Chat Transcript – March 9, 2009
Posted on March 10, 2009
Mike_Summey Hi Lon!
Lon Hi Mike.
Mike_Summey Looks like we’ve got things to ourselves for a while.
Mike_Summey Well, we did.
Lon We did, let the party begin!
Mike_Summey Hi Roger & gpllc
Roger Dawson Good evening everyone!
Lon Hi Roger
gpllc evening all
Mike_Summey Anyone got any good news?
Roger Dawson The sun is shining in Los Angeles. It’s a beautiful evening!
Lon The snow is gone here in SC.
Mike_Summey My youngest son Matt may be joining us in a little while. He is starting get very active in investing.
Mike_Summey HI Kel
Roger Dawson Hi Kel
Kel Hi. Good to be back.
Mike_Summey Any questions before we get a bunch in the chat?
Kel Are you still finding lots of deals?
Mike_Summey I’m going to wait a while before I discuss it, but I’m going to give you a novel way to buy investment properties a little later in the chat.
Mike_Summey Hi caponelou
Mike_Summey caponelou, do you have a short name we can use in the chat?
Mike_Summey Maybe just cap
Roger Dawson This is a terrific time to buy real estate. In some parts of Southern California you buy a nice 3 bedroom house for $99,000 that would have been $350,000 three years ago.
Lon Roger, that’s normal price in the rest of the country.
Mike_Summey Roger, the deals are expanding exponentially all over the country.
Kel Mike, when your property managers inspect a property when the lease expires, do they require all repairs be made before they allow the tenants to renew. I get the feeling mine may be letting some things slide so they don’t have to show it bunch again. easier to just let them renew.
sparky37 Hi Mike & Roger
Roger Dawson Yes, Lon, but rents are much higher here. That $99,000 property would rent for $1500. That means cash flow which has been impossible in Southern California before.
Mike_Summey Hi sparky
Mike_Summey Hi wrmotorsports & danko
Kel Roger, are you still buying rentals or doing something else now?
danko Hi Mike. Hi Roger. Hi Everyone
wrmotorsports Hello Mike
sparky37 Mike, what is your latest strategy to getting properties?
Mike_Summey Kel, I have my managers do an inspection with the tenant when they move in. Then do a follow up walk through after 60-90 days, then a full inspection prior to renewing the lease.
Mike_Summey Hi malpaso
Roger Dawson Kel, I’m focussed on my speaking now, but my son is getting into investing.
Mike_Summey Hi steven & Joshua
malpaso2001 hey Mike
Joshua Hi Mike!
Mike_Summey sparky, I’ll discuss a new strategy I’ve been using a little later when we have more people.
sparky37 ok
Mike_Summey Let’s get your questions answered before I discuss the new strategy.
stevenomalley@aol.com 
sparky37 Mike, how is Carolina prices now?
Kel Mike, one of my property managers has said they have had to lower rents lately do to increased number of people that can’t sell their house so they are renting them instead and creating too much competition. Have you felt that yet?
danko Mike, you got my email that I have moved from wannabe to investor in the last month. The market is really good here in the Twin Cities
Mike_Summey sparky, like everywhere else, prices are falling and in many cases rents are rising.
sparky37 Mike, how is vacancy?
Mike_Summey Kel, that is the case in some markets, especially where builders have way overbuilt and are trying to survive until they can sell their inventory. Florida is a good example of this.
Joshua Mike, how do you make your management co. control repair costs? I seem to be having more than I should. Any advice?
Mike_Summey danko, I’m proud of you.
danko Thx
Mike_Summey Hi Matt!
Roger Dawson Welcome Matt!
Kel danko , what did you get?
Mike_Summey I believe my son Matt has just joined us. He is now an official investor.
sparky37 Hello Matt
Matt I’m here for a few but I havn’t eaten….dad kept sending me txt’s telling me to join so it was either this or the texts would continue
danko I bought a single family home, 4 bd, 1 ba…it sold two years ago for $180,000…I paid 64,500 for it
Matt haha, just kidding
Kel danko , WOW, what will it rent for.
Mike_Summey Matt has been involved with the new strategy we’ve used to buy several houses.
Mike_Summey danko, that’s great!
Mike_Summey Hi pc
pc hello
danko Kel, I put $30,000 in rehab which will be done this week…we can rent for $1300, which is below market…refi all of our costs and have a positive cash flow of $175 per month
sparky37 awesome Danko
Mike_Summey Matt is in Alabama. He bought his first house about a year ago using a strategy we’ve used several times since.
Kel danko, That is great. What part of the country are you in?
Mike_Summey Matt do you want to tell everyone about it or do you want me to?
danko Thx…it was time to stop thinking about it and take the plunge.
sparky37 Mike, Good Dad Bad SOn!
danko We are in the Twin Cities…Minneapolis/Saint Paul
Matt you can have at it
Mike_Summey danko that’s great. That’s how you build wealth with real estate
Mike_Summey Hi Penny
Roger Dawson Hi Penny
danko
Penny Hi Mikeand Roger!
Mike_Summey sparky, Matt is a very good son. Believe it or not he listens to me.
sparky37 Mike, I was Just Kidding, I was refering to the startegy of good cop bad cop
sparky37 *strategy
Mike_Summey Matt is an Apache helicopter pilot!
Joshua Mike, question for you…any advice on how to keep repair costs down with my management co.?
stevenomalley@aol.com how many of you are using private financing for purchases?
gpllc Anyone have advice on getting financing when you’ve maxed debt/income ratio?
Mike_Summey Joshua, I hae my management companies obtain at least 2 and usually 3 bids on any major repair.
danko Steven, I am using HELOC
Mike_Summey steven, I’ve used private financing many times. Usually it is seller financing, but I’ve also been able to get third party financing from people who are tired of getting 1% or less on CDs.
stevenomalley@aol.com what’ that?
Joshua Mike, above what price do you consider major? I seem to be having 200-300 repairs on a regular basis.
pc watch out that they don’t freeze you HELOC in the middle of your project. Has happened more lately.
Mike_Summey steven, Hove Equity Line Of Credit
Mike_Summey Joshua, set your own limit and make the managers adhere to it.
Mike_Summey Home
Mike_Summey Matt, can you share with everyone the strategy we’ve been using to buy properties in your area?
Roger Dawson If you’re looking for private financing, talk to your CPA. They usually have money to lend or know someone who does.
Mike_Summey Roger, good idea. I’ve done that in the past, but forgot about it.
danko They haven’t frozen my HELOC. They lowered the initial value of it, but other than that…they haven’t touched it
Mike_Summey Most CPAs know people with money to invest and right now banks are not a good option.
Mike_Summey Neither is the stock market.
stevenomalley@aol.com Is anyone buying REOs right now?
gpllc excellent, thank you.
Kel The stock market is painful.
Kel I wish I could get my employer to let me buy houses with my retirement money.
Mike_Summey steven, REOs are a ery good option right now, but only one option. Don’t just focus on them. There are many sellers in trouble for a variety of reasons and each of them is a good option.
Kel Or just give it tom me in Gold Bullion or something besides the stock marker
danko Steven, everything I look at right now are REOs and vacant.
pc if you are relying on the heloc, i would take out what you will need untill the project is over in the begining
stevenomalley@aol.com OK, Mike, but I am not seeing banks discounting short sales enough to get excited.
Mike_Summey Of my last three purchases, one was a foreclosure, one a divorce and one just a seller who wanted out. Like the ole rat who said, “To heck with the cheese, just let me out of this trap.”
Mike_Summey HI Justien
Matt sure, I have been down in Alabama for 14 months now and two seperate times I have gathered information on all 3BR/2BA homes on the market. I then drive by the outside and decide from the exterior apperance and MLS sheets which 8-10 appear to have the most promise. I schedule a day with my broker to go and inspect all of the houses, and yes I use the same inspection form on your website dad. (he’s glowing) Once all the houses have been inspected I put in offers on all of them that passed inspection with a clause stating something similar to “this is one of multiple offers being nade siultaneously, buyer will only purchase the first accepted offer and all other offers will be viod. Please date and time stamp your response” The first one that comes back, I buy
gpllc My father wants out of a ‘trap’ in FL if anyone is interested…
Mike_Summey steven, naturally, banks want to get all they can for a property. After all, they are not in business to lose money.
Matt I have done this twice and have had 3 original offers accepted out of rougly 15
sparky37 Matt, how far below is your offer vs asking price?
Mike_Summey That’s why I wanted Matt in the chat. He is more wordy tha I am.
Matt well thats kinda irrevelant because some asking prices are extermely inflated and some are priced to sell, but of the last two that were accepted one was an asking price of $145,000 that I offered $85,000, and the other was asking $119,000 and I offered $92,000
gpllc great way to find out who the real don’t wanters are
sparky37 Matt, that is great info
sparky37 Matt, did they counter offer or just accept?
Mike_Summey I’m very proud of Matt because he actually does what I recommend the rest of you do…he make offers.
Joshua Matt, howmany of these were REOs vs distressed seller?
Matt just accept, I guess the clause put the pressure on the seller not me…both were accepted less than 3 hours after the offers were sent
sparky37 Matt, were there any conditions to closing or was it as is?
Matt one was and elderly widow from virginia that just wanted out and she didn’t owe anything, and teh other was a divorce situation
Matt no conditions, just as is
Mike_Summey This is the new strategy I wanted to share with everyone. Make a bunch of offers simultaneously and put in the offers that the buyer will ony buy one property and will buy the first accepted offer. Once an offer is accepted the rest are void.
Roger Dawson We’ve pursued several short sale properties and have found it not worth the effort. It takes too long to get an answer from the bank. And with all the bank owned properties on the market, I don’t think that it’s a smart way to buy. Wait until the banks foreclosure and they’re under pressure to sell.
Mike_Summey You don’t know what a sell will do until you ask and the way you ask is with a written offer.
sparky37 Matt, did they want fast closing or at your convenience?
Mike_Summey seller
Kel Matt, That is excellent. In addition to the pressure, I bet the shear volume helps the odds as well. As opposed to what I usually do which is one or two offers then wait to hear how that goes before putting any more out there. It takes me 4 months to put 10 offers out there.
Matt i offered closing in 14 days….makes the offer more appealing
Joshua Great info Matt, thanks for sharing!
sparky37 Matt, so once offer is accepted you give deposit, run title and set up closing?
stevenomalley@aol.com thank you Roger, that is what I thought.
Matt kel, I did that all last year….just made one offer at a time and probably made 15 offers, none got accepted. of the 8 I made in one day, 2 were accepted
Matt yes
sparky37 Matt did you buy both or just the first one?
Mike_Summey For most of the past year, Matt did as most of you do and only made one offer at a time. When he started making multiple offers in a single day with the condition that he would only buy one property, things began to happen.
Matt bought both, but the second offer was at my discretion to accept or reject because of the clause….
sparky37 Matt, how was your broker with your strategy?
Mike_Summey I am in the process of arranging to look at several properties in another market and will use this same strategy.
Mike_Summey Hi albert
Mike_Summey Hi albert.
albert HI
Joshua Mike, do your mgmt co’s. charge a leasing fee (for a new tenant) of one month rent? That seems to be very common here in Texas
Matt had never seen it before….I went with dad to meet a local banker to start financing relationships down here and he told us he had been at a board of realtors meeting where everybody was talking about it
Roger Dawson Hi Albert
Matt I guess you could say it was the “talk of the town”
Mike_Summey Joshua, no they do not. I will not hire a management company that does that. If they want to get paid, they need to MANAGE the property, not just find a tenant.
sparky37 Mike, you should be very proud, Matt sounds like a clone of you!
Mike_Summey Hi sandy
sparky37 Matt, I love the strategy
Matt not to mention the broker got 2 closing commissions out of 8 hours worth of work
Mike_Summey sparky, he is!!!! He’s tough as nails too!!!
sandy Hello
gpllc Where in the contract do you put the clause, as an addendum?
Matt just in the remarks section
Mike_Summey Everyone, see I told you in my email that tonight’s chat would give you a new strategy you could use.
Joshua I interviewed ~25 mgmt cos in the Houston area before I hired mine (following your advice in your book) and found that they all do it. Do you think that it could be area specific?
sparky37 Mike, can you put a sample of one of Matt’s offers on the website?
Matt I interview 5 here in alabama before I decided on one….and then I still made them change the management agreement
Mike_Summey Joshua, it could be area specific, but Matt will tell you that the management companies in his area has several things that were area specific that we removed from the agreement before signing it.
Mike_Summey Hi rgrimsley
rgrimsley Hello Mike and all
Kel Joshua, Mine charges 250 for a new lease which doesnt’ bother me too much but they also charge 150 for a renewal which really bugs me. The tenant is already there and wants to stay and they charge me another 150 bucks. I have one other company in a different area that does not charge these fees.
Mike_Summey sparky, I’m not sure I can do that, but feel free to ask any questions of either Matt or me about what we did.
Matt hang on a sec, let me pull the offer out and I can give you the exact clause I put in there
sparky37 Matt or Mike I am just curious how you worded it without being offensive or anything out of line
danko Could you use this strategy with banks and REOs? Most everything I have been looking at are REOs here…there are so many of them.
Lon Kel, when it comes time to renew with your PM, tell them those fees come out or you’ll switch to another PM.
Mike_Summey sparky, I believe Matt is going to pull out the offer and give you the exact language we put in all of the contracts. Hang on a minute.
Joshua Mike, Matt, Wow, what do you recommend? I really like my mgmt co. but if all their competition asks for that leasing fee how do you convince them otherwise? I have 6 properties with them
Mike_Summey Kel, words of wisdon…”A management company can find a new tenant anytime, but owners are much harder to dome by!”
Mike_Summey come by
Kel Lon , I should have done that awhile back but changing seems like more trouble than its worth right now. Kind of like switching banks.
Matt Under the additional provisions paragraph it states “This offer is one of multiple offers being made simultaneously. Purchaser is only going to purchase one property and will close on the first accepted offer that is returned. Please date and time stamp your response. the first accepted offer will cancel all other offers. No replies will be accepted after (Date and time of your choice)”
rgrimsley Joshua, in this economy, they need to be asking YOU what they have to do to keep your business but they won’t if they don’t think you are going to pull the business.
Mike_Summey Joshua, with 6 properties, you have some clout. Tell them that you won’t pay the fees and if they insist, you will look for other management.
Matt nd just to make it fun I only give them tell 5pm the next day to respond
sparky37 Matt, is this the first time you have bought any properties for investment?
Matt these were my 2nd and 3rd respectively….just getting started
sparky37 Matt, that is a great start
Mike_Summey I was with Matt on this last round of offers and they were FAXed to the sellers at 5:30 PM. The realtor called us at dinner because we had an accepted offer back by 7:30.
Mike_Summey Hi awardsr
Matt thanks
Mike_Summey Matt is 24
Joshua Thx for advice..another question. My mgmt co lists vacancies on MLS. They use half that commission to pay the agent that represented the tenant. How do you keep agents bringing tenants if no comission? We’ve found newspaper ads,etc bring non qualified tenants…MLS listing is best?
Mike_Summey We’re getting clsoe to the end of the chat. Does anyone else have any questions you haven’t gotten answered?
Kel Matt, Mike, this sounds like an excellent way to charge up the process. I look forward to trying it (but not the 8 hour day of inspecting):D
sparky37 Matt, thanks for joining us tonight you have provided very good and useful information and as I told your Dad he should be proud of you and you should be proud of him!
albert Has anyone had experience buying several SFH from banks at larger discount. I heard some hedge funds are doing it at 10 cents on the dollar.
rgrimsley Does anybody see the market stabalizing in their area or is most of the activity from vultures and investors (as I see)?
Matt thanks, and yes kel the inspection becomes tedious after a while but the rewards are worth the effort
Mike_Summey Joshua, most markets have numerous ways of advertising for tenants. Don’t worry about attracting unqualified people, because if the management company is doing their job, they will charge the applicant a fee to check their credit and criminal histories and will cull any that are not up to your standards. If they are not doing this, get another manager.
Roger Dawson Nearly all of the activity is in bank owned or foreclures, RGrimsley.
rgrimsley Roger that Roger – I understand that for CA and AZ. Do you see that pretty much everywhere else as well?
rgrimsley And NV.
Mike_Summey albert, I’ve heard of such transactions, but when I looked into them, it seems that the bundles have a few good properties and a number of ones that need to be burned down. You just have to look at the entire bundle to see if it make sense. So far I haven’t found one that does. I think the banks are trying to use this strategy to unload properties that no one wants at any price so they don’t ahv eto pay the taxes on them.
Roger Dawson The worst hit areas in the country are condos in Florida and houses in Riverside, which is 20 miles east of LA
Joshua Mike, what % of rent do you pay your mgmt co’s to manage per month if you don’t mind me asking?
Lon and most of Michigan, Roger.
Mike_Summey Joshua, I pay 8%. Most of them want and get 10%, but because of the volume I give them I only pay 8%.
Roger Dawson Yes, I forgot about poor Michigan, unlike California and Florida, nobody wants to live there anymore.
gpllc What do you think of Property Managers who offer a flat fee?
Matt joshua, where I live in alabama it is 10% for single owners and 8% for multiple owners
sparky37 Mike, Roger thanks for a great chat, Matt join us again.Nite all
Mike_Summey Joshua, I could probably negotiate the fee down to 6% or less based on volume, but everyone deserves to make a profit so I don’t try to go below 85.
Roger Dawson Good night everyone!
Joshua That makes sense, thank Mike. How many mos deposit do your mgmt cos require from tenants? Anyone feel free to respond?
rgrimsley Mike or Roger, on SF houses, are you putting on 30 yr loans and paying them off quicker or going with a shorter term to get a little better rate?
Matt 1 mth
Penny goodnight everyone
Penny thanks all
Mike_Summey gpllc, I’ve never worked with amanage that charges a flat fee, but that doesn’t mean it won’t work.
gpllc Thanks for all you do Mike.
Mike_Summey rgrimsley, I use 15 yr financing almost exclusively.
Mike_Summey Everyone, the next chat will be April 6th. I hope to see you then. Goodnight all!
Matt ‘nite everyone
Joshua Thanks Mike! Great info Matt!
rgrimsley Thanks Mike! Have a great month and hello to all my buds in Avl.
Kel Thanks .
davidma11 i logged in late..
davidma11 anybody still here
Chibataa Where is eerybody?
Bata Mike is not here?
Bata Is the chat over. I must have come late.
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2 Responses to “Chat Transcript – March 9, 2009”
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hello Mike, I just read the chat, and your son sounds like a real smart guy, just like you–he sounds like he has a long career of success ahead of him–I could not be in last nights chat because my computer is in my bedroom, and my wife was sleeping at the chat time, hope to be in next months chat—santo
I too missed last nights chat. Love Matt’s strategy, how is he Financing the purchases? What’s the down payment on those two deals? Matt, FLY SAFE!
Hope to catch you all next month, thanks, Linda from MA