellers are still getting multiple offers. Some towns like Riverside and Stockton are disasters, with foreclosure signs everywhere.
Mike_Summey Everyone wants to blame the banks for the lending mess we’re in, but I blame our educational system. They aren’t teaching consumer finance in schools and as a result people are easy prey for predatory lending.
shane backer mike i agree with you.
oz Roger the SFV is loaded with foreclosures too it seems.
shane backer people where not aware of outcome of the type of money they where borrowring,
Linda I’m with you 100% on that Mike, I’ve felt for years, they should require FINANCIAL PLANNING as a High school course in order to Graduate….
santo mike, crude closed at $127 a barrel today and they said by 2009 it will be $200 a barrel–with prices at the pump–$8 to $10 gallon–time to get out the bike
Mike_Summey Linda, if we are going to have end of grade testing, shouldn’t the #1 thing we should be testing students on is how to manage their money? That’s something everyone needs to know whether they are going to be a ditch digger or a doctor.
Mike_Summey santo, I was riding my bike today.
shane backer motorycle?
Mike_Summey shane, yes! 
shane backer i was riding all weekend….. i have a cbr 1000
shane backer it actualy a great way to go out and look for properties
Mike_Summey shane, I just bought a new Goldwing. My third.
shane backer nice
shane backer mike, where can i read more about the bank taking a 40 percent mortgage followed by the seller financing the rest?
Linda Absolutly, High schools should bring in experts to teach courses on that, with additional education in all aspects of Finance, understanding Mutal funds *basics, taxes, mortgages, how to build wealth….. I would love to do that, I mean have the material to offer schools and run the course… what fun it would be, and great information for our next generation of Adults… they would know more than most of their parents.
valgrn Roger, what would delay a bank from getting an appraisal on a foreclosed property in order to negotiate a deal on the house?
santo mike, I have a free pass in nyc here for transportation for me and my wife–It’s good for life–i retired from the mta in dec.
Mike_Summey shane, I don’t know of any specific writings on the subject. I’ve done some articles on the subject, but I don’t think I included anything about it in any of our books.
MikeF anybody seeing their helocs reduced lately?
shane backer wow santo are you from the NYC area? i am also.
MikeF me too
shane backer yea i read all your books. and i didint see much about that topic
Mike_Summey santo is Mr. NYC.
shane backer hahaha
santo shane, where–me queens
shane backer im in the city on 34th and 6th
MikeF brooklyn
shane backer wow we should all meet up and brainstorm
Linda Any of your N.Y’RS BOSTON RED SOX FANS??? Just kidding, I’m from Boston
shane backer mike.. you should have like an event where everyone in the chat meets up
santo shane, I drove the 34th street crosstown bus
shane backer i might have meet you once i took the bus a few times
MikeF did anyone go to the david lindahl apartment housing seminar 2 weeks ago in NYC?
Mike_Summey shane, I’ve said this many times. Every property is different and every seller is different, so there could potentially be as many different ways to buy properties as there are combinations of properties and people. We tried to give a few examples in our books as a way to get you started thinking oustide the box. It’s up to you to be creative.
shane backer got it thanks, also the offer generator could help with this
MikeF 54K for the property and the NOI is 405. seller is carring 15% ($8100), my down payment is $5400.
MikeF bank financing is for $40,500 at 9% for 30 year fixed
shane backer mikef and santo where are you buying most of your properties? I am highly invested in albany
Mike_Summey shane, the Offer Generator is the best tool on the market to help you be creative because it does all the calculations and lets you balance price and term as well as combining bank, seller and third party financing to generate hundreds of way to buy any given property that will all cash flow.
MikeF however, seller wants balloon in 2 years. (approx $7900)
Roger Dawson Valgrn: Here’s the only thing I can suggest. Banks are very careful to treat their customers fairly becuase they’re afraid of getting sued. Perhaps they don’t want to get an appraisal because it would look like they’re putting too much pressure on the borrower. The thing to do is sit down with the bank officer and talk to him about it.
santo Shane, I might have seen you in the city–like I said I drove the 34th st crosstown bus
MikeF how can I make this work
santo shane–in Buffalo ny
MikeF rochester
valgrn again, thank you
shane backer i want to look at both of those areas. I could show you guys around albany
shane backer do you guys use property managers?
Linda Is anyone willing to share with the rest of us, how many propertys you own?
Mike_Summey MikeF, run it through the Offer Generator and it will let you know what will work and what won’t.
MikeF Mike, it works except for the balloon in 2 years
MikeF I dont know how to get the balloon payment in 2 years
MikeF cash flow is $25
Mike_Summey MikeF, then tell the seller the 2 yr baloon won’t work. Negotiate something else.
santo shane, my p.m. is also my broker–and I get a better deal on fees
MikeF 15 years is too long for $8K, right?
shane backer yea me too
MikeF I have 1 investment property so far
MikeF in Queens
MikeF dont use a prop manager for that 1
shane backer mikef, thats great 
valgrn Linda, from what I can remember from about 4 chats, Mike Summey owns a bundle and has never sold, Roger Dawson owns a boatload too and I believe Santo is another diversified owner - One person that is missing is Lon -
MikeF thanks…that cash flows like crazy!
Mike_Summey MikeF, there is no right or wrong. It either works or it doesn’t. I’ve gotten seller financing for small amounts and large. I’ve done loans with sellers for as short as 83 months and as long as 210 months. There is no standard way to use seller financing.
valgrn I am sure that they will correct me if I am incorrect
shane backer santo and mikef–my email adress is sbacker@pemc.com i would love to meet up and exhange ideas
MikeF thanks Mike!
MikeF you are correct. I just needed to hear it from someone who has been doing this for over 25 years!
santo mike, I am reading your new book, It’s great
MikeF I am willing to meet up as well. have you heard about the wesley barney real estate investment group in NYC?
shane backer no i have not
santo shane, i just took down your email i will speak withyou soon
shane backer yes please email me our info when you get a chance
MikeF I can send you the link. I heard about it from a seminar I went.
MikeF ok, no problem!
Mike_Summey MikeF, a good rule of thumb to keep in mind when asking for seller financing is to negotiate rate, not amount. Try to get 0% financing, but if you do have to negotiate interest, don’t go above the mid point between what banks pay for deposits and what they charge for laons.
Linda Is there a new book out I didn’t know about?
Mike_Summey Linda, our newest is Weekend Millionaire Secrets to Negotiating Real Estate.
MikeF yes, I have printed about 15 offer letters using the OG, trying to find the right combination of price and terms
Linda Oh, I didn’t realize it was out already. Will have to get it to go with my MIKE & ROGER COLLECTION…..
Mike_Summey It’s in bookstores everywhere or you can order from our website. I will autograph all books ordered from the website.
MikeF MikeF, great tip. (I have about 4 MIKE SUMMEY wisdom tips in a word document that I always refer too!
shane backer yes i read there Negotiating books its very good
santo mike, Al Lee sent me a photo of himself behind the wheel of a 1931 chevy–he looks like Eliot Ness
Mike_Summey MikeF, just keep making offers and eventually you will have one accepted. The important thing is to make sure the offers meet your needs and don’t stretch yourself to meet the seller’s needs..
MikeF ok..
Mike_Summey Al has been absent the last few weeks. He must be busy.
Linda I loved the first book so much that when I misplaced it, I had to buy another one, now I have 2 and still value it so much, I keep on in the car and one next to my bed…. Of course I’ve read all the others too, so this will be my next purchas. Thank you for writing what people like me love to EAT to feed our passion
Mike_Summey Roger, tell everyone why they should get the negotiating book.
Roger Dawson Thanks Linda! you made my day!
santo mike, he told me he just sold 8 houses he built, and he will keep the other 2 if no one buys them
shane backer Mike, are you buying alot of properties these days with all the values going down?
Mike_Summey shane, I’ve bought 14 in the past 2 months. I’m in the process of getting them all rented before I buy another batch.
Roger Dawson I think that the new Weekend Millionaire Negotiating book is the best $15 worth you’ll find anywhere. It not only teaches you how to negotiate with sellers, it tells you how to find the bargain properties.
Mike_Summey Hi Rudolph
shane backer wow
MikeF Mike, are they all in your area?
Mike_Summey MikeF, yes! I have management in place to absorb them.
santo shane, on tv today they said all properties are down 30%
shane backer WOW
shane backer mike where are you from again?
Linda You have to get his book Shane…
Mike_Summey shane, Asheville, North Carolina…up in the mountains.
shane backer linda, i have and read all his books
Mike_Summey Everyone, I think we still have a long way to go before the market turns around. There are going to be a lot of good deals and the best are yet to come.
santo mike, you must be in the 250-300 property range now
Mike_Summey santo, I don’t publicize the numbeer of properties I own other than to say it is several hundred. Don’t foregt, I’ve been buying for 37 years and have never sold one.
shane backer I have 4 and never sold one;)
Linda Any idea how long? I’m trying to sell a place which will give me the capital and piece of mind to move on to a permant home for our family and cash to start buying more investment properties….
MikeF I have 1 and have never sold
Mike_Summey Linda, I think it will vary by market with some recovering in another year or two and others taking 5-10 years to recover.
MikeF plan to buy another before the year is out
santo mike, I am just a rookie–buying number 7 in 17 months
shane backer mikef and santo, email me when you get a chance… i am going to sign off.. I will see you guys next week.. mike and roger thanks so much for having these chats\
MikeF ok, i will shane
shane backer santo.. that is a great buying rate.
Mike_Summey MikeF, slow and steady is the way to go. You don’t want to get overextended. You need to build your cash reserves higher with each new purchase and that often takes time.
santo shane–looking to get 2 more duplexes by years end
Linda We have a single fam, a 2 unit, a vacation home that we rent out as much as possible & our Condo that we converted from our first 2 family, selling the 2nd floor, breaking off a buildable lot now trying to sell our unit to be done with that property and get the Cash to do what we want and buy alot more.
shane backer santos. kudos to you man i love it
MikeF Mike, I have cash reserves for 12 months. But, I understand what you mean and will follow your advice
Mike_Summey I wanted to talk more about the economic stimulus package, but our time has flown by and it’s now time to say goodnight. Be sure to read my article on the subject a week from this coming Friday.
MikeF thanks so much Mike!
shane backer santo. I wojuld love to show you the albany area, there is so much going on there. I find great deals all the time
MikeF for all your help. you dont have to do these weekly chats but I thank you anyway!
Mike_Summey Goodnight all.
shane backer goodnight mike
santo shane sounds good
sparky37 Night All
MikeF night all
Mike_Summey See you here next week.
MikeF check for my email, shane!
Roger Dawson Goodnight everyone. We’ll see you in two weeks.
Linda Good nite everyone
oz g/night mike, roger and all… good chat
santo nite all
shane backer ngiht oz
shane backer ngiht all
alex good night and thank you.
Kim Good night all!
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