Chat Transcript – December 6, 2010

Posted on December 7, 2010

scstate88 Hello,
jacobsentom Hello
Mike_Summey Hi jacob & SC
jacobsentom Hello – I thought I would listen in. I have not participcated in a couple years.
Mike_Summey We’re a bit early.
Mike_Summey Jacob, don’t just listen…participate. We’re all friends here.
Mike_Summey Hi Jess
Jess Hi Mike
scstate88 I need some help with what options to take for my rental house that is behine in payments due to losing my tenant and having to do some repair work before I could consider section 8. I wanted to know whether to get an investor that just wants a good return on their money for a using their money or what?
Mike_Summey I have snow & bad roads here tonight.
jacobsentom Wyoming has cleared up here some.
Mike_Summey sc, I’m not an advocate of using other investors. We try to show people how to buy properties so you can afford to own them and keep them up. If you paid too much for the property, you may have to bring in someone else to help.
Mike_Summey Hi Greg
Greg Hi Mike!
Mike_Summey Hi Ned
Ned Hey Mike
jacobsentom I bought a single family house in Grand Junction in 2004 and another in 2005. I did the sin of paying more than I could get back per month.
scstate88 I haven’t paid too much for it; I just can’t get access to the equity that I have in it because I won’t be able to get a loan right now
jacobsentom I now about break even. The houses dropped in value about 50,000 each but I am not upside down and don’t care however not following Mike’s rules I cannot really afford to buy more.
jacobsentom I could only get a little equity.
Mike_Summey Jacob, that is one of the biggest problems I see with people who did not follow the Weekend Millionaire method of investing. Granted, if you follow our advice, you won’t get a high percentage of accepted offers, but the ones you get will make you money.
Mike_Summey Hi mustang
mustang hello
jacobsentom I understand that but did what I did anyway. However financially I am fine and hope to have them paid off at age 75 for a little more income. I am not 58. I started late in life
Mike_Summey sc, when it was rented, did you put back money for vacancy and repairs?
Mike_Summey Hi Trav
Trav Hello Mike
Mike_Summey jacob, the market will come back. The question is when. Unfortunately I don’t see the sales market coming back to where it was in my lifetime, but I think we are in for the best rental market ever.
Mike_Summey All of the people who are losing homes will need to live somewhere and more and more I’m seeing what was our best tenants coming back with the attitude, “I ani’t never going to do that again.”
jacobsentom I have heard rent is strong in Grand Junction though prices are not. My seond sin was thinking about future value of the houses but have my head on straight now and am only looking at the payoff when they are paid off.
jacobsentom REntals are not up in price yet but will do so in the not so distant future though prices will lag.
Mike_Summey jacob, in 40 years, I’ve never sold a property. I never went into a purchase thinking about how much I could make when I sold. I only looked at the cash flow and bought the ones that would pay for themselves and give me an income stream.
Mike_Summey Hi broadway
mbroadway hello Mike and all
Mike_Summey jacob, if you are in it for the cash flow, who cares what the prices do?
jacobsentom Yeh – I read your book, understood it, but then went off in a different tangent not endorsed by you!
jacobsentom Eactly – I am not interested in the price anymore.
Mike_Summey jacob, lots of people did that. That’s why we are in the mess we are in nationally. Just remember, common sense is a very uncommon thing…sepecially when the market is red hot.
jacobsentom For anyone young and in their twenties or thirties please listen to Mike. It will pay off.
Mike_Summey Hi Debbie
Mike_Summey Hi Charlie
Trav Mike I read in the last chat that you don’t use conventional bank finanicing, how do you finance most of your properties
CHARLIE hi mike
jacobsentom Yes – a lot of rental single family homes in my subdivision.
Debbie Hi Mike – Debbie Bucklaew here
scstate88 October was the last month of the tenant; my lease was until the beginning of December. I didn’t get any notice and they told to take the deposit as Oct.’s rent. Of course, I have more work to do than the deposit will cover. I just did some improvements, but I’ve had some setbacks with my own home and car that took more money than I had planned to have going out
Mike_Summey Trav, I do not qualify for conventional financing because I own too many properties. I hae to find banks that will keep my loans as portfolio loans. That means they don’t sell them.
jacobsentom I did buy during lulls in the market in 2004 and 2005. Slight dips. Just lucky. That is why I could still get equity to invest again but I still did not have a balanced budget like I should have at the time.
Mike_Summey Debbie, where have you been lately? I haven’t heard from you in years.
Trav Right Thanks
Debbie Mike – Years….. don’t think it has been years. 🙂 I have a mobile home park under contract in SC.
Debbie The owner has let it go under managed the last couple years because of health issues. He is basically breaking even. It has HUGE potential but I can’t find anyone to finance it. Any suggestions?
Mike_Summey sc, it is so important to keep cash reserves for times like you are experiencing, but it is even more tempting to spend the excess money. You will get through this, but let it be a lesson. Try to build up at least 6 months of cash reserves and you won’t find yourself in this situation again.
Debbie Even the bank (small local) that currently has it financed won’t continue the financing.
CHARLIE Mike if you have a equity line of credit with the bank how would you use the offer generator to calucate the offer
Mike_Summey Debbie, you will probably have to use one of the smaller banks that didn’t get themselves in trouble like the big banks did.
Debbie They all seem to be allergic to mobile home parks?
mbroadway Debbie, that sounds like a great owner finance opportunity
Mike_Summey Charlie, I use it to calculate “cash” offers. Use the credit like to buy for cash and once you purchase it and do the repairs you can get a permanent loan after it is rented. Base your loan on the cash flow, not the value of the property. I’ve never made a mortgage payment with equity.
Debbie The owner will carry a 2nd but he needs cash for medical bills
Mike_Summey Debbie, can you get a small 1st with a bank and then a larger second with the owner?
Mike_Summey Debbie, banks aren’t usually too scared of a 25-50% LTV.
Debbie He owes about 55% on it now.
Mike_Summey Debbie, you will probably have a hard time getting much over 50% LTV on a mobile home park.
Debbie Exactly. I think he would wrap the existing mortgage if I could get him about $150k. But the bank would be in 1st. then the owner or the private lender would be in 2nd or 3rd. Not likely either.
Mike_Summey Everyone, Charlie is my buyer’s agent in SC. He is a great guy and can probably give you some first had information about the way I do business and maybe help you if you are interested in buying in SC.
Debbie Hey Charlie – what company are you with?
Trav Mike how do i find a buyer’s agent
Mike_Summey Debbie, I’d be very careful about using a wrap. What happens if the seller defaults.
Greg Hey Mike, is the Offer Generator good to use for potential rehabs?
Mike_Summey Hi joshua & jan-erik
CHARLIE Debbie i am with carithers real estate in anderson sc
Debbie I would insist on paying the bank directly
Joshua Hi Mike!
Jan-Erik ‘evening all
Mike_Summey Greg, the OG is used to calculate offers that will cash flow with the rents a property can produce. It is of no use if you plan to fix up and flip.
Greg Thanks Mike.
CHARLIE Hey josha & jan-erik
Debbie Charlie – I have a house for sale in Anderson now. I just rehabed it.
Mike_Summey Greg, I’d love to sell you one, but I don’t want you to be misled. There have been too many get-rich-quick merchants on TV. I’m not one of them.
CHARLIE Debbie were is it
Greg @Mike: That’s for sure!
Debbie CHARLIE just off 29 – Mariposa circle. I will owner finance. 3bed/2bath $109k
CHARLIE HEY GP
mustang Hey Mike, do you only purchase residental property or do you buy commercial property too?
gp Evenin
Mike_Summey Hi gp
Joshua Mike, how many offers since your last acceptance? I’m going on about 50.
Mike_Summey mustang, I have a little of everything; houses, apartments, commercial buildings, office buildings, mobile home parks, etc.
Mike_Summey Joshua, I just made 5 offers in late November and all were accepted. My son Matt made three or four at the same time and one was accepted.
Trav Mike who pays charlie’s comm.?
Mike_Summey Joshua, Charlie handled all of the offers.
CHARLIE Joshua mike is avg. 2 out of 10, on avg. Here lately that avg. Has been better. Also watch the ones you have made offers on in the past and remake offers on them also
Mike_Summey Trav, that all depends. Most of the time the seller does, but on the last five that we just closed on Nov 30, I did.
Trav So does he split it with the selling agent?
Mike_Summey Trav, ask Charlie.
CHARLIE Trav most bank foreclousers have a comm split unless i am the listing and the selling
Joshua Charlie, very nice work getting 5 of 5 offers accepted
Debbie Mike_Summey Are you doing strictly cash offers right now or are you still doing a few owner financed deals?
mustang ok, was just wondering, am new to this, just finished reading your “Weekend Millionaire Mindset”!! Loved it! My husband is looking to retire in the next couople of years (26 yrs in military now) and we have been looking into commercial property. That’s why I asked, just wondering if commercial or residential was better to start with. We have a second home that we rent out now.
Trav Charlie Thanks
mbroadway Mike, do you still feel strongly that 2011 will be a great year to purchase? I think we’re seeing the bottom of the market on pricing and rates personally
Mike_Summey Joshua, Charlie is correct about watching the ones you have made previous offer on. I’m amazed at the fact that we have bought properties months after making our first offer at prices well below the original offer price.
Debbie Joshua – I have found that as well. People get a lot more motivated with time
Joshua Mike, do your same mgmt cos that do your houses also do your office buildings and mobile home parks?
Mike_Summey mustang, glad you liked the book. It is my favorite. If you asked me to make a recommendation, I’d tell you to stick with single family homes until you get some experience.
Joshua Mike, Charlie: All of my offers right now are bank REO, cash offers. They almost always sell to investors with cash as well as higher prices. I’m just too conservative!
mustang Thanks, I also love what you said earlier tonight about you never buy a property with the idea to sell it!! Great advice!!
CHARLIE Josha mike is correct, dont stop making offfers on a property that you already made a offer on until it has sold. We have bought properties 15k less than orginally offer, after the bank has reduced the price several times
Mike_Summey Joshua, in some cases yes. Several of the commercial properties just pay me directly on a net, net, net basis so I don’t run that through the management companies.
Debbie Mike_Summey Are you doing strictly cash offers right now or are you still doing a few owner financed deals?
Mike_Summey mustang, if you have to sell a property to make a profit, you are not an investor, you are a speculator and sooner or later you are going to get burned.
jacobsentom Mike what is this calculator people are talking about that you offer?
Mike_Summey Debbie, during these times, I am mainly making cash offers. In times like these, cash speaks much louder than anything else.
CHARLIE HI GWE0351
Mike_Summey jacob, it is the Offer Generator computer program that is available in our online store. It is the best tool an investor can own.
Mike_Summey Hi gwe
jacobsentom Thanks,
mustang Again, great advice. Our home we rent will be paid off in about 6 years (refi to a 15 yr at 2.5% years ago) but we were thinking maybe better to sell, as we don’t have to pay capital gain as military, we have ten years. But I would say your advice is to keep it as an income property?
Mike_Summey jacob, if you are running a computer with Windows 7 you may want to wait to buy it. We have gotten a couple of reports that it is not loading properly on the Windows 7 machines and we haven’t been able to test it yet.
Joshua Mike, for late rent and damages caused by tenants beyond deposit, do you do the work personally to get the judgments in place,or does your mgmt co do that? Do you or they use a collection agency instead?
jacobsentom I am fine. Not Windows 7 here.
Trav Mike if I don’t have a lot of cash reserves to pay cash…what would you suggest get a hard money loan or try to find owner financing??
mustang We have been looking at houses here (stationed in Texas) as prices are cheap here but were concerned about owning homes in several different states.
Mike_Summey mustang, while you own the property, your tenant is like an employee who is getting up each day and going to work for someone else who is paying the taxes and supervising them and when they pay their rent they are making a deposit into your future. Why would you want to fire someone like that? That’s what you do when you sell!
mustang Understand!!
Mike_Summey Joshua, my management companies handle all of that.
Mike_Summey jacob, then don’t wait another day. Get the program. It will pay for itself on the first deal.
mbroadway jacob, I can vouch for Offer Generator too. It’s a very valuable tool
Mike_Summey Trav, can you get a line of credit for enough to buy one house? If so, you can buy one for cash, get it rented, then get a ortgage to get the cash out to pay off your line of credit and do it all over again.
mustang We manage it ourselves. Our rental is in Virginia. I would love to buy more homes but was thinking it might be difficult having homes in several states. We don’t pay a management company now as we only have one home and for what it would cost to have it managed, and we have plenty of cash set aside, that we just pay and get something fixed or we even have flown out there to get it ready in between renters.
Joshua Mike, could you recommend a name of collection agency for me?
CHARLIE Jacob theog is what mike uses to make all his offers, i have watched him use it many times
Mike_Summey mustang, the most important thing is to find a good property manager that you can trust in each market.
Mike_Summey Hi Penny
CHARLIE HI PENNY
Penny Hi Mike…finallygot in…computer problems
Trav MIke, are you talking about a HELOC?? I have great credit but currently I am renting?
Penny Hi Charlie and all
mustang Charlie, sorry if I sound dumb, but am new to this, what is “theog”?
Mike_Summey mustang, I have used a management company since the purchase of my first property. I wanted to be an investor, not have a second job.
CHARLIE Mustang i ment the offer generator
Mike_Summey Trav, a HELOC is one type line of credit, but some people with really good credit can get an unsecured line of credit.
Joshua trav, my recommendation is you try and get a secured (or unsecured if you have to) line of credit and do exactly what Mike suggested. If you muy them the WM way, you will get most (if not all) of your cash back after you fix it up and get it appraised
mustang I understand, as we have only gone there twice to take care of the house and since we use to live there we have used it as an opportunity to visit old friends. Other than that have never had any issues. Also being military, we have only had military renters and we have never had issues.
Trav Ok great thanks for the advice
Trav Joshua Thanks I am new to this
Mike_Summey mustang, my son Matt is military and he has several houses in Enterprise, AL, but he uses a management company and like you only rents to military…mainly comissioned officers.
Joshua Mike, any way you could recommend a name of a good collection agency for me?
mustang Thank Matt for her service!!
Mike_Summey mustang, Matt is an Apache Pilot.
mustang WOW!! Am so proud of all that serve!!
mustang This is my first time in chat and my husband is currently deployed but can’t wait for him to come back and get in on these. Very informative! Thanks! How often do you do these chats?
Mike_Summey Mustang, let me brag a bit…Matt wat the #1 Distinguished Graduate for all of last year at Ft. Rucker.
Mike_Summey mustang, we host the chat the first Monday of each month.
mbroadway Mike, I’ll bet he can fly your plane with no problem right?? 🙂
Mike_Summey mustang, what branch of the service is you husband in?
mustang You can brag all you want and be proud!! My husband is in his 26th year and I am sooo proud. Off the subject for a minute, went in as an enlisted man, then became a warrant officer and then last year became a commissioned officer!!
mustang He served as a Seabee (Navy) for 5 years and has been in the Coast Guard now for 21 years!!
Mike_Summey broadway, yes he can…the problem is, I can’t get him insured because he doesn’t have enough fixed wing retractible gear time. I recently bought him and his brother a small single engine retractible gear airplane so they could get the time the insurance company requires to get insured in the big plane.
mustang I will look forward to future chats! Got to get the Weekend Millionaire Real Estate Book now that I finished the other one.
Joshua Mike, you’ve mentioned you have several 20 unit apt complexes and under. Can you share what the lowest per month rent amount you have on these? I know it’s all about if it cash flows, but this gives me an idea range you have been successful.
Mike_Summey Joshua, my rents range from about $500 to $1500 per month.
mustang Mike, what area do you own most of your properties? Meaning what state?
Mike_Summey mustang, NC, SC, AL
Joshua Mike, thanks, I’ve been looking at some complexes that have rents in the 400-450 range and was wondering if it might be a little too problematic.
Mike_Summey Roger Daswon is off on a speaking trip to China. He sould be with us in January.
Mike_Summey Dawson
Greg Mike, has the lousy economy impacted your cash flow?
Trav Mike Thanks for your time and knowledge got to go hope you and your family have a Merry Christmas
mustang Mike, as far as commercial property, do you only own properties that you rent out or do you own any commercial businesses? We have been looking in to laundrymats?
Mike_Summey Joshua, it all depends on the market. That sounds like it might be on the low end of most markets, so I’d be careful. When you get in the low range you tend to have collection problems and higher maintenance cost due to people not having the skills needed to maintaing a property correctly.
gp Mike, when you refi a rental (after buying for cash and fixing up) do you put in the mortgage app at several banks you work with? or do they prequalify you?
Mike_Summey Trav, join us again next month and have a Merry Christmas and Happy New year.
Joshua Mike, will you buy pre-1978 apt complexes or do you stick to your same SFH year cut-off rule?
CHARLIE Merry christmas & happy new year to all
Greg Happy Holidays Everyone!
Joshua Charlie, are you only doing SFH offers for Mike right now or is he also offering on apartments, office buildings, and mobile home parks with everything on sale right now?
Mike_Summey gp, I usually know which bank will provide the financing and just tell them what I want. I can do this because I’ve been doing it for 40 years. When you are just getting started you have to do a lot of shopping to find the right fit. Just don’t get discouraged and by all means, do what you say you will do once you get a relationship going with a bank.
mbroadway Mike, I hope you, your family and Roger and his family have a great Christmas and looking forward to an outstanding 2011.
mbroadway Everyone have a great Christmas and New Year as well.
Mike_Summey Everyone, next year is going to be another great year for investors. Don’t miss it!!!
mustang Thanks for all the info. This was sooo interesting and will look forward to future chats. Happy Holidays!!
gp Thanks as always Mike. Talk to you next year…
mbroadway Thank you all for the chat and info shared tonight. Always informative.
mustang And thanks again to your son for serving our country!!
mbroadway G night to all.
Mike_Summey Merry Christmass and Happy New Year to all. See you here on January 3rd.
Joshua Mike, quickly before we sign off, will you buy pre-1978 apt complexes or do you stick to your same SFH year cut-off rule?
CHARLIE Joshua we are making mostly sfh offers, the last five offers were townhouse
Mike_Summey Joshua, if you buy pre 1978, be sure to have them inspected for lead paint and asbestos problems.
Mike_Summey Goodnight All!!!
Joshua Merry Christmas to all, thanks for everything in 2010 Mike!
Debbie Merry Christmas and Happy New Year!!!!

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