Chat Transcript - June 23, 2008
Posted on June 24, 2008
Mike_Summey Can you believe how the deals just keep getting better & better?
santo mike, citibank is laying off thousands more
Roger Dawson Hi Santo
Mike_Summey Hi sparky
sparky37 Hi Mike and all
Mike_Summey santo, as many people as are losing their homes, the biggest losers in theis whole fiasco are going to be the banks that created it.
Mike_Summey Hi Daisy
DaisyNH7 Hey everyone!
Mike_Summey It always amazes me to watch how the banks have knee jerk reactions when things come tumbling down on them.
DaisyNH7 Very funny Lon!! My husband said its just a flesh wound…
santo Mike, all the for sale signs in my area, are baby boomers retiring and moving somewhere else—and I mean a lot, two to three signs on every block
Mike_Summey Three years ago, if you could fog a mirror you could get a home loan. Now you need to have a big down payment, perfect credit and great cash reserves before they even want to talk to you.
Mike_Summey Hi Kel
Kel Hi Mike and all.
sparky37 Mike, that is very true
Lon Mike, over $163 billion in REO packages were being offered this week.
Mike_Summey santo, that phenomen is only going to get worse as more of the baby boomers retire. What you’re seeing now are the first year Boomers.
Mike_Summey Hi Penny
Roger Dawson Hi Penny
mark Is there a REO website that the banks are offering before it goes to a realtor
Penny Hi Roger & Mike.
Mike_Summey Lon, where were they being offered.
Lon Probably all over the country. You don’t get to see where until you can proof up.
Mike_Summey I think you will see banks unloading REOs for pennies on the dollar before the markets settle back down. It will be like the late 1980s only worse.
Lon Mark, I don’t think so.
DaisyNH7 I can vouch for that. We have seen more and more short sales taking place and being accepted.
mark Will it be back then when we had the Resolution Trust
Lon I heard BOA was finally budging on their offerings. They are notorious for squeezing every penny out of their REOs.
sparky37 BOA and Citi will be the next two to fall
Mike_Summey I was talking with a local developer las week who has a ton of spec properties for sale and he said he has not had anyone even look at a property in over a month.
mark sparky what do u mean by fall
Lon that’s a bold statement, they’re the 2 largest banks. Mark the time and date, we’ll see if Sparky can say he told us so.
Kel Mike, last week I looked at 6 REOs and made offers on 4. 3 of those already had multiple offers so my was declined. The last one was declined today due to a better offer. All of my offers were exactly 80% of list price. My agent reveiwed all forclosure sales in 2008 and found sales were about 97% of list. The list was below market somewhat though. So I am struggling when there are still so many people willing and apparntly able to offer more that I am.
Lon Sounds like some deals in the making, Mike. Are they good rental type properties?
Mike_Summey Kel, did you use the Offer Generator to make your offers or just offer 80% of asking price?
sparky37 FALL=Fail lose more then you take in and end up being bought out or merge with someone
Mike_Summey Lon, no these are too expensive for rentals.
mark Do most of u have property near your home best, if not how far will you travel for rental properties
mark I mean base
sparky37 these banks gave out so much credit to so many un-credit worthy people
Kel Mike, I made sure the 80% offers were close to the NOI. However, in the past, I have had my REO offers rejected outright and their response was that they will not even entertain an offer unders 80%. So I tried that on a few properties where I thought I could make it work.
Lon I have one 10 miles away, I’m buying a 4-plex that is 30-40 miles away. We’ll let Santo tell you how far away his are.
Roger Dawson Mark, we say try to stay within 50 miles of home. You need to drive by your properties once in a while.
Mike_Summey Everyone, many times REO propeerties are offered at discounted prices initially. If you run the numbers on them, you will find that they often work at the asking price. They are offering the properties to get rid of them, not make a big profit on them. Often they have already taken a writedown on their books so its hard to get them to come down much more.
santo mike, I am buying a two family in buffalo for $40,000—$8000 down–$32,000 financed–the bank appraised it at $22,000, they would not give me the loan,so a mortgage broker is giving the loan, and the only difference in the mortgage is $16 higher
santo lon 400miles away
Mike_Summey santo, why did they appraise it as $22,000? That sounds extremely low.
sparky37 santo, that is why us mortgage brokers are still good for borrowers
Mike_Summey sparky, are you a mortgage broker?
sparky37 yes
Kel The houses I looked at were not typical forclosures. They were modest but in perfect move in condition. I guess that is why they had so many other higher offers. You almost need the property to look bad to scare away the other buyers.
sparky37 Mike, mortgage broker and credit repair specialist
sparky37 help people clean up there credit report
santo mike, I don’t know–house was rehabed and all the other houses on the block are worth $45,000-to $50,000
DaisyNH7 Sparky37, as a mortgage broker do you work for multiple companies or just 1?
Kel Santo, how much rent would you expect on your 40k purchase?
Mike_Summey sparky, are you finding the market for your loans has shrunken dramatically?
sparky37 I work with multiple lenders, I use to say 100’s
mark Any one out there in the Central Jersey are finding homes at dreamitically reduced prices
sparky37 ke, yes deals are harder to get done now and last minute complications kill deals
santo kel, 850 a month–mortgage $218
sparky37 *Mike
Kel santo Those are good numbers!
Lon Oh, Santo, that is insane.
Mike_Summey I have a special guest that will be joining us on July7th. I’ll send the details the week before.
DaisyNH7 Sparky37, what market do you work in?
sparky37 Ny,nj & fla
Mike_Summey He is an expert in multi-family investing.
mark sparky 37 what area of NJ
sparky37 Bergen
Mike_Summey santo, where is vtor tonight? I thought we had him hooked last week.
santo mike, he is still working on my properties tonite
Kel Mike and Roger, I just finished the negotiating book last night. Looking forward to trying some of the techniques. I have to schedule some FSBO visits to try them out. Using Agents makes it hard to put that advice to work.
Mike_Summey Kel, teaching the agents to negotiate can be almost as much fun as doing it yourself. Roger can explain how to do that.
santo mike, he picked up a lot more units to take care of–a few weeks ago he had 78 units —now he has 145 units
DaisyNH7 Sparky37, I work for a bank here in the area and have found my mortgages for FL have been falling apart.
sparky37 yes very tough market
Mike_Summey DAisy, which bank are you with if you don’t mind saying.
DaisyNH7 wachovia
DaisyNH7 I do the mortgages among other things.
Mike_Summey Daisy, some would affectionately call it walk-all-over-ya bank! 
sparky37 Daisy r u in NH?
DaisyNH7 That is the first time I have every heard that (not!) :p
Mike_Summey I was over at my mother’s house yesterday and was noticing the for sale signs on her street. A year ago you might have seen one. Yesterday there were 13 out of about 30 houses.
santo mike, baby boomers?
DaisyNH7 I used to live in NH but live here in lovely Asheville since I got married. (5 wonderful years)
sparky37 lucky you
Mike_Summey Asheville is a very unique market. The regulatory environment here has made it virtually impossible to build affordable housing that falls into the mid range of rents and as a result we have a huge inventory of expensive housing. A recent newspaper article said we had a 9.5 year inventory of housing over $500,000.
DaisyNH7 I am the lucky one being married to my husband. He takes care of the baby and lets me have time on Monday nights to pursue my dreams with real estate. He is amazing…
Mike_Summey Hi Daryl
Mike_Summey DAisy, what does he do?
Daryl Hi mike
sparky37 I meant lucky in a good way, I want to leave NJ
Lon Sparky, it’s called I-95 South
sparky37 yep
DaisyNH7 He is a teacher in the culinary dept at the local college. We eat very well here at home.
jon hello everyone
Mike_Summey I would encourage all of you to start making offers and don’t worry about whether or not sellers are offended. You’ll be amazed when one of your low ball offers is accepted.
Mike_Summey Hi Jon
jon i have an option of getting a 100k fixed equity loan, but not a line. Should I wait a little while until a line is open to me, or work with the loan?
Daryl Mike Have you still not sold any properties yet? How many units are you up to?
Mike_Summey jon, unless you have a use for the money, I’d insist on a line not a loan. You will have to start paying on the line now before you get the money invested and that may cause you to make a quick decision to get some income coming in the cover the loan. Tell the bank you’ll accept a line, but not a loan. Then you can draw the money as you need it, not take it all in one lump sum.
Mike_Summey Daryl, at it for 37 years now and still have not sold a property.
santo mike, did you hear of the National grants conferences—they give you loans for real estate investing at low interest rates 1%–1.48% and if you qualify, the loan will be forgiven–whats this all about?
Mike_Summey I met with one of my banks today to sign a commitment letter for a $1.2 million loan. I’m having lunch tomorrow with another one that wants to give me a $1 million line of credit to use buying in SC.
Kel Mike, do you ever fish for info on the phone before looking at properties. I have such limited time to drive out and look that I have tried to get some feel if a seller would consider seller financing on the phone. They never say yes and I wonder if I would do better to just go look at the house and then try to talk them into it in person. What do you think??
Mike_Summey santo, I’ve never heaard of that. You can bet there are strings attached.
Lon Mike/Santo, the strings are lots of paperwork to be turned in, the qualifying part, does the property qualify, do you qualify, etc.
Mike_Summey Kel, I’ve never gotten seller financing from one who said they would initially. Everyone wants top price and cash. Make your offers the way you want to make them and then let the sellers respond. You’ll be amazed at how flexible they become when they aren’t getting any better deals.
Kel Thanks for the great Chat all. Goodnight.
jon Mike, do you have better luck and get better cashflow buying fixer uppers rather then turnkeys?
Mike_Summey Has everyone noticed how we have lost so many of the speculators that used to join us in the chats?
jon I remember seeing old chats, with alot more people in the chat, not so much anymore…
sparky37 yes much smaller crowds not but better conversation
santo mike maybe their broke
jon I agree
jon better conversations
sparky37 *now
Lon they’re probably working their second jobs to cover their losses.
Mike_Summey jon, they all work the same for me. If it is a turnkey house, I’ll pay more for it. If it is a fixer-upper, I buy it cheaper, but end up having to put the differenc in when I repair it so the numbers work out about the same.
Mike_Summey REMEMBER THIS!!!! If you have to sell to make a profit, you’re a speculator, not an investor.
sparky37 I think I have Al’s keyboard tonight:D
Mike_Summey I wonder where Al is tonight?
sparky37 looking for his keyboard!
Roger Dawson Good one Sparky
DaisyNH7 That was funny!
jon Mike, you mentioned that if you break even you’ll be happy. But for the beginning investor, isn’t it a little tough because if you lose an apartment you’ll need to pay out of pocket
Mike_Summey Roger has gone to sleep again!
santo mike, vtor sold a 14 unit last week for $185,000–a few months that same property was listed for $269,000–big difference
jon Wouldn’t your aim to be try and make at least 200-300 postive cashflow after all expenses?
Mike_Summey jon, if you break even after paying the mortage, you are still making a profit. The tenants are buying the property for you. The principal portion of the mortage payment is building your equity. Each year you can get a small increase in rent and the cash flow starts to build.
Mike_Summey jon, plus you are benefitting from 100% of the appreciation. Granted that’s not much now, but it will turn around.
Mike_Summey Don’t everyone talk at once.
sparky37 Well I need to go, nite all. See you next week
Mike_Summey Goodnight Sparky
jon what’s the minimum amount of rent raise you try to aim for each year?
jon gnight sparky
Lon Also Jon, you’re collectin 5-10% for vacancy and 10% for maint., as long as your tenant doesn’t bail on you in less than a year, you should have enough saved up to cover at least a month.
jon ah yes, that’s true
Mike_Summey jon, I don’t have a minimum amount, but it should at least keep up with or slightly above the inflation rate. Even a $10 per month increase is better than nothing.
Roger Dawson Mike, are we doing a chat next week?
Mike_Summey NO CHAT NEXT WEEK! WE’LL TAKE OFF FOR THE 4TH OF JULY HOLIDAY!
Lon funny, I’m taking the week after that off
Mike_Summey I was wrong. There will be no chat on July 7th
DaisyNH7 Time to get the rug rat to bed (the baby, not the husband) Good night all!! Thanks again…
Lon good night Daisy
Mike_Summey Goodnight DAisy
jon gnight daisy
Mike_Summey We will also have no chat on August 4th. Roger & I will both be traveling. Roger to China and me to the National Speakers Association Convention in New York.
Lon you’ll have to send a reminder, I’ll forget that
Mike_Summey I will
santo nite all
Mike_Summey goodnight santo
Penny Long 4th celebration for u mike?
Lon Mike, did a Jodey Fleming every contact you about a 16 unit for sale in Easley?
jon Mike, how are you able to refinance houses quickly when you use a line. Brokers have told me it’s tough to refinance what you paid for, unless you bought an ugly house and fixed it up
Mike_Summey I had it wrong. We’ll chat next week and then not the 7th. I’ll let everyone know by eamil.
Roger Dawson I have to run. See you in the next chat, whenever it is.
Lon l8r Roger
jon Take care Roger
Penny tata Rog
Mike_Summey jon, if I buy using my line of credit, no one has to know that whne I get financing. As far as the banks are concerned, I paid cash for the house and now want to get my money back out by financing the property.
jon how can you be assured though that the banks appraise it enough to pay back the line fully?
Mike_Summey I have to run also. See you here either next week or the following. I’ll let you know by email.
Mike_Summey Goodnight
jon gnight Mike
Penny ditto, goodnight all
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