Chat Transcript - August 11, 2008
Posted on August 12, 2008
kawhitlock So I know I’m early. I really just have (hopefully) one question. Was trying to do a “Bulk purchase” in a neighborhood. A couple that owned multiple houses in a subdivision just recently foreclosed, and now they’re REO status; but they are all owned by the same bank (WAMU). The one realtor I have talked to is acting really condescending & arrogant. She has informed me that I cannot do a “bulk purchase” because ea. property is under a different Asset Mgr. Is there any way I can get around this or the realtor?
kawhitlock Hey Ken.
kawhitlock where you from?
Ken PA,
Ken You
Ken I am in Charleston, SC now just visiting
kawhitlock Oops, sorry……Athens, GA
kawhitlock Charleston is beautiful, home of Trademark Properties–Richard Davis!
kawhitlock Hey Roger!
Roger Dawson Knee how! Knee how Ma?
Ken Yeah I drove past their office last time I was here, I was hoping to catch a glimps of Ginger 
Roger Dawson I’m speaking Chinese still
kawhitlock oh, wondering what that was all about!
Mike_Summey Hi everyone!
kawhitlock in Heels w/ her dog Jack, no less!
Roger Dawson hi Mike
Mike_Summey Sorry I’m a bit late.
kawhitlock Hey Mike………..First question of the night from me, at very top!
santo hi mike–roger
Roger Dawson Hi Santo
Mike_Summey kawhitlock, what is it. If you’ve already sent it, I missed it. I can only see what has been sent since I logged on.
kawhitlock Oh, didn’t realize that! Here ya go: So I know I’m early. I really just have (hopefully) one question. Was trying to do a “Bulk purchase” in a neighborhood. A couple that owned multiple houses in a subdivision just recently foreclosed, and now they’re REO status; but they are all owned by the same bank (WAMU). The one realtor I have talked to is acting really condescending & arrogant. She has informed me that I cannot do a “bulk purchase” because ea. property is under a different Asset Mgr. Is there any way I can get around this or the realtor?
Josh On your portfolio SFH loans what do your banks require you put as a down payment? Mine is requesting 20% and that seems high to me. Would you agree or should I keep shopping?
Josh sorry that question was for Mike
Mike_Summey kawhitlock, I’d make the offer and tell the realtor to submit it. Let him or her worry about dealing with all the asset managers although I doubt that is the case. If all the properties are in the same subcivision, I’d bet the same asset manager is handling them all.
Mike_Summey Josh, that’s about right if you’re trying to get a new loan to purchase. The days of 90-100% loans are over.
kawhitlock Well she specifically said they were different, and said I had to submit an offer to each one individually–does that seem ridiculous?
Roger Dawson Ka whitlock, is this agent the listing agent for the bank? If not, it’s okay to go around them.
Ken Roger, How do you handle arrogant people? I talked to one guy and he was cold as ICE. He seem to act better than me
Mike_Summey kawhitlock, as I said, I’d make the offer the way I wanted to make it and tell the Realtor to submit it.
Roger Dawson Ken, that doesn’t make any sense to me unless you were asking him to submit a really low offer. Some agents like to do that and some fear it.
santo josh, sfh 5% –multi fam 20% or if your credit score is good !0%
kawhitlock Roger, I’m not sure–I thought she was just the realtor, but then talking to her, it sounded like she is the “Asset Mgr.” for the one specific property I called about initially. Maybe I just don’t understand what the definition of an Asset Mgr. is?
Roger Dawson Santo, you are a mortgage broker aren’t you?
Mike_Summey everyone, right now Realtors are not in a position to be arrogant.
Ken Roger, it was actually for work. Trying to sell my service. I thought it could be in the same principle. It was like he was playing the silent treatment to me.
santo Roger, I am still a rookie–but that is what I get
Mike_Summey kawhitlock, the special asset manager for a bank is the person who is in charge of selling foreclosed properties.
Mike_Summey Hi Chad
Roger Dawson Old joke: How can you get which of the banker’s eye’s is the glass one? It’s the one with all the sympathy in it!
chad Hi everybody
Ken I just talked to an asset manager from Fannie Mae. I ask him to send some listings my way. He laughed and said man I have to many.
Mike_Summey Hi Jeff
Josh Mike: on your floating rate, fixed payment program you have in place, do they reset the amortization every yr or is it when it balloons in 5 yrs? Some banks are telling me that they will do a 5 yr balloon, fixed payment, floating rate, but want to reset (make sure we’ve paid enough principal) the amortization annually. Is this standard or should I keep negotiating (or looking)?
jeff CPA DE hi mike, hi all
santo Roger-or if he looks at a ugly girl, it will crack
kawhitlock I get the feeling that if I tried to use Weekend Millionaire Templates for an offer, instead of using the “typically accepted” Realtor Offer (Purchase & Sale Agreement), they will try to tell me I can’t submit an offer that way. Have you ever found this to happen?
Mike_Summey Josh, if you set the rate at current rates, the bank will want to adjust annually if rates go up. If you start with a payment based on a 1/2 to 1% higher rate that the current rate, you can usually get the payment fixed for 5 years.
Mike_Summey Hi Penny
Penny Hello Mike and all.
chad kawhitlock: I believe it’s between the buyer and seller to decide what kind of contract is acceptable
Mike_Summey kawhitlock, the letters that are produced by the Offer Generator state that if the deal is agreeable you will immediately transfer it to a formal contract and put up a deposit. Tell the Realtor that a Letter of Intent is just that; a quick way to find out if a deal is basically acceptable. You can edit the letters to say anything you want before you print them.
kawhitlock Yes, so I should tell her to pound sand, and submit it anyway!
Penny Hello Roger
santo mike, where in new york were you speaking–let me know when you are in nyc–and I would like to come and see you
kawhitlock Well it certainly doesn’t hurt to try, and see how they respond!
Roger Dawson Hi Guys and Gals: my computer just crashed so if you asked me a question and I didn’t reply, please repeat it.
Mike_Summey Santo, I spoke at the Marriott Marquis on Times Square.
Roger Dawson Hi Penny!
chad Hi Roger, you need a new computer!
kawhitlock Does anyone hear ever use or deal w/ a realtor when trying to submit an offer?
Mike_Summey Roger, was that the Macintosh that never crashes? 
Roger Dawson Chad: I hate to tell you this but it’s a brand new $3000 computer. Now Mike is going to say, “Is it a Mac?”
kawhitlock I’m still not sure how to get around them, because it seems like anytime I call the banks directly I just get stone-walled!
Mike_Summey kawhitlock, I buy as many using Realtors as I do otherwise…maybe more.
santo mike, oh man that is 25 minutes from my home by public transportation
chad Roger, I had a seller give me a price, and when I asked him if he was at all fliexible on the price he blew up up! What kind of negotiation is that?
Mike_Summey kawhitlock, how large is the bank you are trying to deal with?
kawhitlock still waiting on Roger–Mac or not?
kawhitlock Washington Mutual.
Roger Dawson Chad, that’s a stupid seller in todays market!
Mike_Summey santo, sorry, but it was a closed meeting. They would not have let you in.
Penny Roger, last week they were giving me a hard time about my computer, typing funny. Mike blamed it on the computer drinking too much wine!
Ken Kawhitlock you might want to interveiw 4 realtors to get a good gut feeling on the best one. I made the mistake on going with a guy that someone recommended. Now my PM is my realtor
Roger Dawson While Mike was in NYC I was speaking to 2200 Realtors at the Taipei Board of Realtors convention.
chad Roger, I’ve had sellers get upset at a low offer, but never when I asked if they were flexible
santo mike, I still have my badge from my city job, I think they would have let me in
kawhitlock I feel like I have a good realtor (3rd time is a charm they say), but I thought you said to try to avoid using them, so you can have more negiotiation power, as well as less 3rd party communication.
Roger Dawson Computer can be very snooty when you pour cheap wine on them!
davido Mike, Roger: A couple of weeks ago I told you about a house in Sacramento that I saw and made an offer on. I did not buy it because after inspection, I figured it would cost $20k in repairs. Plus the bank wanted $20% down. Even with repaairs, NOI was working for me. However, I decided to pass because the repairs would have taken most of my available credit. Plus, I didn’t feel in position to take on such major repairs. If it would have rented out after repairs, my cash flow would have been really good, but I’d have to pay back the repairs line of credit over time. In the end, I just wasn’t comfortable with it. Have you passed up opportnities even when NOI Worked?
Mike_Summey kawhitlock, the better able to pay cash and close quickly, the more attention you will get from banks. If you are making offers that ask them to finance the deal, you’re like thousands of others doing the same thing. One point to consider, if the bank has to finance the purchase, the loan is considered a “Loan to Facilitate” and is not looked upon favorably by the regulators.
Mike_Summey Hi Eddie
chad cheap wine and a cheap, expensive computer!
Roger Dawson Penny, do you read Drabble cartoon? The baby in it is named Penny.
Josh Mike: So would you mind explaining where the rate would be exactly? IN other words prime is at 5% today would payment be set at say 6% (+1) or would it be even higher? I assume yours are not right at prime–banks lend at prime plus an adder in my limited experience? I have proposed prime plus 0.5 or 1 and they all feel prime is going up, so uncomfortable with a 5 yr fixed payment. thoughts?
EDDIE-NC Hi everyone
kawhitlock pretty much everything I do is a cash offer.
Roger Dawson Banks currently borrow money from the Feds at 2%. So they’ll lend to you at less than prime if your credit is good and you’re bringing some deposit accoutns to them.
Mike_Summey david, unless you are comfortable with a deal, pass on it. There will be plenty more. I’ve passed on hundreds of deals that were “almost” right and I’ve never regretted doing so. I’ve never lost money on a property I didn’t buy.
chad what do you guys think of the sub 2 potential in today’s market?
Josh Roger, which banks?
Penny awwwhhh, bet it is a cute cartoon too Roger..
Roger Dawson Chad, do you mean buying buying to an existing loan? Don’t do it unless you get the approval of the underlying lender.
davido That’s good to know mike, and reassuring. It was definitely an “almost” right. I said to myself had I been doing this for years with at least 10 properties under my belt (two right now) and good cash flow, I think I would have bought it.
Roger Dawson I meant buying subject to an existing loan
davido Mike, Roger: When you look at a home to purchase, do you bring an inspector with you the first time out or do you use an inspector after you make an offer?
chad Yes Roger (taking over payments)
chad I’ve got a sub2 course, but I haven’t read it yet.
Mike_Summey Josh, fortunately, I am able to get prime +0%, but it took years to be able to do so. I just did a $1,200,000 loan with a fixed payment based on a 15 yr amortization and a 6% rate. Although the payment is based on 6% I’m only paying 5% which means more of each payment is going to principal. Until the rate rises to 6% I will be getting ahead of the amortization which is why the bank will set the payment for 5 years.
Roger Dawson Chad: same answer. Don’t do it without the underlying lenders approval. If they catch you they could call the loan or charge you outrageous points.
chad Thanks, Roger.
Mac Roger, given the current climate, what do you think the chances are that the bank will approve the sub2?
chad I’m starting to market in a better part of town, and I thought there could be sub2 potential
santo roger, did you hear that california has a budget problem–it was on the news that governor Shwarzenegger is taking 200,000 state jobs, and rolling them back to minimum wage–$6.50 an hour–he signed it into law the other day
Mike_Summey david, I have an inspection form which I use to do my own inspections. It touches upon everything of improtance, but if I’m unsure about anything I’ll pring in a professional to help.
chad My normal target market is mainly rental properties (not homeowners)
Roger Dawson Mac, I imagine that the odds are about as good as them making you a new loan.
Mac Roger, OK, it certainly would be worth asking them
Roger Dawson Mike, wouldn’t you make the offer first, but subject to your approval of an inspection report?
chad I know you guys recommend against that kind of area, but I knew other people investing there so I started as well
davido carleton has some of those sheets in his course. would it be similiar to that? and for a typical single family home, what is the average inspection you spend on the place?
Roger Dawson chad there are some so-called experts who teach how to get around the due on sale clause in the underlying loan but I’d run a mile from them.
santo davido, $250 for inspection
Mike_Summey Mac, buying “subject to” is a gimmick being sold to people who mainly flip houses. It lets them get a deed to a property hoping they can sell it quickly. Stay away from it unless you have tons of cash and like to roll the dice.
Roger Dawson Yes, Penny, little Penny Drabble is as cute as a button. Just like you!
chad Thanks Roger. Would their initials be Bill Bronchick or William Tingle?
Mike_Summey Roger, I’ve been doing this so long, I can do a fairly compresenhive inspecttion in a very short time so that’s what I usually do.
Josh Mike: wow, thanks and very interesting. When you were newer to business and first sold the idea to the banks, how many points above prime would you typically pay and how many points above would you set the payment? trying to get a gauge for me.
davido santo, i paid $200 for an inspection in this last house because I wanted to pick his brain as he went through the house. i had not really inpsected a house in the past so i figured it was a learning experience. that said, i can’t pay an inspector everytime so i need to learn how to do most of it myself. and by most of it feel i mean feel pretty good about a buy or pass decision.
Roger Dawson Chad, I’m not familiar with them but if that’s what they’re teaching get your running shoes on.
Mike_Summey Josh, when you are using a floating rate loan you rarely have to pay any points. Points are typically used to buy down the rate on a fixed rate loan.
Ken I have to agree with Mike about sub2 I am sure anything could work, however usually sub2 you need upfront fees like $4k not many people have that, most are scared of the market.
chad I deal mainly with rehabs, and I can also tell roughly how much repairs will cost
Mike_Summey My inspection form will be back on the website as a FREE download very soon. We’re slowly rebuilding everything that was on the old website, but it takes time.
Josh Mike: sorry, I meant percentage points above prime (adders I guess)
Ken Chad were you from
Ken Mike the site looks good.
chad Ken: I’m in Harm City (Baltimore)
Roger Dawson Do you like the green and yellow colors on new site? Mike and I disagree.
davido I like the green and yellow colors.
davido looks a lot better
santo davido, that $250 is for a 2 family–i can’t inspect myself–don’t know what i’am looking for–plus all my properties are 400 miles away–so it is worth it to me to have a licensed inspector do it for me.
Roger Dawson Can’t think about Baltimore without thinking about that Mayor that ordered police to bomb squaters who wouldn’t move out of a building!
Mike_Summey Josh, if you want to set a fixed payment for 5 years the initial rate used to set the payment will be based on whether or not the bank feels rates are going up or down. If they expect rates to rise quickly they may want to set it based on 2% above actual, but if they expect rates to fall you may be able to get away with as little as 1/4% above.
chad This is acting hokey — or is it my computer? Mine’s as bad as Roger’s
santo roger, 61 homes burned to the ground
davido santo, i hear that. the $200 i paid was for a duplex. if I wanted the full property report in written form, i could paid another $250. but the chat with him and the review on his laptop was fine for me. i had mad e my decision not to by.
chad When was that, Roger? And which mayor? I somehow missed that.
Roger Dawson Chad, what was that Mayors name? Goode? He was a real charmer!
chad The mayor now is Sheila Dixon, Before that, Martin O’Malley, Kurt Schmoke, William Shaeffer …
Mike_Summey kawhitlock, where are you located?
Roger Dawson It was abou 20 years ago. It’s amazing what’s tucked away in the dark recesses of my mind. The group was called MOVE and they thought the public has a right to occupied empty properties. The mayor disagreed.
kawhitlock almost logged off….Athens, ga
Mike_Summey kawhitlock, do you know my friend Billy Morris who lives there?
kawhitlock very small market–100,000 people
santo roger, they said the bomb was just to smoke them out but the fire got out of control
kawhitlock Never heard of him, but that’s not saying much….I’ll ask around. What does he do?
chad kawhitock, isn’t that home of the B-52s and REM?
Mike_Summey kawhitlock, he owns the newspaper there.
Mike_Summey Morris Communications
Roger Dawson KAW: that’s like a cop saying “I swung my nightstick at his belly but he ducked and I broke his skull.”
kawhitlock Chad–you got it! Also, Widespread Panic & if you’re into country, John Berry.
chad Must be a great town for music
kawhitlock Aaah! Athens “Banana” Herald!
Mike_Summey Roger still has the big head from his trip to China. He was a big celebrity there…like a rock star.
Roger Dawson Sales of homes in CA have actually gone up, but 40% of sales are now bank owned properties.
kawhitlock Actually, my husband & I own a franchise DJ company.
santo mike, are any of your speeches open to the public
Mike_Summey Hi playhard
playhard532@yahoo.com hi mike its Jeff here in Fletcher how are you??
Roger Dawson Mike, I had a thousand people at a book signing there, yelling and screaming for more. But my wife Giselle stills expects me to take the garbage out!
Mike_Summey santo, some are, but I don’t have anything near you at this time.
Mike_Summey Roger, that’s called coming back to reality!
Josh Roger, Mike: I know most of your loans are with smaller local or regional banks. Do you know do if the larger name banks (ie Chase, Wells, Wachovia, etc) make portfolio loans at a local level? Are they flexible with good rates, terms where they might look at doing a floating rate, fixed payment program? Just curious how they work on a local level (if different from corporate level).
Mike_Summey Hi Jeff
kawhitlock Mike, any plans to update your Offer Generator Program?
Mike_Summey We have another Jeff in also.
santo ok mike–I would like to go when you have the next one
playhard532@yahoo.com I see that,,Shirley Johnson says hello!
Mike_Summey kawhitlock, not at the present time. It still works just as well as it did the day it was first produced. As they say, good thing last.
playhard532@yahoo.com Mike, have you heard anything about the gov getting ready to make a major change in the lending industry other that what congress has already done with Fannie and Freddie Mac?
kawhitlock Oh, it definitely serves a great purpose, there would just be a couple of things I would “tweak”.
Mike_Summey playhard, no I haven’t. What’s he talking about doing? If anything it’s probably only effecting state banks.
chad Like what, kawhitlock? I have it, but haven’t made much use of it yet.
Ken more state regulations I think
Roger Dawson Mike, can you answer Josh’s question on big banks?
Mike_Summey kawhitlock, if you will email your suggestions, I’ll put them with a couple of others I have so they can be considered when we do update it.
kawhitlock chad-I would like to be able to tie the Est. Net Rent Page, to a specific property is a major one—MIKE, I agree, it would be better to just e-mail you on this!
playhard532@yahoo.com Well from my 12yrs in the mortgage industries, all my sources are telling me more banks are to follow countrywide if they do not lossen the grip on alt a borrowors. Banks are starting to violate discrimination laws. FHA is getting rid of the DPA program Oct 1. Thats down payment assistant and they must now have 3.5 down to purchase a home.
chad I need to take the time to learn how to use it — the WM guys haven’t steered me wrong so far!
Mike_Summey Josh, it doesn’t matter the size of the bank. I have loans with both very large and very small banks and both do the same thing. Keep in mind that banks are businesses and they have their ups and downs too. Saying they can’t do a particular type of financing could just be a way of telling you they aren’t interested in real estate loans right now.
Roger Dawson I understand that the Feds are really raising the maximum amount of FHA loans. That should help.
playhard532@yahoo.com thats right mike, they have been doing that for yrs!! Legally.
Mike_Summey kawhitlock, the Net Rent Page is always tied to a specific property. You input the property address prior to getting to the Net Rent Page.
chad My long-term is to get more rentals, but right now I’m doing m ore wholesaling to get our of debt and build cash reserves
chad get out of debt
kawhitlock I probably didn’t explain it well–was trying to recall quickly. Will try to give better on the e-mail.
playhard532@yahoo.com Roger, they are also hitting the rate for a lower loan amounts as well. So you get discriminated against the lower your loan is…Now hows that for legality??
Mike_Summey kawhitlock, if you save the information as you proceed, you can recall an offer at any time.
chad I don’t think people with low loan amounts are a protected class (they can’t be discriminated against)
kawhitlock Mike or Roger, maybe I missed your answer, but don’t you suggest skipping realtors & talking straight w/ the bank if you can–to have more negiotation power by having no realtor fees involved?
chad If it’s an REO they are going to list it with a realtor, so that’s normally who you have to talk to
kawhitlock That’s what I’ve found to be the case also, just wanted to see if Roger or Mike agree w/ that assessment.
chad well, Roger and Mike?
playhard532@yahoo.com Mike, question for you. What do you advise for a deposit since NC only allows for 3 times the amount of the rent and then they trash the place and you have to come out of pocket for the repairs? For someone just starting out that can put them in the poor house very quickly. What is your stratgy on that?
Mac KAW, see the last chat with Blue Ridge Bank. They’re a local bank who frequently deal directly with end buyers
Mike_Summey kawhitlock, I always prefer to talk directly with the bank official if possible, but big banks that have a lot of properties may not talk other than through a Realtor. Don’t let that deter you. Just tell the Realtor to submit the offer you want to make.
Josh Mike: I know you recommend steering clear or HOA fee subdivisions. Here in Houston, ~95% of all good rental subdivisions have HOA fees (all mine are in them). What do you recommend?
chad Playhard, all you can do is collect the highest deposit allowable and screen your tenants carefully. Do you do Section 8?
kawhitlock Yes, I do, but sometimes they screw up the wording, so I have to get real specific on what is ok & not ok to say.
playhard532@yahoo.com kawhitlock, its good to tell them you are a pocket buyer to. Thats works good for me.
kawhitlock Mac - local to GA??
Mike_Summey playhard, I have my managers do thourough credit and criminal history checks and we usually get a deposit equal to a months rent plus additional for pets.
Mac KAW, local to Asheville, NC. I said that as a general comment about local banks
playhard532@yahoo.com heard horror stories about section 8 when you have to evict them??
kawhitlock oh, got it! Yes, I definitely can see I would have more say w/ local banks, but not too many of them handle any of the foreclosures that take place around hhere.
playhard532@yahoo.com got it Mike, thanks
Mike_Summey kawhitlock, you can always submit the “Letter of Intent” from the Offer Generator and then if what you submit is acceptable let the Realtor transfer it to contract form. I find that it saves a lot of time doing it that way.
chad Possibly, I just got my first Section8 tenants because a lot of people recommended Section8.
playhard532@yahoo.com is it harder to get a section 8 person out of your rental than a regular one?
Roger Dawson Playhard: most investors find that Section 8 guarantees that you get the rent. The problem is the condition in which they leave the property when they leave.
playhard532@yahoo.com thats what I heard Roger.
Penny saying goodnight now for this week. See you all next week.
kawhitlock Yes, if I am able to bypass the realtor in my initial connection.
chad That house was someone I had to evict. Luckily I got her out with only two months of lost rent. I kept her security deposit of course.
Roger Dawson I have to run. See you next week.
playhard532@yahoo.com Thanks Roger
chad Bye, Roger, thanks!
Josh Thanks a ton Mike and Roger. You guys are very helpful…apreciate it
Mike_Summey playhard & chad, keep this in mind, if a Section 8 tenant has to be evicted they lose their Section 8 voucher.
Mac Playhard, one thing about section 8 is that if you find damage that they’ve caused, they have to pay for it now, and the housing authority will support you in collecting it or they’ll kick the tenant out of the program.
chad Section 8 tenants are no worse than any other tenants — at least not in my market
playhard532@yahoo.com got it. Ok know I see..
Mike_Summey It’s past 9:00 and I have to run also. See everyone here next week. Goodnight.
kawhitlock Well, thanks for all Mike & everyone else…….time to go!
Mac Section 8 as a group takes worse care of the property. Regular inspections are necessary.
playhard532@yahoo.com thanks Mike, Chad, Mac
chad So what roger said about them leaving the place in worse condition doesn’t make sense
Mac chad, they will leave it in worse shape if you don’t watch them
playhard532@yahoo.com well I just heard that its very hard to get them out if they have trashed the place. What is the schedule for inspections? Is there one??
chad In worse shape than anyone else? Why is that?
Mac Got to go, goodnight all
playhard532@yahoo.com sorry I got in late.. gotta run, thanks chad!
chad Me too, thanks! Bye …
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