Chat Transcript - June 2, 2008
Posted on June 3, 2008
Lon Roger beats Mike!
Lon Hi Roger.
santo hi roger
santo hi Al
Al Lee Hi Santo, Roger
Al Lee Where’s Mike?
Lon That’s the $1M question.
Lon are you smarter than a 5th grader?
Roger Dawson Hi Everyone! I just spoke to Mike Summey. There’s been a big wrect in his neighborhood and hi power is out. He’ll join us as soon as it’s restored.
Al Lee I have been stumped on some of my 4th-grader’s homework problems.
sparky37 Mike needs his own generator
Lon He needs to head to Barnes & Noble and wifi in.
Al Lee santo, how are you doing?
Roger Dawson So Al Lee and I will be your chat leaders until he gets here.
santo Al my closing date for my next duplex is july 15th $8000 down mortgage $202
Al Lee santo, if I remember the numbers, it is another home run for you.
sparky37 Santo, how often do you go and check on your properties?
Al Lee Roger, have you been ont he road much lately?
santo sparky, never, I have a fantastic property manager who is also my broker
sparky37 do you go see them before you buy?
Roger Dawson Al, I was in Grand Rapids 10 days ago and I’m off to Philadelphia on Wednesday.
santo sparky don’t have to he sends me photos on the internet
Al Lee I have bought dozens of houses that are within 30 miles of where I live and that I have never seen to this day.
Roger Dawson In july I’m speaking in Whistler, Canada, Hong Kong and Taipei. All in one trip.
sparky37 Santo, since rents are low, hw do you pay PM?
Lon rents are low?
sparky37 meaning under $1000
Lon well, that’s most rentals in most markets
santo my pm charges me $40 dollars per unit which he sends me a invoice through email and i send a check
Al Lee Mike called me just now and said he does not know how long it will take to get his power back. I told him Roger and I will cover everything. IF we make any commitments on his behalf he will be happy to stand behind them, too.
sparky37 Santo, does he have minimum charge?
Lon Shall we commit him to some deals?
Al Lee If you work a profit in it for me and Roger, you will surely get a deal with Mike tonight. RIght, ROger?
Roger Dawson I think I know Mike well enough that I can answer any of your questions the way that he would.
santo most pms charge 10% of what the rent is–my guy charges me $40 no matter what the rent is so i pick up some money there
Roger Dawson I keep waiting for him to flip me a house or two. He wouldn’t miss it.
Al Lee Roger, you ought to be able to negotiate that.
Lon except he doesn’t know how to sell a house
Al Lee Find out what motivates Mike and you just go from there.
sparky37 thanks Santo
Roger Dawson Hi Penny! The power is out at Mike’s mansion. He hopes to join us later.
Penny Hi Roger.
boni Hello, everyone
Penny thanks for the info
Roger Dawson The thought of a Democrat being President seems to stir him up.
Al Lee ROger, don’t even say that !!!!
Roger Dawson Al, how are foreclosures in Dallas?
Ken Local governments and state some times do more for ya than at the federal level
Roger Dawson I agree Ken.
santo Al, there is a guy in California who bought 100 houses for cash–no mortgages here, and he never went to buffalo–I like his style
Al Lee The foreclosures in Dallas seem to have dropped down a bit from the high they hit a couple of months ago. I don’t mess with foreclosures much myself, so I do not keep track.
sparky37 I am looking into buying a property 2 1/2 hrs away, any recomendation on how to find a good PM?
Lon yahoo yellow pages
Ken I can’t believe how we are eating the fed rate cuts. mortgages rates don’t seem to drop as fast as other rates. My money market is at 2% and the banks offered me a loan at 7% they are nuts
Roger Dawson The LA market is strange. Higher priced properties and beach properties are holding their price. It’s a seller’s market. Some lower priced areas like Riverside and Stockton up north are disasters.
Roger Dawson Lower price in Calif means <$400K
Lon ewwww, slums
sparky37 northern nj still priced high
santo Al, the rate i got for my duplex loan was 6.50%
Roger Dawson Sparky, I think that talking to Realtors is a good way to find a reliable person.
Lon it seems that high end properties tend to not be as affected as lower to middle priced housing.
Ken What do you guys think of vacation rentals?
Al Lee I like to see myslef as an investor, not a landlord. I do not want to deal with tenants. Since I was forced to start a management ocmpany when the one who managed a bunch of houses for me went BK, I have actually had to meed one or two–but I did hire the property mangers who worked for the old company and have them doing essentially what they did before, so I still haven’t met most of my tenants. I don’t want to, either.
jasonannable hi Roger, just wondering if you manage any of your properties.. probably not.. but have you ever?
Lon Ken, with gas prices going up, who can afford to vacation?
Roger Dawson Ken, Mike would say stay away from them. It’s highly speculative. Invest in blue collar areas where working people live.
Al Lee 7% is a good rate for an invetment property. Lower is better, of course. During my investing career, I have paid up to 9.5% and made money at it.
Al Lee Mortgage rates ar usually based on long-term rates for 10- ro 30-year treasuries, not on the short-term prime rate.
Al Lee 10- to 30-year
Roger Dawson Jason, my parents managed all my properties for me. Mom was an excellent bookeeper and Dad was a great fix it guy. I let them live in a beach condo I owned and paid all their expenses. It was a great deal for both of us.
Lon I am buying a 4-plex and the banks have really gotten tight on the financing. BOA wants 30% down at 6.5% int., Wachovia wants 20% down at 9.75%, another bank is at 15% down and 9.5% and another was 10% down at 9.5% 7/1 arm. NO ARMS PLEASE.
Al Lee Vacation properties are a different animal. YOu usually rent them for only part of the year and pay very high management fee rates as well as clean up and make-ready after each occupant moves out.
jasonannable I did my first weekend last weekend.. (the w/e millionaire way).. I already have an investment property but I bought it through MLS and using a realtor.. I found the first weekend to be more challenging than I thought it would be.. I found it hard to get just a general impression of a neighbourhood without focussing too much on particular details
jasonannable Roger, that sounds like a great deal!
Roger Dawson Jason pick a neigborhood that you would feel comfortable walking around. Just talk to people. Say,
Al Lee BTW: here is a status of my latest project http://www.buyrenthouse.net/RavenviewPhotos/
boni i am new at the site and have been reading on W/e millionnaire’s book. I am
sparky37 how do you go about researching an area you know nothing about?
Roger Dawson Say, “I’m a real estate investor. Do you know any neighbors that would be interested in selling?” In a couple of hours you’ll feel very comfortable doing it.
santo Al, i have been lucky so far, 3 evictions last year, and just a minor sweep out, and my pm has tenants lined up no vacancies here
Al Lee We have tenants waiting to move into all the houses as soon as they are completed (if they pass our screening) and with Section 8 vouchers for up to $1700/month.
jasonannable thanks Roger. I’m going to do exactly that this Saturday
boni looking at condos close to a university. What do you folks think of student housing? Thanks for the feedback.
Al Lee The rent of $1700 is if the owner pays utilities, which we recommend you never do. Thus, the actual net rent is more like $1300.
Roger Dawson Sparky, going to Realtors open houses is a great way. Wander in and wait until they are through talking to a potential buyer and ask them about the market.
Al Lee Condos have home owner associations that can be the death of you. Be very careful.
Ken Roger I found that I get a funny look when I say i’m a Realestate investor. I think mike had a line that I use often “I buy properties regularly” spelling
jasonannable haha nice.. “frequent buyer”
Roger Dawson Boni. We have many students who invest in student housing. Get enough rent in the nine month school year that you need for the 12 months. Get the parents to sign the leases and expect a higher amount of wear and tear.
Roger Dawson Ken, I like that. At least let them know that you’re not an agent looking for listings.
boni Thanks Al, Roger. A bedroom cost $270K & according to the realtor he rents his for $1850 a month. condo fees are $585 including taxes.
Ken Roger it just seems people don’t like Rentals in their neighborhood. Some think it will bring down the neighborhood. You know alls they hear about are the slum lords
jasonannable So for anyone who manages properties.. my tenant is leaving June 30th.. she had a dog and cat and I think she smoked.. I’m going to have to do a thorough cleaning.. my questions are 1) should I just replace the carpets? 2) when should I advertise that the place is available for? July 1st wouldn’t really give me time to do all that.. and Aug 1st would mean a whole month without a tenant..
santo Al, there was a open house on my block sunday, a duplex for $750,000–i told the century 21 guy who handed me a flyer he was nuts–$750,000 would be down payments on 75 duplexes in buffalo.
Ken Jason I know those scrubbers from Home depo or other places work magic. Not sure about the smoke smell
Roger Dawson Jason get a carpet cleaner to tell you if he can save the carpets. Rentals don’t have to start on the first. Just prorate the first month and have them pay the next month up front also.
Al Lee boni, the condo fees are not the only issue. The HOA can change the rules on you any time. They have been known to impose a “non-occupier owner sur-charge” which coudl be any amount they deem appropriate: $500/month, $1,000/month. They are not bound by rules that a city government might be bound by. A majority vote of the owners can modify the bylaws any time and any way the want. Be Careful. I know peopel who have lost their properties to the HOA president.
Lon Jason, a good crew can be in and out in a week, whether you professionally steam clean the carpet or replace it. No reason you can’t put a renter in the second week of July.
Al Lee santo, you are right.
Al Lee In low-end rentals you can experiment using commercial carpet with no pad. It cleasn up easier and wears better. It might save a lot of replacements.
Ken Jason I found out that a good PM is worth their weight in gold, She knows who is who in the contracting biz and works some great deals for me
boni al, that is one scary thought. How does one prevent that from happening. Don’t they reveal that policy to prospective owners as a matter of course.
Roger Dawson Ken if you have a great spouse and a great property manager there is nothing else you need in life!
santo Al, in my area I can’t believe how many for sale signs are out there–2 sometimes 3 on every other block–all with those $750.000–$800,000 prices
Lon Roger - just passive income.
jasonannable that’s good.. at the time I bought this property, I didn’t know enough to factor in PM costs.. I’ve definately learnt my lesson though
Ken spouse spouse spouse, oh thats what i’m missing.
Al Lee Roger, a great cigar and a great Scotch ???
Ken Jason do you have the Offer Generator? I found that to be a very helpful tool
jasonannable yes! it arrived just the other day
santo Al, and a great old car
jasonannable My wife wants me to ask you guys if you’ve ever had difficulties getting 3rd and 4th mortgages? Our mortgage guy says that we’ll have difficutlies but we have yet to try. I think that’s one of our obstacles that is preventing us from putting more offers down.
Roger Dawson Al, I know how to find a great cigar and a great Scotch. The great spouse is tough and a great property manager are tough to find.
Kel Roger, where do you get your documents when one finds a willing seller to carry the loan? Such as the loan documents?
Ken Jason just make your offers pending a morgage
Lon Only one of the Mac’s has a 4 property limit, the other is still 10. I have not reached either threshold yet. That rule only applies to conforming loans.
Al Lee boni, I have a story in my book about that. You don;t need to buy the book, there is a eBook version on my website for $4.95 that is the complete book. I suggest you get it and read it. Not just for HOA’s, either. There are lots of things in it that you might find valuable. www.myRentProperty.com — then you need to Subscribe (free) so you have a password to log in with to go to the discount shopping page
Al Lee Of course, if you prefer the paper book, that is OK, too.
sparky37 Santo, how did you decide on buffalo and how did you find your pm?
Al Lee Roger, I have a great spouse, but am not sharing.
santo Al, i just filled my gas tank on my 2003 caravan–17 gal.–$72 now i made a schdule where that gas will last a month—$18 a week
boni Thanks for the heads up, Al. I will look it up. It;s just that my daughter goes to that university and instead of paying rent I thought maybe i could work up something with a condo.
Roger Dawson Ken, there are two parts to that. The note is a very simple document that outlines was you owe and how you’re going to pay. That form is in all office supply stores or Google a source on the the Internet. The deed of trust is more complicated because it must contain an accurate property description and pass the county recorder’s standards. Unless you really know what you’re doing better to have an attorney or title officer do that for you.
Al Lee santo, yes, a great old care would be nice.
santo sparky on the internet i saw how cheap houses were in buffalo
sparky37 and how did you find PM?
sparky37 Did you research area?
santo sparky my pm i got through my attorney, bless her heart
Kel Roger, thanks. What about when the note is paid in full: how does one ensure that the lein is released by the seller?
Ken I listened to my good ol buddy the realtor and bought new a bad area. that first property is barely breakin even That property was 2.5 hours away
Ken near a bad area
sparky37 is your attorney in buffalo?
santo sparky did not have to research–my pm told me everything
sparky37 good and bad?
Roger Dawson The deed is held in trust by the trustee. The borrower is called the benficiaryand the seller the trustor. When the loan is paid have the seller or lender sign and notorize that it has been paid in full. That authorizes the trustee to reconvey the title to the buyer using a reconveyance deed. It sounds complicated but it’s second nature to everyone in real estate.
santo sparky, yes, when she was younger she bought some houses which helped her through college
Kel Roger, so then do I need to also find and pay a trustee for the duration of the note?
santo sparky, my pm steers me away from bad areas
sparky37 Santo, how many units do you have now
santo sparky, my insurance man also told to stay away from 3 zipcodes
Roger Dawson Kel, your title officer or attorney handles it all for you. There’s just one fee up front. In California we use escrow officers who have their own escrow companies.
santo sparky i will have on july 15th 7 houses and 14 units–i closed on my first house aug. 2007
Kel Roger, I have made bunches of requests for seller financing and I am currently negotiating with my first interested candidate. If he agrees, I am not sure what I need to do next. Can I just set up a closing with a closing attorney and they will close it adequately or do I need to be aware and on the lookout for any pitfalls?
sparky37 and it has been everything you hoped for? What were some of the nightmare things?
santo sparky, no nightmares, only good dreams
sparky37 great
santo sparky, iwas lucky
Roger Dawson Kel. I would have an attorney do you first one for you. Even a minute error acna cause great grief later.
sparky37 better to be lucky then good!
Al Lee Santo is one of the real success stories. He learned as much as he needed to know to get started and then he did what 90% of people never do–HE DID IT!
santo Al, thank you
Ken Sparky I had tenants move out unexpected, I thought it would cost about $1500 easy to clean it up. I found a PM that day. She located a guy that did the work for $300. it’s a emotional rollacoaster forsure. I won’t worry about that stuff now. I guess you just have to expect that stuff
Al Lee I used to do seminars and I have had the same person at my seminar three times. I asked him why he was there again. He said he wanted to be sure he didn;t miss anything.
Kel Roger, sorry, I didn’t understand. What would he do for me first?
Mike_Summey Hi everyone. I just had power restored.
Al Lee l told him that after one seminar he knew more than I knew when I started.
Ken Who is the new guy
Al Lee Hi, Mike
Mike_Summey What have I missed?
sparky37 1 hour
Ken this and that
boni hello
Penny Hi Mike, sorry ’bout the power troubles.
santo Al, some of my friends say you will never see them paid off–because im 62 years old, i said so what as long as i keep making money
Penny Roger’s been holding down the fort well.
santo hi mike
Mike_Summey There was a wreck at the intersection just below my home and it took out power, phone, cable, everything.
Al Lee santo, you are absolutely right! What a shame to die owing the banks a ton of money 
Roger Dawson Thank you Penny
Mike_Summey I can’t believe they got it repaired this quickly.
Lon only because it’s you, Mike
Al Lee Actually Mike clipped a power line landing hsi King Air
Ken Santo thats good thinking, Everyone questions why I watch my money. they say what if you die tomarrow then the money is no good. I then tell them “the money will go to my parents and that would be better” always thing positive
Mike_Summey That’s probably true Lon!
Kel Hi Mike, Your students may need to chip in for a generator for you.
Roger Dawson Ken, just tell the attorney what you want to do. He’ll prepare the note for you and the deed of trust or mortgage, depending on where you live. He or she will get all the signatures and see that it all gets recorded. They do it 6 times a day so it’s not a mystery to them.
Kel Roger, Thanks!
Mike_Summey Kel, I have a generator, but I didn’t think it was worth getting it started. I didn’t think the power would be out too long, but they set a record for getting it back on.
Al Lee Roger, the title companeis in Texas have standard forms promulgated by the Texas Real Estate Commission for all those things. It is routine.
santo ken, i have no one but my wife–no family–so when we are gone my pm gets it all—i told him to keep this in the back off his mind–when he steers me to a house, make it a good on e because someday they willall be his
Roger Dawson I need to run. See you next week!
Kel Mike, a woman in Jackson, TN died last week because her power went out and they couldn’t get the generator started. She was one of the last people living in an Iron Lung.
Lon Mike, know any banks willing to do a conventional loan, 10% down on a 4-plex?
jasonannable k thanks for all your help
boni Hi, Mike. I am reading your book and still trying to understand NOI.
Mike_Summey Lon, I don’t have much experience with conventional loans. Banks have treated my loans differently for over 25 years because of the number of properties I own. All of my loans are portfolio loans that the banks keep rather than selling them.
santo mike i read your new book–now i’am loaded for bear
Mike_Summey boni, NOI is very simple. It’s the amount of money left over after all expenses are covered.
Mike_Summey santo, good for you. I thought you’d like the Negotiating book.
Ken Negotiating is my weakest point. It’s getting better
Mike_Summey Sorry I missed the chat tonight, but I’ll bet Roger & Al took care of everyone in my absence.
santo mike you bet
boni That part I understand. it is about the concept of using it as my base for buying houses that I am trying to understand.
Mike_Summey Ken, negotiating is like learning to walk. The more you do it the better you get. Negotiate everything! Practicing on little things will help you get better at big things. The principles are the same.
Al Lee Mike, I explained to everyone that Roger and I were empowered to enter into commitments on your bahalf ant that you would honor them. The folks’ll all let you know what deals we made and Roger and I will be expecting our commissions from them in the mail.
Al Lee On that note, I need to make my exit.
santo that’s right
Mike_Summey boni, almost any deal you can negotiate that will allow you to purchase a property with the NOI will be a good deal. The Offer Generator computer program will teach you many ways to buy that go beyond the conventional bank financed deals.
Al Lee Goodnight all. Hope to make it next week again on time.
Al Lee Goodnight, Mike.
Kel Yeah, thanks Mike for the great financing on my next property (per Al).
Mike_Summey Al, just put it on my tab.
santo it’s been great——-nite all
sparky37 Nite all
boni I will butytt he offer generator. I just want to understand the math behind it.
Mike_Summey Again, sorry I was late. I’ll try to be on time next week.
Mike_Summey boni, when you start using the OG you will be able to quickly figure out what it does. It’s not rocket science.
Kel Good Night \
Mike_Summey Goodnight all! See you next week.
boni okay. Good nite
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