Chat Transcript – December 15, 2008 – With BB&T Regional Bank President Michael Willett
Posted on December 16, 2008
Easy_Money_in_NC not done this before how does it work?
Mike_Summey Hi Mike & everyone else.
Mike_Summey We’re a bit early.
Mike_Willett Good evening Mike
Easy_Money_in_NC hello Mike…..everyone.
Mike_Summey Ken & Easy Money, you’ve got Mike to yourselves for a minute. If you have a question, now is the time to ask him.
Roger Dawson Hi everyone!
Mike_Summey Hi roger
Mike_Summey Hi Jn
Easy_Money_in_NC nothing specific. here to see how it works, hear about BB&T (looking at their stock) and curious as to lending for RE investors these days.
Ken Hey well I am kind of lurking tonight, I am interested in what others have to say.
Mike_Summey Mike, any comments on financing real estate investors?
Mike_Willett Mike, that’s a broad question but one that I get asked frequently.
Mike_Willett I think that it’s no secret that bank’s in general have been more restrictive in financing investment real estate.
Mike_Summey Hi Bob
Bob Carr Hi Mike
Mike_Willett Some have exited the business all together and some have limited their lending to non-speculative type of homes.
Ken Mike_willett how come the banks didn’t tighten up lending standards sooner. I hear different angles how this mess came to be
Mike_Summey I asked Mike earlier today about financing investment real estate and he told me what he just said. Not a lot of interest in financing speculative real estate. that a big difference in true investors.
Mike_Willett Ken, great question. I think it goes back to greed and the eternal hope that next year’s appreciation can solve a lot of problems.
Mike_Summey Hi Broadway & Joe
broadway Hello Mike, Roger and everyone
Joe from CT Hi Mike
Mike_Willett A bank’s assets are their loans and many banks were looking to grow assets.
Mike_Summey Hi gallegosllc
Easy_Money_in_NC Mike now that Freddie/Fannie have restricted investors to 4 loans and knowing that BBT holds most of their papaer, whats your advise for RE investors looking to pull cash out of existing properties (mortgaged and over 10 loans)
Ken Mike what is the best way to approach a bank about buying their bad assets “real estate”
gallegosllc@yahoo.com Hi Mike how are you?
Mike_Summey Everyone, lets address questions to MikeW & MikeS to keep the confusion down okay?
Mike_Summey Hi Joshua
Ken Mine was to mikes
Easy_Money_in_NC mine was to MW 
Ken no wait mikew
Ken sorry
Roger Dawson MikeW: What does BB&T stand for?
Mike_Willett Easy, that could be easier to say than to do. Banks have really clamped down on investors simply trying to pull money out of project. They may think this is another way to sell their property. I would always emphasize the cash flow that a property can support and use that to support your request.
Easy_Money_in_NC branch bank and trust
Roger Dawson Thanks
Mike_Summey Ken, I’ve found the best way to appraoch banks about their REOs is with cash and a quick closing. MikeW may add to that.
Joshua MikeW do you have any banking contacts in the Houston area you would recommend?
Ken I thought it was Best Bank and something that starts with a T
Mike_Willett Roger……..BB&T stands for Branch Banking & Trust Com
Mike_Willett Our founder’s name in 1872 was Adphehus Branch of Wilson, NC
Mike_Willett Most people think it is because of Branch Banking
gallegosllc@yahoo.com Mike S. Whats the best way to get CASH??
Mike_Willett And Ken, our slogan is the “Best Bank in Town.”
Easy_Money_in_NC MW- I hold my properties personally and they now cash flow well (all are on 30 year fixed). Are you saying that BBT would look at a refi should I approach them (Im not looking for commitment from you, just a question in generalities)
gallegosllc@yahoo.com Hi Roger! Love your book!!
Mike_Summey gallego, the only sure way I know to get cash is to save it over time or let your assets grow until you can use them to get cash. Other ways are usually speculations that are risky ventures.
Roger Dawson Thanks Gallegoslic, you made my day!
Ken mikew did you see my last question about the best way to approach a bank to buy any real esstate they have
Mike_Willett Easy, we would look at a request to refi. Depends on the nature and use of proceeds. Just spoke with someone today who was interested in consoldiating and eliminating a monthly payment.
Mike_Willett Sorry Ken, new to this and typing as fast as I can.
Ken its ok I get lost sometimes as well
Mike_Summey MikeW, I told you this would improve your typing.
Mike_Willett Every bank has an OREO (Other real estate department) that handles foreclosed property.
gallegosllc@yahoo.com What if one is not in a cash position. HOw would you get cash?? I am talking about buying homes in todays market.
Mike_Willett Our bank actually publishes it on our web site.
Mike_Willett Best way is to contact the OREO area or Special Assets area. Every bank has one.
gallegosllc@yahoo.com Roger. Good, they do work well!! Thanks
gallegosllc@yahoo.com Mike S. I guess my questions is, how did you start buying home before you made your millions is real estate?
Easy_Money_in_NC MW – to be honest my request to refi would be to put it right back in earning interest (wash out against interest paid and be more liquid should need be). Would BBT look at 30 year for all of mine or be treated like a commercial 20 year (again allQ’s asked in general terms)?
Ken Mikew has lending to businesses tighten up any? If so when do you see that relaxing
Joshua MikeW do you have any banking contacts in the Houston area you would recommend for the type of investing Mike does?
Mike_Willett They are coming in fast now
Mike_Summey gallego, many people would like to buy properties in today’s market, but they don’t have cash. That’s one reason I’ve been advocating building cash for the past few years. With the red hot market of a couple of years ago, I knew it was only a matter of time until we got into a period like the one we are currently in.
Mike_Willett Easy, 20 years commercial only, 30 years would be limited to secondary market. Depending on age and condition of property, could be limited to 15.
Mike_Willett Ken, lending has definitely tightened up, but some banks still have money to lend.
Mike_Willett They have to be selected to make sure they are not financing other lenders rejects.
Mike_Willett We used to refer to this as a dumber lender than you in our circles.
gallegosllc@yahoo.com MikeS. That does make sense for investors in that position!! But again how does one start off, just getting into this business?
Ken MikeS i was reading an article about Warren Buffetts poeple getting mad at hime 3 years ago because he wasn’t buying and saveing his money. I bet they are thankful now
Mike_Summey Everyone, my experience is that banks are looking to make loans, but they only want to make ones the are sure will get repaid. The days of no doc liar loans are over.
Easy_Money_in_NC hmm, 20 year numbers don’t work. Would BBT originate the loan (s)for the secondary market to purchase?
Mike_Willett Joshua, no contacts in the Houston Area. Mike S. is the best reference I can give for real estate investment. I have a high degree of trust and confidence in what he does.
Mike_Summey gallego, the way I started was very…very…very slowly. I bought one house my first year, two my second, four my third and gradually build equity. I don’t know of a quick way to bu8ild wealth.
Ken gallegosllc what helped me was knowing were my money was going. I started to save. Read Mikes last article. it’s an up hill climb forsure.
Mike_Willett Easy, we would but we are dependent upon their underwriting guidelines
gallegosllc@yahoo.com Roger. What are your thoughts on what I’m asking Mike S?
Mike_Summey Hi krspack
krspack1 Hey Mike
Mike_Summey Hi mayor
krspack1 Finally could make it tonight
mayorad Hi there, Mike.
mayorad Hi, Roger.
gallegosllc@yahoo.com Mike S. What is great! I’m not asking about growing quick wealth, because I know that is not what you teach. I am just wanting to get a good idea of how you started and how you would start in todays weird market and financing.
Mike_Summey MikeW is a very astute banker. He won’t just tell you what you want to hear. He’ll give you sound advice that will work over time. He, like me, understands that there is a big difference between speculating and investing in real estate.
gallegosllc@yahoo.com Mike S. Sorry I ment to say “that is great”!!
krspack1 Hey Mike. I appreciate the chats. I don’t often make them, but read the transcripts every week
Easy_Money_in_NC MW – so what you’re saying is we’d be locked into Fannie Freddie guidelines? I can’t seem to find anyone that will fund me now that I am over 10 loans without paying all but 4 off…..not possible.
Roger Dawson Gellegoslic: in this economy, it’s very important to have cash reserves so that you can weather any storm. If you’re low on liquid assetts, right now would be a good time to be cautious.
Ken mikew what are the odds of buying a property directly from BB&T before it goes to a realitor? I try to avoid Realtors like the plague.
gallegosllc@yahoo.com Thanks Roger.
krspack1 Mike/Roger: do you have any information or recommend any books/material for investing in real estate inside your IRA
Mike_Willett Easy, that will be a challenge. What I would recommend is to look for properties where you can finance for a shorter period of time. They’re out there, the savy investors find them.
Joe from CT Mike W Are you seeing people appling for loans in your bank?Or is it stagnant?
gallegosllc@yahoo.com Mike S. was that responce to me or Mike W?
Mike_Willett Ken, it is good if you can identify it early. One way is to stay in touch with a local banker and let him/her know what you are interested in and where. They can let you know if something comes up.
krspack1 Mike W: How do you handle mortgages for an IRA that is investing in real estate?
Joe from CT krspack1 How to invest in real estate in your ira by hugh bromma
Mike_Summey gallego, from the very beginning, I put all of my excess cash inot an account and gradually built cash reserves. The better my cash reserves became the easier it was to get financing. I lived off my salary and let all my real estate profits grow for 20 years before I tapped into them.
Mike_Summey gallego, that was for everyone.
Mike_Willett Joe, we are growing commercial loans at a rate of 12% per annum. We are the oldest bank in the Carolinas with money to lend. While some business is off, there are opportunities out there.
gallegosllc@yahoo.com Sounds good!!! Thank you.
Mike_Summey krspack, I don’t know enough about using an IRA to answer that question. Maybe MikeW or someone else does.
krspack1 Thanks Joe from CT
Joshua MikeW, I have chatted a lot with MikeS about fixed payment, floating rate payment programs. For this type of financing what interest rate do you see banks “setting” the initial payment at currently? Prime, prime+0.5, etc?
Easy_Money_in_NC MW – I actually build my rentals (all but a few – have a C lic.) and am “in” them “right”. Having built up even more equity over time, I’d simply like to pull some out, not looking for any more investments of the RE type right now, actually looking at playing in stocks a little (been watching BBT for a while now ). Am I out of luck? Any thoughts?
Joe from CT krspack1 its a great book my friend it will help you also go the equity trust website there info there 2
Mike_Willett krspack, we could not handle that request. IRA’s is something we can not lend to or the asset on. Reason being is this could be messing in the event of default and a tax consequence was triggered.
broadway MikeW, how is your bank handling loan renewals in todays market with values being diluted? If there is someone that had 10-20% equity in property 3 years ago, that may have vanished.
gallegosllc@yahoo.com Mike S. About how long did it take for you to feel confident about being a full time investor?
Joe from CT Mike_Willett What other loans do you offer?Business,maybe residential?
Mike_Summey MikeW, I don’t believe an IRA can borrow money. Am I correct?
krspack1 Mike S: I was going to ask you about an inspection checklist, but noticed it on your website today. In addition to the one on your website, are there any other documents you use when you are physically inspecting / evaluating a home
Mike_Willett Joshua, your question is tricky. Depends on how long before you reset the payment on a variable interest rate. The longer you go without resetting the greater the spread.
krspack1 Mike W: Is not loaning to IRAs industry wide or just BB&T specific
Joshua MikeW, is 5 yrs possible? I think that’s what MikeS does on most.
Mike_Summey gallego, I did not consider myself a fulltime investor until I retired from the business world about 25 years after buying my first investment property. For me, real estate investing was a weekend hobby.
Mike_Summey Hi wps
wps good evening to you too
Mike_Willett Easy, let me hit the stock question in a minute, Broadway, this is a real challenge, if we have a loan already on the books and it’s performing we simply do not do anything but keep the payments on the previously agreed amortization schedule. If something is happening like release of collateral or cash out we have to look at current value.
Mike_Willett Joe, we offer all loans from consumer to corporate.
gallegosllc@yahoo.com Mike S. OK!! Thanks for the info.
broadway Thanks MikeW. I’ve got a commercial line up for renewal this month and I’ve been concerned on the equity in the property. Renewals were not ever a problem before but now, the bank is doing appraisals.
Mike_Willett Mike S. is right on the IRA question. While I’m not going to say no bank would do it, it would be a nightmare for a credit administrator
broadway MikeW, what you say makes perfect sense.
mayorad krspack1 – As Joe stated, and it is my understanding, that you can use a custodian/administrator/agent, such as Equity Trust (www.trustetc.com) to help you acquire property through a self-directed IRA. But I would look into the literature that they provide, and even look into the book he references.
Mike_Summey MikeW, I’ve tried to explain to people in past chat how using a fixed payment floating rate loan results in sharing the risks with the bank and as a result I believe that the investor pays less interest over time. As you know, the loans I have with your bank are structured that way and we usually set the payments based on .5 – 1.5% above the prevailing rate at the time depending on whether we feel the rates are going to be going up or down.
Mike_Summey Hi Kel
gallegosllc@yahoo.com Mike S. I work with banks and buy homes on short sales! But I am going to combind that approach with yours and Rogers teachings for long term wealth!! What are your thoughts on that?
Kel Hello.
krspack1 Thanks Mayorad
mayorad No problem. Good luck.
Easy_Money_in_NC when we get to the issue of BBT stock, was just curious if you could comment on BBT holding a large lot loan portfolio that I heard may affect the company’s net numbers should those loans default and be written off, any comments?
mayorad Joe from CT, side question for you coming up.
Mike_Summey gallego, use any method you want to buy the properties, just be sure you buy them right. If you use our Offer Generator software to calculate your offers you will make wholesale purchases and the purchases will cash flow.
Mike_Summey Hi James
Mike_Willett There is no set rule of thumb on setting payments above the variable rate. The bank just does not want a negative amortization or one that will stretch the period beyond the agreed upon plan. Some banks have the ability to automatically readjust every six months to a year.
krspack1 Mike S / Roger: I was going to ask you about an inspection checklist, but noticed it on your website today. In addition to the one on your website, are there any other documents you use when you are physically inspecting / evaluating a home
wps Mike S what do you mean by using a fixed payment floating rate loan that results in sharing the risks with the bank
Mike_Willett Easy, BB&T is a large real estate lender and we have made a number of lot loans.
krspack1 Mike W: Is not loaning to IRAs industry wide or just BB&T specific
Mike_Willett We have been a conservative lender meaning that we used adequate advance rates and did our homework on underwriting the borrowers ability to pay.
gallegosllc@yahoo.com Mike S. Good! I just invested into that program. Now I am just getting use to using the software. So, in the next few chats I will be asking a lot of questions.
Mike_Summey krspack, I use the form on the website. It is ther for everyone to use for FREE. Just bring it up and print as many copies as you want. I use it on every purchase and my property managers use it as a move-in/move-out form too.
krspack1 Thanks Mike
Mike_Willett Now with that being said, you still have things that do not go as planned and while our problem loans have increased to a high level, we are still one of the cleanest in the industry.
gallegosllc@yahoo.com MikeS. I have found that to be a great way to buy homes at very good whole sales prices!!
Mike_Willett krspack, can answer your question with 100% confidence but would say the vast majortity of commercial banks would not. You may have a trust/investment department that could assist you.
gallegosllc@yahoo.com Mike S. With todays market, how are you finding your opportunities?
Easy_Money_in_NC very good, thats what I want to hear. I was cautioned recently by someone who follows BBT and Cooperative closely and warned about a large portfolio that may not be in the best shape, guess all is relative.
gallegosllc@yahoo.com Mike S. In real estate that is. Sorry.
Mike_Willett Easy, I’m not saying we don’t have our challenges but we still have the lowest past dues, non-performing and chargeoffs in our peer group.
Mike_Summey gallego, I’ve been doing this so long that many people know I’m an investor. I have banks and builders that call me every week to look at properties.
krspack1 Mike W: Are banks willing to loan above 80% of purchase price now for clients with good credit… even to the point of utilizing a second to cover the difference between the first and the purchase price
Easy_Money_in_NC hmm, bravo! any “callanges” down in Wilmington I may need to know about 
Mike_Willett krspack; banks are holding to their equity requirements in general now. However you could consider other assets in lieu of equity like a second
Kel Mike, I think I am about to give up on forclosures in my area. I made an offer last week that was 91% of the banks initial price. No contingencies and would close in 1 week. They lowered their price 2,000 then they were done. It was Countrywide.
Mike_Willett Easy, good friend of mine is the President of our “Southeast” region. He tells me that there is no shortage of opportunities on the coast.
gallegosllc@yahoo.com Mike S. What has been your best source out of all you great leads?
Easy_Money_in_NC reeeally, can you divulge his name here?
krspack1 Mike W: I am finding that some banks are not porfolioing their loans right now. Is this just an isolated event or is it more widespread right now
Mike_Willett Kel, 91% and the ability to close fast is worthy of more discussion. maybe Countrywide thinks they have some marketable property.
Mike_Summey krspack, I’ll answer your question on financing above 80%. If a bank will loan 80% of appraised value to someone who pay the appraised price, they will loan 100% to someone who can negotiate a purchase at 60%-70% of legitimate appraised value. What they want to see is cash flow coverage and it is usually very marginal at 80% of appraised value.
Roger Dawson MikeW: I looked at your website, but couldn’t find REOs. What do you call that department?
Mike_Willett Easy, I would rather not on here.
Mike_Summey Hi samandy
Ken Roger I had to type ” real estate” into the search area
Ken I think it came up the second search down
krspack1 Thanks Mike. Understood. I was more curious about purchase price instead of appraised value.
samandy57 hi all
Mike_Willett krspack, can’t answer that question for other banks. I would think if they are making loans they would have to portfolio them simply because there are fewer places to send them. This could be their answer on not making loans.
Roger Dawson Thanks Ken
Easy_Money_in_NC I understand, maybe you could email it to me? itbracer45@ec.rr.com
Ken Kel I that is why I don’t like dealing with Realtors if that is what you dealt with. I don’t trust some of them
Mike_Summey Ken, I deal with Realtors all the time. Some are a pain, but by and large I’d rather have a Realtor in the deal handling all the details than try to do it myself.
Mike_Summey Hi sharon
sharon Hello
Kel Ken How do you mean? My understanding is that the listing realtor inputs the offer and uploads it to Countrywides site and they wait for a response. I have been told that they don’t even speak to each other. It is all electronic. Which does make it difficult to negotiate.
Mike_Willett roger, go to our home page and click on “Site Map”. If you scroll to the bottom of the page you will see bank owned properties.
gallegosllc@yahoo.com Mike S. Thanks for all your help and I will come with some questions next week about your offer generator!!
Roger Dawson Thanks MikeW
Mike_Willett Easy, I will e-mail you your name
broadway Mike and Roger, thanks for the chat tonight. Gotta run. Mike W. great job typeing tonight too. Thanks for allowing us to pick your brain!!!
Ken I just don’t trust them. It also seems that the banks or other enitities don’t budge on the price for months
broadway good night to all. Hope everyone has a great holiday season!!!
krspack1 Mike S: Reread your statement “60%-70% of legitimate appraised value” . Just curious if banks are getting more stringent / conservative with their view on appraisals
Mike_Summey This will be our last chat until the second Monday in January 2009. We’re going to take a well needed break.
Mike_Summey MikeW what is BB&T’s position about financing 60-70% of legitimate appraised value if it means financing 100% of the purchase?
Roger Dawson It seems to me that banks price their REO properties very realistically. A home that sold down the road from me for $590K, the bank took back and put it on the market for $349K. It sold within a week for $325K.
gallegosllc@yahoo.com Sounds good!! I will make a list of questions!! By to all.
Easy_Money_in_NC thanks MW I’ll look for it. Can I use your name?
Joshua MikeS, do you use a realtor to represent you as the buyer or do you go directly to the listing agent for REO properties? How do you negotiate with the bank when most offers are submitted electronically?
Mike_Willett Easy, sure.
Kel Roger, the one I tried to get from Countrywide was about 10,000 below market to begin with but there was another non REO right across the street at the same price. I was surprised they would not come down 9% from their asking price. I thought that would have been a no-brainer in this market.
Mike_Summey Joshua, I have several banks that I deal with directly on their foreclosures. If I’m making offers through other Realtors, I usually use a buyers broker to represent me.
Mike_Willett Mike S. the answer is that we like and prefer to see some equity in every deal. So you will need to address why a bank would deviate. Everyone always says that the property is worth more than what they are paying. You will need to illustrate why.
Roger Dawson We get asked a lot if real estate agents are working for the seller or the buyer. Realistically, they are working for themselves. If they can put pressure on a bank to accept a low offer, they will do it to earn the commission. Especially these days when they are starving.
krspack1 Mike W: Followup on Mike S question. What if the property cash flows out of the block
Mike_Summey MikeW, that’s one reason why I try to buy for cash and get financing later. Then I don’t have to deal with the percentage of purchase price issue. Then the only issue is cash flow and appraised value.
Joshua MikeS , do you buy foreclosures with a buyers broker or only directly with the bank on those? My understanding is the very large banks only list them with realtors?
Mike_Willett krspack, this is a tricky question. Someone with a proven track record and other sources of repayment, we would have more of a tendency to work with this. Someone just beginning and not other source would need some downpayment.
Mike_Willett I knew that. lol
krspack1 fair enough
Mike_Willett Mike s you are a savy investor and handler of banks. I read your book
Mike_Willett that’s a compliment by the way
krspack1 Mike / Roger: Thank you for all you do. Merry Christmas
krspack1 Mike W: Thank you for taking the time tonight
Ken I’m out of here guys and gals, Thanks Mike_ willett for your answers hope to see you back here in the near future. see you next year
Roger Dawson MikeW: thank you so much for your participation tonight. You answered questions in depth and we appreciate it.
Mike_Willett Thanks, I enjoyed it. Happy holidays Krspack
Mike_Willett Thanks roger
Mike_Summey Joshua, you are correct. The large banks usually work through Realtors, but small local or regional banks often sell their own properties and you can deal directly with them. Buying from the larger banks is much less personal and often more difficult. I once made an offer to a large bank and it was rejected. They later took the property to auction and I bought it for $6,000 less than what I had offerred 6 months earlier.
Easy_Money_in_NC MW – is it possible to use non income producing properties with no encomberances against it for collaterol?
Mike_Willett Mike, sometimes large banks can not negotiate until after they foreclose because they do not technically own the property.
Mike_Willett The time to catch them is right after acquisition before they list.
Mike_Summey MikeW, on the property I discussed earlier, it was already bank owned. They were just too stubbor to take my offer.
Mike_Willett Easy, it is but more restrictive. Most undeveloped land with no supporting income requires a 65% loan to value.
Joe from CT I just want to say thank you roger and mike for these chats and great info and great guests have a Merry Christmas and see you in the new yr!
Mike_Willett Mike S. some banks may turn into REIT’s before it’s over.
Mike_Summey MikeW, that seems a bit liberal for raw land. Most of the banks I deal with will only loan 50%.
Kel Mike_Summey I think that has been my difficulty recently. Too Stubborn
Easy_Money_in_NC 65% LTV on the property being aquired?
Mike_Willett Mike S. 65% is the maximum by our policy
Mike_Summey I told Mike_Willett he was only obligated to stay with us until 9:00 PM and its about that time.
Joshua MikeS/Roger, thanks for all your help and advice in ’08. Happy Holidays to you and yours!
wps Merry Christmas and a Happy New Year to all
Mike_Willett No undeveloped raw land is a 65% maximum loan to value. Think about it with no income to generate from this you have to float the note on your own dime.
Mike_Summey MikeW I want to personally thank you for your participation. I know everyone feels the same way.
Mike_Willett Excuse me that sounds like car financing.
wps DITTO
Mike_Summey I hope you will join us again next year.
Mike_Willett Mike S. had a great time tonight, hope you invite me back
Easy_Money_in_NC Got it, thanks. and thats 65% based on appraisal or tax value?
Joshua Thanks MikeW for tonight
Roger Dawson Merry Christmas everyone!
Mike_Willett Most likely appraisal. some banks take the more conservative of the two.
Kel yes thanks Mike W, Mike S. and Roger. this is always great.
Mike_Willett Thanks everyone
mayorad Mike S./Roger/Mike W. – thanks to all for this chat session. Learned a few key pointers there. Happy holidays to you all! Look forward to more chats in ’09.
Mike_Summey I hope each of you has a very Merr Christmas and Happy New year. We’ll see you here next year.
Easy_Money_in_NC thanks Mike W enjoyed it. I’ll look forward to your email. Merry Xmas
Mike_Willett Mike S. if you are finished with me I’m going to head out.
Mike_Willett You should have it now easy
Mike_Summey Goodnight Mike! Thanks for joining us.
Mike_Willett good night everyone
Easy_Money_in_NC good nite
krspack1 Thanks again Mike. Have a great holiday
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