Chat Transcript – November 3, 2008
Posted on November 5, 2008
Mike_Summey Hi mayor
mayorad Hi, Mike – where is everybody?
Mike_Summey mayor, I don’t know. I had a problem getting in myself. How about you?
mayorad I was on before with “hawkeye” but since he didn’t find anybody, he decided to opt out.
mayorad Actually, I’ve been kicked out 2x but finally got through okay.
Mike_Summey I had to change computers in order to get in.
Mike_Summey There’s Roger Dawson
Mike_Summey Roger, did you have any problem getting into the chat?
Roger Dawson Hi Mike and Mayorad! Sorry to be late.
Roger Dawson No, I didn’t Mike, it came right through
mayorad Ah ha. Interesting. Well,you let me know if/when you exit early. Don’t want lil ole me tying you 2 up.
Mike_Summey I think everyone must be working on the election.
mayorad Hi, Roger.
Roger Dawson Every body must be getting out the vote.
mayorad Possible, I guess. CT’s election polls are tomorrow.
Roger Dawson MIke, is Elizabeth Dole going to prevail?
Mike_Summey We may have had others in earlier like hawkeye who got out thinking we wouldn’t be here.
Mike_Summey Roger, I’m not sure. It depends on which poll you believe.
Mike_Summey mayor, tomorrow’s poll is the only one that counts.
Roger Dawson The pundits are saying that if the Republicans can’t hold NC, it’s going to be a landslide.
mayorad Yes, agreed there, Mike.
Mike_Summey I rememer last election when Bush was down 6 points in the polls on election morning.
Mike_Summey I will be looking at 3 houses to buy tomorrow.
Roger Dawson Are they bank owned?
Mike_Summey And if I can make a deal on them, there may be 14 more from the same seller.
Mike_Summey Roger, no, these are brand new spec homes a builder has not been able to sell & is now willing to move them at a fire sale price.
Mike_Summey We’ll find out tomorrow whether his idea of a fire sale and mine are the same.
mayorad Well, mind if I ask a couple of questions; we could limit this to 1/2 an hour if you 2 want to cut out early.
Roger Dawson I would bet that they’re not at this point.
Mike_Summey mayor, that’s what we’re here for. go ahead with your questions.
mayorad Great – 1st, any opinion on Ken McElroy’s book on Property Management? I’m a big fan of his books and I’ve been delighted to see him on your chat room twice. Your thoughts?
Mike_Summey Roger, these houses were for sale at $144,900. He indicated he might sell in the low 70s
Roger Dawson I have had a chance to read Ken’s books, so I can’t say.
Mike_Summey mayor, in talking with Ken outside the chats, he seems to know hi stuff. One thing I’ve learned over the years is that nearly everyone has some good ideas. Learning to pick out the one that work for you is the challenge.
Mike_Summey Ken sent me his lst two books, but I haven’t gotten to them yet.
mayorad Guess I’ll submit my 2nd question while I’m at it: I have a friend who has bought a few of single families in NC. Don’t know where, though. She said that she’s had a heck of time finding quality tenants and property managers. 1, 2 tips on how to make single families work (especially renting them)?
mayorad Speaking of property managers, Roger/Mike, do you both use them, and what’s your secret for finding a good one (reliable, proactive, communicative, etc.)?
Roger Dawson The key of course, is to buy them right. New investors sometimes think that they can buy at retail value and make it work. Then when they lose a tenant or have to do some repairs, they don’t have the capital to handle it right.
mayorad Thanks for the answer on my book question. Yes, it is important to read through and try to find the gold nugget from the dirt. Agreed.
Mike_Summey mayor, every market is different. In Asheville where I live and in Anderson, SC where I also invest, I have found good property managers and they do a great job. In some smaller markets in NC there may not be anyone who specializes in management, but you can usually find a good real estate and trian him/her.
Roger Dawson I found that finding an honest property manager in LA was a big challenge.
Roger Dawson Hi Rolyn
mayorad Gotcha, Roger on buying. Makes sense.
Mike_Summey When I started investing, I used a real estate agent who also sold properties to manage. Once I got several properties I learned that he was not putting the effort I needed into management so I changed to a professional management company.
Roger Dawson Hi Sparky
Mike_Summey Hi Rolyn & Sparky
RolynProperties Thanks Roger for the welcome.
mayorad Sounds good, Mike. Thanks.
sparky37 Hi Roger & Mike
Mike_Summey Mayor, today I use 5 management companies.
mayorad Roger, what type of challenges did you find with property managers in LA?
sparky37 very cozy in here tonight 
RolynProperties I’m on the west coast, it’s a little difficult to get to the chats on easter time zones.
Mike_Summey sparky, I had problems getting into the chat earlier & others may have also.
Mike_Summey Hi Scott
mayorad Wow, Mike! Did you ever think of starting your own management company and just paying them a salary (kind of to keep it all in the family)?
scottR Hi Mike and all..how goes it?
Mike_Summey mayor, no I never wanted to own a management company. That is a business and I’m an investor.
Mike_Summey Hi Penny
Roger Dawson It’s easy to find a property manager to collect rents from good tenants for you. It’s hard when you have to evict a tenant or work to collect rents from poor tenants.
Penny Hi Mike.
mayorad Yes, makes sense. Logical. Thanks, Mike.
Roger Dawson Hi Penny
sparky37 Mike, I think people are just nervous to do anything
Penny Hi Roger. and everyone
Mike_Summey sparky, you are right. It’s been that way as long as I’ve been investing.
RolynProperties I want to be like Mike when I grow up =)
Mike_Summey sparky, as long as I’ve been investing, people have told me it wouldn’t work, that you couldn’t find deal that would work.
scottR Roger, I was listening to one of your cd’s today. I like to pull one out every few weeks and just let it play when I’m in the car…GREAT stuff!
mayorad You just defied the naysayers, Mike. That’s what I’m trying to do myself.
Roger Dawson Mayorade: You don’t want a manager who is also an investor. They would always rent their properties first. So Mike starting a manangement company wouldn’t work.
sparky37 Mike, I see and talk to people everyday who are just in a state of being frozen by fear
Roger Dawson Thanks Scott! You made my day!
Mike_Summey sparky, when I bought my first property, it only broke even on cash flow. Today it is paid off and rents for $950 per month.
Mike_Summey sparky, it takes two things…PATIENCE AND PERSISTENCE!
scottR I just purchased Mike’s Offer Generator and I have some questions…
mayorad Interesting point there, Roger. I’ve had a couple of discussions with property managers in my target market, and one of the questions that I’ll ask is if they own. One straight up answered my question (which I sincerely appreciated) but it did make me wonder about non-compete situations (especially for tenants and vacant units).
sparky37 Mike, your way is definately a proven winner, most people just refuse to start.
Mike_Summey Go ahead Scott.
sparky37 Mike it’s called analysis paralaysis
Mike_Summey sparky, no it “paralysis of analysis.” 
scottR I know everyone’s tolerance and ROI expecancy are going to vary. I like the way the Software breaks the componants of the deal up and asks for ROI on specific things like repairs, closing costs, etc. I want to get an idea of a place to start as a new investor.
sparky37 Mike, I was close but I was analyzing it
Mike_Summey One of the most anxious times I’ve had was when I bought my first investment property. I had all the worries everyone else has, but I always lived by the philosophy “Make a decision and then make it work.”
sparky37 Mike, I have been looking at a good number of deals lately but I am not finding anything worthwhile that break even or be positive cas flow.
Mike_Summey scott, you start with “your” comfort level. If you have tons of cash reserves, you may take bigger risks than someonewith no cash reserves. I started with the commitment that I would only make offers that would work for me and never worried about asking prices, appraisals or whatproblems the seller had. After all, I was the one who would have to pay for it after I bought it.
Roger Dawson Sparky, where are you located?
sparky37 Roger, northern NJ
Roger Dawson Is the Wall street meltdown affecting rental rates?
Mike_Summey sparky, all properties will break even or cash flow at some combination of price and terms. The art is finding a combination that a seller will agree to. That’s what the Offer Generator does, it help you come up with all the different scenarios to offer a buyer.
sparky37 Rentals are actually going down because so many are on market
Mike_Summey sparky, the Offer Generator lets you use the rents to back into a purchase offer.
sparky37 Mike, I know I have been saying I will order and just have not. Is it a download or a cd?
Mike_Summey Hi Ed
Roger Dawson In Southern California it’s very hard to buy property that will break even with 20% down. So you have to put more money down to get cash flow. If I had put 50% down on a fourflex (four units) in Beverly Hills 20 years ago, I have income of $16,000 a month today.
Mike_Summey sparky, it is on CD. You have to order it from our online store.
Ed Hi Mike
scottR Our IRA has been doing some great deals, but we personally have to build our cash so we can benefit from the investments now. Our personal goals include long hold income producing property, but our IRA is getting a quicker growth by buying cash and re-selling post or pre repair.
sparky37 Mike, will do tomorrow
scottR It’s a really cool program Sparky
Roger Dawson Scott, we see your point but remember that our philosophy is that wealth is not how much real estate you own, it’s how much cash flow you can generate. Wealth is an income stream.
sparky37 Mike, I am finding sellers with no equity, so they can not really deal
Mike_Summey scott, you can always turn quick cash by buying and selling, but once you sell you have capped your profit and you have to do it all over again to make money. Buying right and renting is a slow and steady way to build wealth the can continue paying you the rest of your life.
Mike_Summey sparky, look for other sellers.
Roger Dawson Sparky, you should have the sellers take your offer to their lenders and see if they’ll do a short sale.
sparky37 Mike very far and very few between here
Mike_Summey About half of all real estate in America is owned free and clear. many of these people are looking to convert real estate equities into retirement income. That’s just one source.
scottR That’s EXACTLY what i want to do…buy and hold, pay them off and enjoy the wealth. The reason I’ve got the IRA doing the shorter term thing is because of the restrictions in obtaining leverage with it.
sparky37 Roger, tried a few short sale offers all rejected with no comeback offer
sparky37 Mike, trying to use your rule of buy close to home
sparky37 but very expensive
Mike_Summey sparky, I’ve never had much luck with short sales either. I have found thebest deals buying directly from the banks after they own the properties.
sparky37 Mike, that is what I need to do, how do you suggest approaching? Most banks by me are majors with retail help
Mike_Summey sparky, in some areas you need t move further out. You can accomplish almost the same thing by finding a good area and dealing within a 10 mile radius of it. I have another large block of properties that are about 100 miles away, but they are all withing 10miles of each other. I can go for a visit and see them all in a few hours.
Mike_Summey sparky, once again, buying from banks is only one option. Think about it…every property is different and every seller is different, so there could theoretically be as many different ways to buy properties as there are combinations of properties and people.
sparky37 Mike I am looking 2hrs away but think it might be too far
Mike_Summey There are many factors that create motivated sellers; retirement, job loss, job transfer, illness, accident, divorce, etc. Look for the opportunities.
sparky37 Mike, it will be interesting to see what happens after tomorrow
Mike_Summey sparky, the ones I’m going to look at tomorrow may be deals because the builder is trying to avoid bankruptcy and I have the ability to buy for cash and clsoe quickly. Hopefully we will be able to come to a meeting of the minds. I won’t try to take advantage of his situation, but I won’t buy unless we can structure a deal that will cash flowright from the start.
Mike_Summey Any prediction on the election?
sparky37 I predict trouble
mayorad Mike, you indicated earlier that you have over 4 property management companies that you hire. Can you provide a few examples of the criteria that you ask of them? Do they need to be certified? If so, with whom? Do they need to have a certain number of years under their belt?
Mike_Summey mayor, do you have our real estate book?
Roger Dawson I think that Obama will get 350 electoral votes, and the Dems will end up with 60 senate votes and a gain of 35 in the house. In other words a landslide.
mayorad I have one of them. Not all. Which of your books should I get to address my prop management questions?
Mike_Summey mayor, Chapter 6 is “Finding a Property Manager.” There’s too many items to try to fit into a chat.
Mike_Summey mayor, Weekend Millionaire’s Secrets to Investing in Real Estate.
mayorad Answered my next question on name of the book. Thanks!
Mike_Summey Roger, I think the election si going to be a surprise to everyone.
Roger Dawson Mayorad, I think that the first one (WM secrets to investing in RE) will answer most of your questions. But all four books would be less than $60 so it’s fraction of what you’ll get from them.
sparky37 Mike I hope your right
mayorad Thanks, Mike.
Mike_Summey mayor, it is available in bookstore everywhere, on Amazon.com or if you order from our online store the book you get will be autographed and will include a $1,000,000 bill to use as a bookmark.
Mike_Summey I think there are factors that the polls do not reflect.
Mike_Summey At least on the presidential race.
mayorad $1 mill bill as a bookmark?!? I’ll go buy a few places with that bill!
sparky37 Goodnight Mike Roger and all see you next week
mayorad All kidding aside .. thanks, Mike.
Mike_Summey mayor, they are very authentic looking. I’ve had lots of fun with them.
Roger Dawson Good night sparky
Mike_Summey I’m going to have to cut out right at 9:00. I have to go to the hospital and pick up my brother.
Roger Dawson I have to leave too, but you can all stay and chat together if you want.
Mike_Summey He is a builder and he accidentally shot himself in the knee joint with a nailgun last Friday. He has been in the hospital ever since. He just called during the chat to let me know they are going to release him tonight if he can get a ride home.
mayorad Thanks for all of your earlier answers, Mike and Roger. Appreciate your time and advice.
Roger Dawson Give him my best, Mike.
Mike_Summey Whatever your preference, don’t forget to go vote tomorrow.
Mike_Summey I’ll see you next week.
Mike_Summey goodnigh
mayorad Take care there, Mike, and everyone. Have a good one.
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