Chat Transcript – December 7, 2009
Posted on December 8, 2009
Roger Dawson Hi Jess and Santo
Jess Hi Roger
Roger Dawson Greeting from rainy Southern California. Mike will be joing us soon from Asheville.
Roger Dawson There’s Mike!
Mike_Summey Hi everyone
Mike_Summey Hi santo. Haven’t seen you in a chat for a long time.
Mike_Summey Hi sj
sj hi mike and roger
Mike_Summey Roger, my brother in Carson City said they got 18″ of snow last night. Did you get weather at your house?
Mike_Summey Any question?
Roger Dawson Mike:
Roger Dawson Mike: it’s been pouring with rain all day here. Snow in the mountains but not here of course.
santo hi mike, having a little trouble with the java
Jess Hi Mike, just would like to know in what circumstances will the landlord needs to increase the rental?
Mike_Summey Hi santo, nice to see you back.
Mike_Summey Jess, I try to increase rents with each lease renewal if possible. You have to do what the market dictates, but usuall a small increase will not drive a tenant out unless times are really hard.
Mike_Summey Hi Jason, Joe & gp
Jess Mike, how much do you normally increase? What percentage?
Mike_Summey Jess, I try to keep up with the CPI if possible. A series of small 2-5% increases are better than one large increase every 3-4 years.
Roger Dawson From a negotiating standpoint be sure that you give them a reason why you’re raising the rent. It makes it much more paletable. Higher property taxes, higher maintenance costs, etc.
Mike_Summey Hi Penny
Roger Dawson Hi Penny
Penny Hi Mike, Roger, and everyone!
gp Hi Mike. In your email you talked about coaching programs, I have one of these co. bugging me now. I’ve gone through all your material and have 3 rentals. Do you think these coaching programs are a benefit?
santo mike, just had a complete knee replacement operation–the first two weeks of therepy was complete torture, but i am starting to walk normal now, another month, the doctor said it will feel like a 25 year old leg
Mike_Summey That’s my son Jason in the chat. He is a new investor who started this year.
Roger Dawson Hi Jason!
Jason hello roger
sj hi jason
Jess Roger and Mike, I have had heard often enough from tenants stating that increasing increment of rental is hard to be accepted by them cause they are not staying in commercial property whereby increment of rental is more acceptable every renewal of lease. How do you handle that?
Mike_Summey gp, our books and programs give you everything you need to be successful. If you follow what we teach about the only thing a coach would give you is moral support.
Mike_Summey santo, I may have to have a knee replacement later this winter.
Joe Jess, Are your renters that well-versed in commercial property rentals that they actually know that?
Mike_Summey Jess, my property managers handle all of the rent increases and usually a simple explanation that inflation is what is pushing up rents. That’s not the case now as the CPI is actually falling for the first time in my memory. I have some commercial tenants that will actually get a decrease this year because of the CPI adjustment.
Roger Dawson Jess: I haven’t heard that argument and it doesn’t make much sense to me. Ask them for a 15% increase. When you back down to ten or five they’ll think you’re doing them a favor.
gp Thanks mike. I certainly like your approach better than the high pressure sales tactics of some of these others.
Jess Hi Mike, what is CPI?
Mike_Summey Jess, when prices are rising on everything else, tenants can’t expect you to keep your constant.
Jess Roger, thanks for the input
Mike_Summey Jess, sorry about theat…Consumer Price Index. It is published by the government and reflects the effects of inflation on prices.
Mike_Summey Hi george
Jess Mike, thanks for the explanation
Mike_Summey gp, do you have the Offer Generator program?
Mike_Summey Hi oz
gp No
OZ hI MIKE
gp I think that’s what’s holding us back right now. I need to get it.
Jason gp it’s been the most useful tool I’ve used since I started in January
JoefromCT Hi everybody
santo mike, that duplex i bought for $11,000, plus a $15,000 rehab, total $26,000 cash is renting for $1100 with no mortage, am going to refinance and get $45,000 to put down payments on two quads, one of them is selling for $40,000, the other is selling for $50,000, wich will bring my total rental units to 24.
Roger Dawson That’s great, Santo
Mike_Summey Hi Joe from CT
JoefromCT Hi Mike
gp buying it now..
Mike_Summey Jess, go to www.BLS.gov/cpi to find the Consumer Price Index
Jess Mike,thanks
Roger Dawson This is the best time ever to buy rental property because rents have gone up and prices have gone down. Rents are going up because all those foreclosed owners are now renters. In addition, mortgages (although hard to get) have the lowest interest rates in decades. All this adds up to more cash flow for landlords.
JoefromCT Mike lenders want 20% down and i’m really closely at multis 3 and up how can i raise that kind of money or get around it
Jason GP I’ve used it to make all my offers and had several accepted I never thought would even be considered
Mike_Summey Santo, you are a star. I remember when you were wringing your hands over buying the first property.
santo mike, remember i called myself the weekend failure
Mike_Summey JoefromCT, do you have a source of funds you can draw on temporarily to make a cash purchase and then get a loan later to get the cash back out?
Mike_Summey Jason and his brother Matt started investing together in January and are doing very well.
JoefromCT I have some like 18,000 but if your lookin at a purchase price of 300,ooo that can run into a lot of money
Joe Mike, are you recommending private money, hard money, or whatever makes the deal work?
gp What do you think of buying land and building mfus? You don’t approach this much in your material (so far as I recall)
Mike_Summey Joe & Joe, it could be a line of credit, a relative etc. If you can find a way to buy for cash and you buy right you can probably get all your cash out when you get financing and many times more than what you have in the property.
JoefromCT thats a diffrent way to ook at it
Roger Dawson What’s a mfus?
Mike_Summey gp, I don’t buy land. I joke that there are three ways to go broke, women, liquor & vacant lots. They all cost you money. I guess for women you could substitute men for women.
Mike_Summey Hi downNow
downNowBackup Hi
JoefromCT Mike do you have any banks or institiutions that you recommend to apply for a line of credit
gp Does the generator include state purchase contracts?
Mike_Summey JoefromCT, right now the small community banks that didn’t get in trouble with all the sub-prime loans are the best source of financing.
JoefromCT Thanks Mike
Joe Thanks, Mike. I’ve always been reluctant to do something like take out a 401(k) loan, lose my job, and have to pay it back immediately. But if this is a short term deal to get the property and then finance it, it might not be bad. I’d rather use a 401k as a last resort.
Mike_Summey Hi adam
Jason GP, it doesn’t have the individual state contracts, I use it to compute the offer and you can either use the letter of intent it creates or transpose the numbers to any state contract
adam hi
downNowBackup Mike, What are some ways to develop relationships with the local small banks without having to open an account?
downNowBackup Mike, (small banks cont) I would gladly open accounts at EVERY small bank when I can find, fund and harvest deals (whether flipping or cashflowing).
JoefromCT Roger i’ve used the offer generator to construct the best offers.My question to you is it gets frustrating when your showing it to sellers because they always want a higher price and haggle with you and sometimes dont understand what can i do diffrently to try to convince them or get better at?
santo mike, my property manager, who also sells me the houses,put me in contact with one of his customers who just lost his job, he is in a bind, and wants to sell one or two of his houses, he has a six family he paid $100,000 for, and that is the one i am interersted in–that sounds good to you, it is fully rented—mike, what kind of offer would you make–give me an idea of what i should do.
Mike_Summey Joe, during the current times I use the Offer Generator to calculate the offers, then use a line of credit to purchase for cash. Once the property is purchased, any needed repairs done and it is rented, I then get a bank loan based on the appraisal. I find that I can usually get $5-$15K more than what I paid and the deal will still cash flow. I then put the excess funds into a reserve account to make the banks feel better and to insure that I don’t get caught short if ther is a vacancy.
gp Jason you won’t regret it!
downNowBackup Mike, Your answer to Joe was based on principles in your book combined with the Offer Generator, right?
Mike_Summey santo, use the Offer Generator to calculate the offer. It will give you a better idea of what to offer than I can without seeing the property.
JoefromCT Mike that bank loan is from a diffrent bank than the line of credit right?
Mike_Summey downNow, that’s correct. Most of the answers you will get here in the chat are in our materials. As I said earlier if you have the entire Weekend Millionaire library, you will have everything you need to be successful. We host these chats to help clarify any of the information that you might find confusing (hopefully not) and to give moral support for those just getting started.
Mike_Summey JoefromCT, sometime it is and sometimes I use the same bank. The line of credit I have is unsecured, so the bank is usually happy to transfer money to a mortgage and have it secured; especially if the mortgage is only 56-75% loan to value.
downNowBackup I appreciate that (free online chat support). Just need to start this new journey and keep putting one foot in front of the other with faith in the tools you have provided. Sometimes the hardest thing is to say ‘No’ to a deal that doesn’t ‘work’ BEFORE funding another round of EXPENSIVE education… 
gp Mike, When you refi the loan do you need 70% LTV, or do your bank relationships allow you to do better?
Roger Dawson Joe, the number one reason offers don’t get accepted is that the buyer doesn’t explain why he’s offering what he is. Walk them through the Weekend Millionaire method of calculating the break even point and show them how you’ll only break even at the price you’re proposing. Then they understand that you’re not taking advantage of their misfortune.
Mike_Summey downNow, some of the real estate gurus you see on TV have a 30-50% return on their products. I can count on one hand the number of returns we have had in 5 years.
Mike_Summey Hi a82629
a82629@ptd.net hi
Roger Dawson Well said, down now! If you think education is expensive try ignoranct. That will cost you far more.
gp And are you running into mortgage limits (max of 10) these days, or do the community banks ignore that?
downNowBackup Thank you Mike & Roger. God Bless you (and everyone here).
Mike_Summey Joe, another point to consider is using the Offer Generator to compute two offers, one cash and the other using seller financing at a low or no interest.
Joe Mike and Roger, I’m new to your materials, so I’m curious if you both recommend full disclosure of what you are doing with your deal?
JoefromCT Thanks Mike and Roger
santo roger, mortgage brokers can always get you a loan, even if you have 10 or more mortgages
Mike_Summey gp, the max for conforming loans has been reduced from 10 to 4, but I don’t use that type financing. I can’t qualify for it. I use 5yr loans with a 15 yr amortization. I refinance the balance after 5 years.
sparky37 Hi Mike N Roger and all
sparky37 Is that you Santo?
JoefromCT Hi Sparky37
Mike_Summey Joe, I have no problem with full disclosure. I will even sit down with sellers at times and show them exactly how I came up with my offers and tell them if they can show me another way to pay more I’ll gladly do it.
Mike_Summey Hi sparky
santo sparky, the one and only
sparky37 Santo, how are you doing? How is Buffalo going?
Joe Thanks, Mike. As you probably know, that’s not the normal method taught.
Mike_Summey Joe, we don’t teach gimmicks and questionable techniques. I like to sleep at night.
Joe I agree.
Mike_Summey Jason, why don’t you share a bit of your success.
Jason Joe that’s what I love about using the offer generator for mine…if someone has questions you can simply print out and show them exactly how you arrived at your numbers
santo sparky, very well, am looking at two quads–one is $50,000 the other is $40,000—-also maybe a six family for $100,000
Mike_Summey I have been in this business for nearly 40 years and have used the same method for all that time. As a result, I’ve never sold a property and never had a down year, including last year.
sparky37 Awesome Santo, I was telling a friend of mine who lives in Buffalo about you
santo sparky, well he can tell about these prices
Mike_Summey Joe, one reason I have just about stopped speaking at the real estate investing clubs is because they are beaten to death with one get-rick-quick scheme after another and I don’t want to get lumped into that crowd.
gp Mike, can you share how many units you currently have?
JoefromCT Good Thinking Mike
Mike_Summey Jason, how many properties have you and Matt purchased so far this year?
Mike_Summey gp, I have several hundred.
Jason 16
Mike_Summey Hi kyle
kyle hi
Joe Our REIA is looking for folks like you, not the gimmick-guys. We had issues with that last year, so we quickly changed to move away from those types.
Roger Dawson Full disclosure is more of an issue with the seller. They must tell the buyer every little thing that could affect the value of the property or the buyer’s decision to buy.
kyle mike, your offer generator is for buy and holds. do you ever do buy, fix and sells?
Mike_Summey Joe, I spoke at the big Real Estate Expo in New York a few years ago and I was never so glad to get away from something in my life. When the line of people wanting their money back is longer than the line coming in, that tell you something.
Mike_Summey kyle, I’ve never sold a property in my life.
santo sparky, if i get those 2 quads, i will have 24 rental units, feb 2010 i wll be in the game 3 years.
Joe Thanks, Roger. I didn’t mean full disclosure in that sense, but in being open with the seller about how you arrived at your deal. I just couldn’t think of better words to phrase it with.
Mike_Summey kyle, no one has ever given me a good reason to sell.
kyle wow
kyle how many do you own now?
sparky37 Santo, great great job!
gp Santo, what will be your total noi if you don’t mind me asking?
Mike_Summey kyle, when I have a tenant who is paying the rent, its like having an employee who gets up every day and goes to work, someone else supervises him, pays the taxes and insurance on him and every time he pays the rent it is making a deposit into my future. Why would I want to fire him? That’s what I’d be doing if I sold the property.
Joe Santo, in getting off to such a great start, did you have your own funds available to get you started, or did you do it all with leverage? (OPM)
santo sparky, explain
sparky37 Santo, explain what?
santo joe, I started with a $50,000 cash purchase
Mike_Summey Everyone, our Weekend Millionaire books, audio and computer programs are designed to give you about as much information on what not to do as on what to do. We want you to be successful. That’s why we donate our time to host these chat for FREE.
santo sparky, you mean my profit
JoefromCT I appreciate that Mike
Joe Thanks, Santo
OZ Gotta run…g/night all, merry christmas and happy new year to all
gp Our issue (my wife and I) is that we’re somewhat anti social. We have 3 rentals in 3 years, looking to triple that in 2010. Any advice for us introverted folks?
Mike_Summey I did get an email from someone today who was having problems loading our Offer Generator on a computer with the new Windows 7 operating system. Our programmer is trying to get access to a Windows 7 machine to figure out how to install it on that system. We are also talking about doing an upgraded version of the program next year.
kyle mike, did you have to send postcards to market to motivated sellers when you started?
Roger Dawson GP, seems to me that being anti-social is working well for you. Keep doing what you’re doing.
sparky37 Mike n Roger, You guys do an Amazing Job and the service you provide is priceless. I want you to know it is very much appreciated.
Jason I 2nd Sparky
Roger Dawson Thanks Sparky! You made my day!
Roger Dawson Jason, thanks. You’re my hero!
Mike_Summey gp, if you only acquire 1 per year, in 15 years you will have quite a little next egg for retirement; however as you acquire more and get more experience, you’ll get better. I bought one my first year, two the second, 4 the third and things got better from there. Just be patient and keep at it.
santo joe, the $50,000 cash purchase i refinanced, got $44,000 cash and put down payments on the next 4 houses
Jason I try 
Mike_Summey kyle, no I’ve never sent a postcard.
Mike_Summey Hi joshua, a little late aren’t you?
Mike_Summey Thanks sparky!
Penny ditto OZ and to everyone…see you all next year!
Joshua yeah, sorry Mike, got tied up in a meeting!
Joe Thanks again, Santo.
Roger Dawson I need to run. I’m going to a lecture on international negotiations at the Richard Nixon library.
santo nite all
Mike_Summey Joshua, anything urgent on your mind before we sign off?
gp Thank you so much. That’s exactly what we’ll do. I’m sure the generator will help, I know we just need to get offers out there.
sparky37 Mike Happy New Year see you in 2010! Night All
Jason Goodnight all…Merry Christmas and Happy New Year!! See ya
gp Merry Christmas all. Thanks again.
adam thank you every one and have a good night
Mike_Summey Before everyone leaves, I want to wish you all a very Merry Christmas and Happy New Year.
JoefromCT To you to Mike and everyone
gp Remember the reason for the season.
kyle back at you mike
Joshua Mike, how many have you closed recently? Still doing the time stamp clause?
Joe Thanks, Mike. Same to you and all here!
kyle do you ever speak to the creia in asheville, mike?
Jess Merry Xmas and Happy new year to all
Mike_Summey Goodnight all. See you here on January 4, 2010!
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