Chat Transcript July 21, 2008
Posted on July 22, 2008
Mike_Summey Hi Rojo! Looks like we’re early.
Mike_Summey Hi poboy
Rojo Welcome Mike
Rojo How are you?
poboy hi mike
Mike_Summey Rojo, things are great here. How abou tyou?
Mike_Summey Hi suze
suze Hi Mike
Rojo Well, it could be a lot worse =)
Mike_Summey Suze, this isn’t Suze Orman is it?
Rojo Oh ohhhhh it just might be
Mike_Summey Hi sparky
suze No, it is my screen name. But i am a big fan of her.
poboy Mike, I missed the launch of your new site last week, but looks great!!
Mike_Summey suze, just kidding!
sparky37 hi Mike
Rojo Well, she did say that Home Ownership is the road to financial freedom.
Roger Dawson Hi everyone!@
Rojo Hey Roger
Mike_Summey poboy, we’re still working on the real site in the background. What you see now is just a temporary stop gap site until we turn on the actual site.
sparky37 HI Roger
Mike_Summey Roger, are you wearing your uniform shirt I sent you?
Mike_Summey Hi scott
Roger Dawson Hi Mike:
Scott Hello Mike and Roger
Roger Dawson Mike, no I’m not. I’m saving it for special occasions. It looks great.
Mike_Summey I rode my motorcycle to the airport and back today. It was so hot I nearly passed out.
Rojo What state Mike?
Roger Dawson I was up in Whistler Canada for three days last week. Everything seems so expensive here with their dollar now at par with ours.
Mike_Summey Rojo, I’m in North carolina, in the mountains, but it was over 90 and that’s hot with all the humidity we have here.
Rojo Mike I’m up in Seattle Washington, this is the kind of weather we have been waiting for, (10 months in the waiting from the rain…laughs)
Roger Dawson I spoke for Prudential California realty last week. Half their business is now people buying foreclosed property from banks.
Mike_Summey Next week my guest will be a bank Special Assets manager. He is the guy who sells their foreclosed properties. I’m sure you willhave some questions for him.
Rojo Roger: Whistler is beautiful, did you have a good time?
sparky37 I am in norther nj near nyc border and lots real estate agency are closing
Mike_Summey I wonder where everyone is tonight?
Mike_Summey sparky, I’m seeing the same thing here, but the area that is really taking a hit is the mortgage brokerage. Over half of the ones in business a year ago are no longer in business.
Mike_Summey Hi Penny
Penny Hi Mike
Roger Dawson Hi Penny!
Mike_Summey suze, where are you located?
sparky37 tell me about it mike i am a mtg broker!
Penny U 2 R
Penny d everyone
Mike_Summey I think Penny has been in the wine tonight.
Penny oops, not sure what that was. U 2 Roger and everyone
Penny 
Roger Dawson Rojo, it was great. I go there skiing every year but I’d never been there before in Summer. it’s beautiful. The Winter Olypics will be there in 2010 so they’re building a four lane highway all the way from Vancouver, which is 70 miles to the south.
Rojo Hey Mike I have a question for you, if you had to start all over again in this current market how would you do it and what part of real estate would you go into?
sparky37 Mike, I actually started a credit repair business to help my mtg clients get loans
suze I live in Texas. It is over 100 right now and it is going to be like this for the next few months.
Roger Dawson Sparky, is it true that you need perfect credit and 20% down to get a loan these days?
Mike_Summey Rojo, if I had it to do over again, I wouldn’t do anything differently from what I’m doing now. I wish the market had been like it is now when I started. This is the best time I’ve seen in my lifetime.
Mike_Summey Hi Daisy & Joel
Rojo Roger: Yeah I was up there two years ago when they started building those condos by the water. Did they finish them yet?
DaisyNH7 Hi everyone!!
Joel DuBois Hi Mike and everyone
Roger Dawson Rojo, what water is that? The lake to the East of town?
sparky37 Roger at minimum you need very good credit and at least 20%
sparky37 and appraisals are worthless, they always lower them 10 – 20%
Rojo If I’m not mistaken it’s a lake…(Alta Lake)
Mike_Summey Roger, conventional thinking is 20% down to get financing, but no money down deals are still very possible with 20-40% bank financing and the balance financed by the seller. Of course you have to find sellers with substantial equity to make deals like that.
Rojo Thanks Mike:
Rojo Alta Lake is on the way to Whistler
sparky37 Mike, here most people have very little equity and if they do they need the money
Mike_Summey When a bank can finance 20-40% and be in a first position, they have two people guaranteeing their loan in addition to the property. You and the seller.
Roger Dawson Rojo: I didn’t go to that end of town. I did three seminars for a software company while I was there so I spent my spare time wandering around the village, which is delightful.
Scott Mike, what action do you think Congress will take on down payment assistancegrants?
Joel DuBois Mike, What do you think about buying using home equity in my current home, then refinance after getting a place fixed up and rented?
Joel DuBois There are many places in my area of Pennsylvania that can be bought for $50-60k and rented for $650/mo or more.
Mike_Summey Scott, I hope they don’t take any action. Why should taxpayers be making grants for people to buy homes when they have demonstrated the lack of ability to manage their so they can have a down payment.
sparky37 Joel, what part? I was looking into scranton / wilkes barre
Joel DuBois Any part, but I am speaking of the Harrisburg area
Roger Dawson FHA has now raised the limits on FHA mortgages. It varies by county but in some parts of CA you can get a $729,000 loan
Rojo Ohhhh, Okay because Route 99 is the only way to get to Whisler by car and on route 99 they were building these condos by the water. I thought they would be built by now. Maybe I will take a drive up there to see, (I’m about 3 hours away).
Mike_Summey Joel, that is a very good way of getting good deals. It lets you get the advantages of a cash buyer and repeat the process over and over as you get permanent financing and repay your equity line.
Mike_Summey Joel, I use my lines of credit to buy for cash, then I put permanent loans on the properties after getting them in my name. Doing it that way also lets me borrow 80% of appraised value without regard to what I paid for the properties.
Mike_Summey Hi Bob
Bob Carr Hi Mike!
Joel DuBois About 2 years ago, I almost bought my first property but I realized how much time it was taking me. My job is in commissioned sales and the income can be $60k or $300k. I ended up focusing all my efforts towards my job but am now thinking of buying my first. My biggest time waster seemed to be finding a decent management company.
Bob Carr Hi Penny
Joel DuBois They all seemed very expensive compared to what I read about in your books.
Penny oh my goodness, is this THE Bob Carr?
Penny Hello again!
Bob Carr Penny…everyone well….children doing well at school?
Scott Mike, I am referring to current programs available on FHA loans, such as Nehemiah and American Dream. HUD is advocating that they be eliminated! Given the current mortgage climate, we rely heavily on FHA financing when retailing property and down payment assistance grants help
Joel DuBois Mike, what would you do if you couldn’t find a reasonable management company? Just factor the extra cost into the expenses?
Mike_Summey Joel, think about this! Most working people spend 40 hours a week, 50 weeks a year for 40 years and have little more to show for it than a monthly Social Security check. If you spend 4 hours a week looking at properties and making offers and it takes you an entire year to buy your first home, in 15 years, that one home can pay you more than the Social Security you work your whole life for. Imagine where you’d be if you did that once a year for the entire 15 years.
Mike_Summey Hi Jess
Rojo Hey Joel how much is management company charging?
Jess hi Mike. How are you doing?
Bob Carr Mike…how can I get around the”you have more than four property rule” and we can’t help you?
Rojo Wow!! Mike has a point
Mike_Summey Scott, why do you rely so heavily on FHA financing?
Mike_Summey Hi davidoro
davidoro Hey Ya’ll. Sorry I’m late I was just putting in on offer in on house
Penny Yes Bob, both almost done with college and both getting married next Spring. Hope every thing well with your family. Bet you’ve add several properties since last we talked.
Scott Mike, we rely on FHA when SELLING property. It has become the sub-prime market.
Mike_Summey Joel, in some areas, good management is hard to find. If you’re in one of those areas, you may have to start with a real estate firm that will both manage and sell. Gradually you can work them into better managers as you buy more properties.
davidoro I have a good one for you guys. Not long ago – say even a year ago – I told Mike that his system would never work in Califorina. Well times have changed.
Bob Carr Penny — I’m a little behind …my goal is 12 a year…the year isn’t over yet!
Mike_Summey davidoro 
Penny awesome Bob!
Mike_Summey Scott, I wish I could help you, but I’ve never sold a property so I don’t know that much about FHA financing.
Mike_Summey Hi alphonza
davidoro Just put in offer for a duplex (a 3/2 on each side). It’s a bank owned property in Sacramento. My offer was $135k but in 2005 some sucker paid $410k for it. A spectacular come down!
Mike_Summey davidoro, it’s called patience!
Penny Bob, you are doing well, I have trouble meeting my goal of reading 12 books a year. LOL
Joel DuBois Roger, do you ever feel guilty saying “You can do better than that?” Sometimes I have trouble with that.
davidoro Bank is asking $169k for it so I expect a counter. I think they might move as they had a full price offer on Friday but the buyer balked on Saturday. Wish me luck!
Scott Mike, understood. At this point, I am only able to hold about 25% of what I buy – which at this point is a 40 a year. The others I wholesale or retail to keep the wolves away. I hate to sell.
Roger Dawson Joel, I recommend “You’ll have to do better than that.
Rojo I’m a newbie here, I contacted 7 Real Estate Agents how do you find an Agent who is Investor friendly?
Mike_Summey david, that’s the reason I keep saying make offers that work for you and don’t worry about the seller. You’re the one who has to pay for it if the offer is accepted. I’ve never understood why anyone would want to buy a property the had to pay for the privlege of owning.
Mike_Summey Hi Ken
Roger Dawson An experience negotiator will respond, “Exactly how much better than that do I have to do” It amazes me how many people will give you a concession when you use this gambit
Ken Hey
davidoro I’m just amazed at how fast prices have come down. Apparently there are thousands of bank owned homes in Sacramento. Another reason not to count on appreciation but on cash flow. And, Mike, the lesson about including at least 10% return on your money down is very important. If all else, at least you’re getting 10% ROI on your money.
Mike_Summey Rojo, that’s an interesting point. One thing I’ve noticed recently is that Realtors who didn’t want to work with investors a year or two ago are now calling me to see if I will work with them.
Roger Dawson Rojo, time have changed. Real estate agents are hungry. They’ll work with investors and submit short sales these days.
Joel DuBois Mike and Roger, I am sorry to admit this but I have been getting invites to this for several years and this is my first time. It’s amazing to be able to chat with you. Thank you very much for this kind of access.
Ken DuBois you from PA?
Roger Dawson Welcome Joel! We don’t charge you and rarely try to sell you something!
Joel DuBois Yes, Harrisburg area of PA
davidoro The realtor I just got off the phone with knows it will be countered, but she also knows I have wiggle room and the banks need to move these things. I also take comfort in holding onto my money if they don’t want to negotiate. There’s always another deal.
Mike_Summey Joel, thanks! We do this each week as a FREE servie to our readers and students who follow our investing advice. We want you to be successful and we’re here to give you help and encouragement.
Penny thanks Mike and Roger for answering Rojo’s question in harmony
Ken Joel I’m out near Johnstown, PA I went to school in DuBois
davidoro Joel – have you purchased a property yet?
Roger Dawson Penny, it’s scary how we think alike, isn’t it?
Penny Great minds think a like;, Right!
Rojo Thanks Mike and Roger, I will keep on trying but the realtors that I contacted 8 month ago hasn’t called back yet. I will try a few more to see what happens.
Mike_Summey We seem to have several new people tonight.
Joel DuBois I plan to soon
davidoro By the way Mike, the new website is so much better.
Mike_Summey Thanks david. I think you’ll like the real new site even better once we bring it online. This is just a stop gap site while we’re working on things in the background.
davidoro So did anyone else catch the offer and price that I just mentioined $410k in 2005, $169k today! Just amazing.
Ken I would cry if my property dropped $30k and I needed to sell it’s like what would you do.
Ken Mike what do you think about the government helping these lenders?
Rojo the unfortunate thing is I’m in Seattle and it’s still way overpriced here.
Mike_Summey davidoro, believe it or not, prices have a way of seeking a common sense level once the speculators get out of the way.
Mike_Summey Ken, I think the government should stay out of it. The people who make the stupid mistakes should have to pay for them, not the taxpayers.
Roger Dawson Ken, the feds will have to help Fannie Mae and Freddie Mac out if they fail. They have $7 trillion dollars in loans there. But it will be a disaster for the financial health of the country.
davidoro Ken – you didn’t ask me, but I think the gov’t has to do what it has to do. It’ll be generations before we see lending like that again. I think we are in for a long haul of slow growth. Great if you’[re in a cash position.
Rojo Properties on avg are going for 400K
Ken You guys are right, not to get real political but they should have stepped in before this happened, It didn’t take a rocket scientist to see what was going on
Rojo But I think that’s what runs every market…Fear and Greed.
Roger Dawson Mike and I have been speaking out against adjustable rate and payment loans for the last five years. It was a disaster waiting to happen.
Ken to bad those out there that known those loans are crap and house over inflated that did the math on their budget didn’t buy I think those people might still be waiting on the side lines to get a home for awhile till this mess filters out.
Mike_Summey We may not see another time like this for 50 years. When banks, builders and speculators get burned, it takes them a long time to get over it. There’s nothing like a big dose or reality to bring common sense back to the market. If you don’t believe it, jsut ask peole who survived the Great Depression. It had a life long impact on their thinking about money and credit.
davidoro Roger, I don’t like interest only loans either
Rojo From what I have read…when people get greedy you get fearful and when people get fearful you get greedy…:)
Roger Dawson The key thing to remember is that it’s a great time for an investor to buy!
abertram Hello all
Mike_Summey Hi abertram
Roger Dawson Back in 1928 Bernard Barook sold short. He said, “I knew that it was time to get out of the market when my shoe shine boy started giving me stock tips.”
abertram Hey guys, I just have a small question that I hope anyone could give me some help with.
abertram I am trying to do a lot of research on real estate investing. My goal is to own multiple properties and convert them into rental properties…
abertram However, I am having troubles convincing my wife that going into debt is the best thing to do for these properties.
abertram We don’t have enough money to pay outright for them and all she sees is the debt going up and up
Mike_Summey Everyone, mark your calendars. Don’t miss next week’s chat when we will have a banks special asset manager as a guest. He will be able to answer your questions about the do’s and don’ts of buying bank foreclosures.
abertram Any advice?
Scott Mike, I am new to your chat sessions. Are they every Monday evening?
Roger Dawson Abertram: read our books. We’re not advocating high risk investing. Ours is a buy and hold program. If you’ll buy the way we teach you, there is no risk. Have your wife read the books and get her enthusiastic too!
Mike_Summey abertram, explain to your wife theat there are two kinds of debt. Good debt that someone else pays for you and bad debt that you have to pay from your earned income. Debt to buy investment properties is good debt when you buy the Weekend Millionaire way. If that expalination doesn’t work, have her get in the chat and talk to me directly.
abertram I agree with you, but if I buy, I go into more debt.
Mike_Summey Scott, yes, the chats are every Monday evening with only a few exceptions.
abertram I see the advantages, but she simply sees the increased liability and the supposed headache of managing a property. I am in talks with property management companies and I’m assuming, for a fee, they will be able to take care of the majority of maintenance problems.
Bob Carr Abertram – it is just a MindSet….sorry Mike…no pun intended!
Roger Dawson Scott, I’ll answer for Mike. Yes, they are every Monday evening at 8PM east coast time. One exception will be August 4 when I’ll be in China doing seminars and Mike will be the guest speaker at the National Speaker’s Association convention in NYC
Mike_Summey abertram, Roger is right. You shold read our books before you do anything. Have her read them too. When it comes to debt how much money would you want to borrow if you could borrow it for 6% and inverst it so that it earned 8-9-10% or more?
Ken abertram I use to manage my 3 properties for 8 months the heck with that. My PM nos the ins and outs of rentals. best investment I made. She actually saves me money.
Mike_Summey Thanks Roger, I almost forgot to let everyone know that we won’t have a chat on August 4th.
Roger Dawson Ken, if you’ve got a loving spouse and an honest property manager, life is not going to get much better than that.
abertram I have just listened to a podcast with Mike and I have the Weekend Millionaire book on the way!
abertram I hope to convince her sometime that this is good debt as I honestly see a future in real estate investing even if the market is so soft right now.
Mike_Summey abertram, there are 4 of the Weekend Millionaire books, an 8 hour audio program and a great computer program called the Offer Generator.
abertram I just want to get my feet wet with one property, you know? You never know until you try!
abertram I am an audio guy. I might go for the 8 hour audio program.
Mike_Summey abertram, the soft market is creating the best time to invest in real estate I’ve seen in my lifetime.
Mike_Summey abertram, check them out on our website at www.weekendmillionaire.com/store
abertram Cheap buys, but if I ever wanted to get out, that might be the trouble
Ken Roger I”m working on the spouse. I’m still single 
All most all the books I read there is a good women to inspire someone
Roger Dawson Purchase prices are going down and the rental income is going up because so many former owners are now renters.
abertram Interesting, Roger. I never really thought that could be a factor.
Mike_Summey Rising rents and falling prices are an investors dream.
abertram By the way, these chats are an excellent idea. I have read a few real estate investing books and never had the opportunity to actually ask questions. Much thanks.
Mike_Summey abertram, when it is difficult for people to buy, they have to live somewhere so they rent. The growing number of renters pust pressure on the market and pushes rent up.
abertram How can you calculate vacancy rate? Wouldn’t it be hard to estimate that?
davidoro abertram, i’ve been in and out of this chat room since mike first launched the book. i bought my first property in October 2007. i just made an offer on a third property today. I sold my wife on it. It gets easier to do when she sees the rent checks come in.
Mike_Summey abertram, that’s an answer a good property manager can give you.
abertram Thanks, davidoro! That gives me some inspiration!
Rojo Sorry computer issues
davidoro man, i tried the self property management thing. don’t do it. hire a property manager. it’s the only way to go.
abertram I don’t even think I would try to do that. I am not a handy man at all.
Roger Dawson I need to leave you now. I’m going to Taiwan on Saturday to speak to the huge Taipei real estate brokers convention and then on to Southern China for four days of seminars. I’ll be back with you for the chat on August 11. Good investing!
davidoro everyone wish me luck on my offer. hopefully i have good news to report next week. Ciao!
Mike_Summey davidoro, you are so right. That’s one of the first things I tell new investors. You have to decide whether you want to be an investor or take on a second job that doesn’t apy very well and is filled with headaches.
Penny Saoger. goodnightfe travels R
Penny safe travels Roger, goodnight
abertram Good luck, man!
Mike_Summey I told you earlier that Penny must be into the wine tonight.
Rojo lol
Rojo Hey Jonathan how was the run?
Mike_Summey Jonathan, you’re late. We’re just wrapping up.
Penny sorry all, My laptop keyboard does really strange things if I type to quickly. I can’t figur it out.
abertram Does anyone know where to find a good PM?
Penny too
Jonathan thats what i was a fraid of
Jonathan it was hot good though
Mike_Summey Jonathan, I have time for one question if you have one.
Jonathan ok one min for my typing
Jonathan I am working on a trust deal to save someone from forclosure and there is an agent involved what is an acceptable finders fee
Ken Abertram I would intertiew atleast 3 if you can
Mike_Summey Everyone, don’t miss next week. Roger will be in China, but my guest will be a bank special assets manager…the guy who sell the foreclosures.
abertram nice
Jonathan he thinks 1500 is ok my atorney thinks about 500
Rojo That is going to be cool!!
Mike_Summey Jonathan, what has he done for you?
Ken Jonathan sounds like a good time to practice your negotiating skills
Jonathan not a thing i am having trouble getting the hme owners # from him
Ken You tried 411? maybe just beat on his door if you got that info
Jonathan mike i was at a investor club meeting and a guy by the name of troy said he flies heliocopters with your son
Jonathan yeah i even have some old phone bills but the nuumbers are no good
Mike_Summey Jonathan, you should be able to get the homeowners information from the public records at the county courthouse. If the agent hasn’t done anything and doesn’t have a listing agreement, just bypass him unless you think he can help you with future deals. Agents who do nothing aren’t worth anything.
Jonathan well he is the home owners agent so she is in agreement with him
Rojo lol@agents
Mike_Summey Jonathan, my son is at Ft. Rucker in Alabama. I flew down there yesterday and spent the day with him. Are you near Enterprise, AL?
Mike_Summey Jonathan, if he is the owners agent, you will probably have to deal with him, but the owner is the one who will pay him, not you.
Jonathan No I am in sc but macintire is where he said they were together
Mike_Summey Jonathan, that is probably true. Matt is with the Apache unit based in SC.
Penny Jonathan, if you have the guys name you might try whitepages.com. If he has a land line it will list it. (If you haven’t already tried that.)
Mike_Summey I’m going to have to leave you now. See you here next week.
Jonathan Penny the house is in my area and she has been gone
Mike_Summey Goodnight all.
Jonathan thanks mike
Jonathan Penny I have to find a way to make the agent happy too he has her info
Penny okay all. gotta run also, see you all next week
Penny goodnight
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“Roger Dawson Ken, if you’ve got a loving spouse and an honest property manager, life is not going to get much better than that.”
Finding a property manager you can trust is worth a lesson on its own. Any ideas? Sample agreements?