Chat Transcript - August 25, 2008
Posted on August 26, 2008
cville Hey Johathan oz and santo
cville guess we are a tad early…
cville anyone investing? I have one rental
oz cville yep a tad bit anyhpw
oz cville not currently presently working om doing a rehab
Jonathan yeah working on it everyday
Jonathan whats up with the 4 loans in your personal name
santo hi mike, that fellow in south carolina, Richard Davis, who owns trademark properties, bought a 300 unit complex, and convaerted one apartment into a condo,with the intention of converting the other 299, in one day, he sold the condo, and all of the other 299 were ordered for sale, he set a record in one day sales of $50 million–I think the profit was $20 million for him, not bad for one days work
Mike_Summey Hi everyone. I just got off the phone with Roger. He is having Internet connection problems.
Mike_Summey Hi Mike
Mike_Summey Santo, that sounds too good to be true.
Mike_Summey Hi Christian
Christian_Robinson hi
Mike_Summey santo, where was this project.
Mike_Summey Hi sparky
sparky37 hi Mike
Mike_Summey Roger may be late joining us even if he does. He’s having problems.
Mike_Summey Hi Danko
Jonathan Hi mike and all
cville mikencandler are you in candler NC?
santo mike, it was on tv last week, if it comes on again i will tape it for you–he does all his work in south carolina
danko Hi Mike. Hi Everyone
davido Hey Mike, I just got the offer generator. I noticed there is no place to input “asking price”. Is that correct or did I miss it?
sparky37 Santo, who?
Mike_Summey santo, I
Mike_Summey I’ve never heard of him.
cville He does a flip show
cville mostly he rehabs and flips
Jonathan I am in SC i’ve heard of him
santo nike, his tv show is called–the real estate pros
mikencandler Mike, a co-worker is afraid to by in WNC–says the WNC market will drop 10-15% each of the next 2-3 year. Thoughts? I tell him good, stuff will be on sell . . .
sparky37 oh Richard Davis
Mike_Summey davido, asking price means nothing. The OG computes what you can pay for a property and have it cash flow. If you are trying to pay asking price, it will compute at what rate of interest you would have to have to do so or what rate of return you would get on your money if you paid cash.
Mike_Summey mike, your co-worker is right. I agree.
Mike_Summey Hi Billdozer
davido Thanks, Mike. That’s what I thought.
santo mike, do you get this show on your cable system–he is on tv on the weekend
danko Does anyone know the time frame between the first public notice of foreclosure until the foreclosure sale? I just subscribed to the local legal paper and there are literally hundreds of foreclosures listed in each issue, which is twice a week.
Mike_Summey cville, I don’t know anything about flips. I’m an investor, not a speculator. If you have to sell a property to make a profit, you are not an investor, you are a speculator.
Mike_Summey Hi oz
Mike_Summey Hi luther
cville I do believe the WNC prices have dropped some, but were way up, still experiencing at least 5% increases here for current properties
Mike_Summey cville, where are you?
cville Me too Mike, although I own the house I live in, and 1 rental
oz Hello Mike
cville Just enjoy watching them redo houses
mikencandler cville, I’m in Candler, NC
cville looking for another deal
cville I live across the street from some people you know….. scott and michelle
Mike_Summey I think the Asheville…WNC market area is just beginning to feel the downturn in the real estate market. I think prices here will fall for at least two more years.
Mike_Summey Hi padale
padale70 hi mike sorry im late
santo mike, Alex Rodriguez of the new york yankees knows the value of rental properties—he has 1300 rental units
mikencandler Mike, 10-15% each year?
sparky37 Santo, soon to be 650 as Cynthia will get half!
Mike_Summey mike, I’m not sure how much, but this area is in for a major correction. Many builders are just now realizing how much trouble they are in and things are only going to get worse for them.
santo mike, i never thought of that
Mike_Summey Good observation sparky.
mikencandler Mike, thanks
cville my son just bought his first house outside charlotte
danko Mike, do you find buying foreclosure property better before or after the foreclosure sale? Dealing with the homeowner or the REO bank?
cville he is paying about 200 more a month taxes and insur included than he was paying for his “crappy apartment”
Mike_Summey danko, most of the time it is better if you can get to the property owner before the sale, but there are risks involved. Once a property goes through a foreclosure, it is cleansed of all leins and encumbrances.
santo mike, am looking at a 4 plex in buffalo under rehab–seller wants $80,000–my p.m. thinks he can get him down to $72,000
cville He was inspired by your collumn about your son buying
Mike_Summey cville, good for him. My youngest son recently bought his first house too.
Mike_Summey cville, glad to hear you are one of my readers. 
cville Asheville Citizen
cville Times
cville delivered daily!
Mike_Summey cville, I’ve received a lot of complaints since they moved the business section to the back of the sports section. People have had trouble finding my column.
Jonathan I recently met with an older lady, husband diseased, that has a nice home on 4 acres and a 7.5 acre pond, it would be a place for me to stay. It’s worth 250 to 300, with some upfits to the kitchen and the baths. So I plan to offer her 200. 20 down and 180 principal only. Payments of 1000. She actually lives in a condo at the beach so if she sells outright she will have to pay capitol gains tax. I am going to propose that she put the house in a trust; I will then be the trustee and the beneficiary. To then control the property doable? I own two properties this way, but I took over payments/saved them from foreclosure.
danko Mike, is there anywhere else we can read your columns if we are not in NC?
padale70 mike im new to real estate wich one of your book or programs should i start with?
Mike_Summey Danko, they are posted to this website on a one week delay and I send a link to them with each chat reminder.
danko Oh. Ok. I thought they were different. The ones on the website I’ve read many times
Mike_Summey padale, I recommend you read the Mindset book first followed by Weekend Millionaire Secrets to Investing in Real Estate.
cville I am thinking you can read them on line through www.citizen-times.com
padale70 thanks mike
Mike_Summey danko, they are different. The one you get on the website is what I actually write, the one in the paper is what it looks like after the editors get through with it.
danko I want the “uncensored” ones…lol. I’ll stick with the website
cville oh….maybe I should read it here…. this is where I sent my son to read
Mike_Summey everyone, there are dozens of the columns on the website.
santo mike, did you finish up those last 3 houses you said you were buying
cville At first his friends were like, oh no, now they are sooooooo Jelous!!
oz Thank Mike I was unaware
Mike_Summey santo, the bank was supposed to get title today so I had to wait until the foreclosure sale was final before I could make offers.
Mike_Summey Hi Penny
danko Glad I asked. I’ve read many of your columns here on the website
danko Everyone should read them
Mike_Summey Thanks Danko
Penny Hi Mike.
cville and sent them to their children!!
cville brb
Mike_Summey Danko, you aren’t Don Danko are you?
danko Mike, nope that’s not me. I’m a different danko
Mike_Summey I just went to my high school reunion. One of my classmates was Don Danko.
danko and I’m not Donald Trump trying to get free advice
Jonathan Mike can i put a property in a trust and then arrange seller financing to try and avoid capitol gains tax
Mike_Summey Jonathan, why are you trying to avoid capital gains tax?
Mike_Summey I just spoke with Roger again. His Internet service is down so he won’t be joining us.
Jonathan The seller lives at another property she plans to move back to the prop I am wanting to buy for 2 years to make it her primary residance and do up fits while shes there i am trying to buy it before the price goes up
Jonathan older lady no mortgage
Mike_Summey Jonathan, if you buy it now and she finances it, I believe she will only pay tax on the money she receives each year.
Mike_Summey Hi mayorad
mayorad Hello, Mike.
Jonathan Ok so if there is no lump sum no capitol gains tax
Jonathan thank you
cville b
Mike_Summey Jonathan, that is my understanding. YOu should check with your account to be sure.
Jonathan I will do that thanks
santo mike, Donald Trump just bought Ed McMahons house that was going into foreclosuse–so now he rents it to Ed—-( Ed McMahon was johnny Carsons partner on tv for 30 years)–where did all his money go? –he should have invested in rental properties
oz Jonathan from my understanding she would only pay capitol gains on any principal payment she receives in excess of her principal costs. hope that helps
cville I was looking at a tax forclosure, has been a bidding war going on, haven’t jumped in the fray yet
cville and is getting close to my real “deal” price, so not sure I will.
Mike_Summey Jonathan, if you get 0% financing, your accountant may tell you that the IRS will impute interest and she will have to pay ordinary income tax on the imputed interest portion of the payments you make. If so have the accountant calculate the difference between ordinary income tax and capital gains tax. I believe that the tax is the same until the taxpayer has more than $94,250 in taxable income.
Jonathan per year or total
santo nite all
Mike_Summey cville, be careful of tax foreclosure sales. They aren’t always what you think they are.
cville that is what I have heard, and also why I am still on the sideline. you can look it up on the county site
Jonathan from what I know after one year if the taxes are not paid back to you the property is yours Mortgage/ Mortgages and all
Mike_Summey cville, I’ve never bought a tax foreclosure so I’m not a good one to ask for advice about them.
Mike_Summey Johnathan, per year.
cville their is a newer doublewide on site, was looking at value of the land only
Mike_Summey Hi alex
Jonathan Well i will be well under that thanks
Mike_Summey Jonathan, not you, the seller.
alex hello everybody
oz Jonathan there are varying laws on the taxes,however I think since the tax lien take priority over even the first lien there would be no others, except perhaps an IRS lien.
Mike_Summey Jonathan, who owns the tax lein?
Jonathan I will be paying her 12k per year so thats what I ment sorry
Mike_Summey Sorry, that last reply was for cville.
mayorad Mike, a refi question/example for you … I’m a little green in this area ….
Mike_Summey mayorad, a little green must mean you have money…:D
mayorad Yeah, I wish 
mayorad Here goes …
cville From what the county told me, they do, the money is owed to them. and anything on it even the doublewide which is part of the tax bill is included.
Mike_Summey cville, so the county is foreclosing, right?
mayorad I found this refi example which has me a little befuddled: if an investor takes over a property from a seller who had $140,000 in equity, the seller just wants to get out; the investor refinances the property and pulls out $100,000 in cash, how is this considered a “$100,000 in your pocket” deal? Doesn’t any money provided to one by a refi - over and beyond the amount paid back to the original lender - have to be paid back to the refinancing lender?
Jonathan oz I talked to my attorney and the tax lien is first but the mortgages are not cleared at time of sale or that is my understanding
cville yes the county is foreclosing because of back taxes
cville http://www.buncombecounty.org/governing/citizens/prop4Sale_TaxForeclose.asp
cville or http://www.buncombecounty.org/common/tax/FCL.pdf
Mike_Summey mayorad, I’m not sure I fully understand your question. If you buy a property from a seller who had $140,000 equity in the property and you buy it for just what is owed, if you refinance for $100,000 more than what you pay the seller, the amount you pay the seller goes to pay off the existing mortgage and the difference goes in your pocket.
Mike_Summey mayorad, is the scenario I described what you meant?
oz Jonathan to be on the safe side, check wih another attorney, any I have spoken ot have told me any/all liens other than sometimes an IRS lien is wiped out. Same as a first lien holder on a mortage or trust deed and note. where there are liens following the first.
mayorad I’m thinking it through, Mike. Thanks for the follow-up. I’ll get back in a moment.
danko I’m getting several hundred foreclosure listings each week up here in the Twin Cities. I am overwhelmed with the sheer numbers of them.
Jonathan oz ,That would be ok with me I will have to do that
alex How much will an apprasier cost me in the northern virginia area, just a ball park figure.
sparky37 alex 250 to 300
oz Jonathan hope it works our for you
cville I would have guessed 300 to 500
alex thank you, sparky37
Mike_Summey danko, that is happening all across the country. As these properties hit the market at significantly reduced prices, it will further depress the market. I think we still have at least two more years of correction before we see the market start to firm up.
padale70 danko where do you find these forclosure lists?
davido Hi Mike - another question on the OG: The OG is strictly to get your foot in the door with an offer, correct? All the “final” paper work will be done with an agent or a lawyer correct?
davido danko - 75% of the listings in Sacramento are foreclosures
Mike_Summey alex, if you look in the yellow pages unter appraisers, you can call and get a quote from them.
danko Mike, I checked the value of my own house yesterday. We live in a nice neighborhood and our property valued dropped $17,000 since last year…that’s the tax assessor’s value
alex thanks
Jonathan mike I have an investor friend that is willing to cosign for me on a loan, but when we started the paper work we were told that with the 4 mortgage limit in a persons name it is not going to work. any ideas
davido Big New York Times article on foreclosuers in Merced, CA on Sunday. It’s about 2-3 hours south of Sacramento. It’s worse there.
Mike_Summey davido, the OG produces a Letter of Intent. Once you reach an agreement in principal with a Letter of Intent, you then transfer the deal to a formal contract. You can do the contract, a real estate agent can or your attorney can.
cville yeah, I live in a modest house that is paid off, 7 years till someone else pays off my rental mortgage. Looking for something else
cville as well
Mike_Summey danko, don’t expect your taxes to drop. The county will simply adjust the tax rate so they get the same money.
danko lol…oh NO, I wasn’t expecting that. I know the government well enough
Jonathan My friend has a lot in the way of credit score trade lines everything. I am 23 and selfemployed so I havent had any luck alone
danko lol
Mike_Summey Jonathan there is no longer a 4 mortgage limit. It is now 10 unless they have changed it back in the last few days.
danko Mike, is that 10 mortgage limit becoming standard?
Jonathan Well that is great I may be in buisness
danko or just certain lenders?
davido Mike - do you write the offer up before or after inspecting the property? I know that should be “after” the inspection, but with all these foreclosures I can spot a deal before even seeing the property. I write in the letter of intent that this is “contingent on inspection of the property by buyer” or something to that affect. What are you thoughts on offer before inspection?
alex Is that 10 mortgage limit per bank?
davido Mike, I hear the 4 mortgage limit is back.
cville then all these foreclosurers, many luxury homes, ouch, but dang it, ya can’t have everything this minute!!
davido After 4 mortgages, the bank can’t sell it to Fannie Mae or Freddie Mac. They have to keep it on the books.
Mike_Summey Jonathan, it took me a whole year of making offers before I bought my first property. Like you, I was young, had little cash and marginal credit. I just kept making offers that I could handle if one was accepted and finally I got one. In the beginning it is slow and often frustrating, but if you keep at it you will be successful.
oz davido i think some of that is the lenders requirement or limits
Mike_Summey alex, the 10 mortgage limit is the maximum you can have and still get a qualifying loan.
Jonathan I will stay at it thats for sure
Mike_Summey alex, all banks total.
alex thank you
danko Thanks for a great chat. See you all next week
Mike_Summey davido, that has been raised to 10.
cville my son is 24, only on his first “real” job 8 months and he qualified for 1st time
davido i see
cville only bad is he is paying mortgage insurance
Mike_Summey cville, my son was in the same situation.
cville as he did not have 10%
cville oops 20%
cville had 10%
Jonathan I dont have “income” for 2 years since i am self employed
cville so no W2, or taxes for yourself?
Mike_Summey cville, the 10% - 20% down payment only applies to loans that the bank or mortgage broker is going to sell. If the bank is going to keep it as a portfolio loan they can pretty much do what they want.
Jonathan w2 for last year not this one yet
davido mike - if you time please answer my quesiton about the letter of intent pre-inspection. otherwise, i’ll ask it next week.
mayorad Mike, mayorad here again - think I came up with the answer to my question … here goes …
cville 1 bank (suntrust) (and what we use?) wanted a co signer, the other did not require him to have one…. guess what he went with….
Jonathan well everyone I will talk to yall next week Thank YOU
mayorad Say, what is owed on the property is $30,000. The investor offers to buy the property for $30,000; the seller accepts. The investor refinances for $130,000 based on the value of the property. The seller gets his $30,000; the investor pockets $100,000 plus gets to keep the property. $100,000 cash in pocket. Sound good to you?
Mike_Summey davido, sorry I missed it. You can do it either way. I prefer to do my own inspection before making the offer so I don’t have to go back and renegotiate if I find things on the inspection. If you feel comfortable making offers contingent upon inspection, that’s fine too.
davido thanks mike.
sparky37 mayorad sounds like an awesome deal
cville no co signer….
davido i too prefer to inspect first, but the numbers are just so good on some of these, and i know the homes and areas well, that i feel OK making offers contingent on inspection.
Mike_Summey mayorad, sounds good to me.
davido thanks again for the time, mike.
davido have a good night everyone
mayorad Just want to make sure my understanding of “cash refinancing” is correct? Here many claims of cash-out refinancing, and I struggled to make sense of them.
cville haven’t been here in awhile, forgot how much fun it can be. Thanks Mike
mayorad davido - quick question for you: your recommended listing of questions to ask when hiring/evaluating a Property Management firm. I would greatly appreciate this information. Can I send you an e-mail?
Mike_Summey davido, you can make a lot more offers if you make them contingent upon inspection, but my experience is that all of the items you find when you inspect become new negotiations regardless of whether or not you have a signed letter of intent.
cville nite all
Mike_Summey Everyone, I’ve got to run also. See you next week. Goodnight.
sparky37 Night Mike
mayorad Thanks, Mike, for the input
davido bye
alex thanks mike, good nite, all
oz g/night all
mayorad Good night, everyone.
» Filed Under Chat Transcripts
Comments
Leave a Reply