Chat Transcript – April 4, 2011

Posted on April 5, 2011

ATHU Hello Keith! Where are you from?
Roger Dawson Hi Athur and Keith, Mike should be joining us shortly.
Keith Hi All – Keith here from Plano, TX
ATHU Hello Mr. Dawson. I would like to wish you a Happy Birthday with many more to come
Keith Second that – Happy Birthday Roger!
Roger Dawson Thank you Athu and Keith!
Mike_Summey Hi everyone…especially the birthday boy!
Jan-Erik Good evening all
Mike_Summey Hi Jan-Erik
Roger Dawson Thank you Mike!
Mike_Summey Hi ATHU, Keith & Richard
Richard Hi Mike
ATHU Hello Mike
Keith Hey Mike –
Mike_Summey Stormy weather here. I hope I don’t get knocked off line.
Mike_Summey It is supposed to get very bad later tonight.
Mike_Summey Anybody have questions before we get too busy?
Roger Dawson Here in Los Angeles it’s a lovely evening. 75 degrees and bright and sunny
Keith Sorry to hear it. It’s prime baseball weather here in the DFW area.
Mike_Summey Rub it in Roger
ATHU It is nice here in North Carolina also
Mike_Summey We have a front with big thunderstorms, possible tornados and hail moving in here.
Mike_Summey Hi kjh
Mike_Summey Carleton Sheets said he may join us for a while.
Mike_Summey Hi dena
kjh Hello to all
ATHU I have a question. Is it hard to negotiate with real estate agents who have properties that have been on the market for a long time?
dena gettleman hello
Richard Hi K-man
Mike_Summey Athu, you don’t negotiate with the real estate agents, you negotiate with the sellers
kjh Evening Richard
Roger Dawson When I was an active real estate broker we used to say that there are three elements to a great real estate market — buyers, sellers and financing — and you’d never see all three in place at one time. The only thing I see missing now is financing. If the banks would start lending on real estate again we’d have a booming market.
Mike_Summey Athu, I rarely buy any properties without an agent involved. If I want to negotiate, I just give the listing agent a written offer for what I want to do and let him or her present it to the seller.
kjh Mike, do you tend to stay away from Short Sales due to the length of time it takes to process the deal or does it not matter to you?
ATHU Oh okay! I understand what you are saying. Thanks for the information..
Mike_Summey kjh, I do make some offers on short sale properties, but not too many for that very reason. I have one pending right now on an offer that was accepted by the seller in February. The bank just last week asked form more information from me.
Keith Mike and Roger – what would be the best pieces of advice you have for making cash offers on HUD homes?
Roger Dawson KJH: Short sales are a real pain. My son just bought one and he sweated it out for months, not knowing until the day it closed that we would get it.
kjh great thanks
Mike_Summey Keith, write the offers and present them. Nothing magid about that. Cash offers always get the quickest and most positive responses.
Mike_Summey Hi Wayne
Wayne Hi Mike
Mike_Summey Keith, I have bought nearly 40 bank owned properties in the past two years by simply making cash offers for what I want to pay and then letting the bank respond. Often I am turned down only to buy the same properties months later for less than my original offers.
Mike_Summey Hi barbie
barbie hi all!
kjh I’ve had trouble downloading and using the Offer Generator on a MAC. Do you foresee any corrections in the coming months?
ATHU Mike & Roger I was reading your book and see where you said open an account with different banks. Do you still feel the same way?
kjh hi barbie!
Roger Dawson Keith: Not all brokers are authorized to handle HUD resales. The ones that are authorized have gone through classes to learn how the system works. Find a HUD broker that you can get along well with and have him or hurt hunt for opportunities. Strangely enough if you are a public servand like a fireman, police officer or sheriff
dena gettleman are these offers for multiple properties contingent on an inspection?
Mike_Summey kjh, I haven’t heard of any having problems with Mac computers. It shoud install okay. Just be sure to select the Mac version from the installation disc.
Mike_Summey Hi Markl & marwllm
Roger Dawson ‘s deputy you get special treatment. They like to have the laws living in the neighborhood.
markl hi mike
kjh I’ll take another look at it.
marwllm1 Hi Mike
Mike_Summey dena, I do the inspections before making the offers. Otherwise I wouldn’t know how much to offer allowing for the needed repairs.
Mike_Summey Athu, I have accounts with 12 banks.
markl would like to buy offer generator but have windows 7. any luck with that yet?
Mike_Summey Athu, when you are locked into just one bank, you have to ride their wave and it may not be going in the same direction you want to go. Of my 12 banks, 3 are not doing any real estate loans right now and one has asked me to move my loans to other banks because they are in trouble with real estate loans and have been ordered by the Feds to purge their real estate portfolio.
Mike_Summey Mark, we are still having problems with Windows 7. Its not with the OG program, its with the installation program.
dena gettleman inspecting before the offer…. that is a little different from the norm. if you go to the same inspector, i guess you might get a discount after a while
ATHU What is the best way to build business credit?
Keith Thanks Mike & Roger about HUD homes. I’m seeing houses come and go active now in the Dallas area – like you said. Sometimes they come back on the market at a lower price. Doesn’t seem like any rhyme or reason to what the Feds accept and there’s really no negotiation possible. Like Mike says – I guess just make the offer and let it fly.
Mike_Summey dena, I do my own inspections, but keep in mind I’ve been doing this for nearly 40 years. I understand your concern if you have to pay for inspections.
markl have read all of the books and ready to start buying and would like to buy and hold for a long time but still have a question. when the inevitible inflation hits and long term rates go up are you concerned that price appreciation will cease when borrowing costs for consumers rise?
kjh Hey Mike, when do you like to schedule your closing dates?
Mike_Summey Athu, pay your obligations on time, begin building up cash reserves with the banks, and don’t try to grow too fast.
ATHU Thank you Mike
markl mike i am not a computer geek sorry, will the og work or do i need the install program
dena gettleman I know a lot about houses, but i’m no Mike Holmes….. i think i might tend to not catch potentially expensive problems. Is there an AB Tech class that would be helpful? 🙂
Mike_Summey Keith, I’ve made as many as 4 offer on the same bank properties before the bank finally accepted an offer. I usually make the offer in mid March, June, September or December and I always go down in offer price with each offer. One banker sent word through their agent that I was moving in the wrong direction. I sent word back asking if he had ever heard of depreciation.
Richard I have windows 7 and could not get OG to load on my computer but was finally able to get the OG to work by loading it on to a SD card and running it from the card while plugged in my laptop, but hope to be able to load it on my computer someday if it gets worked out.
ATHU Mark or Roger do you deal with Mobile Home Parks? If so how do you determine if it is worth the cost?
Richard PS – I had to use a non-windows 7 computer to load OG onto the card first.
markl mike, what is best bet for reo’s? have my agent check mls or should i call all of the local banks and ask them directly. also, i am told that lately the reo’s have dried up a bit. do you think we will see a lot more now that the robo signing controversy is about over?
Mike_Summey mark, price appreciation is definately a function of interest rates. As long as you base your offers on current rates and your best guess as to what they are going to do you should be okay. Keep in mind that when inflation kicks in, rents also go up and the higher rates make it even harder to buy so pool of renters grows. Just a thought.
Mike_Summey Richard, that’s an idea we haven’t tried. Does it seem to work okay that way.
Mike_Summey Hi Penny
Penny Happy 45th birthday roger!
Penny Hi Mike and all you chatters.
ATHU Hello Penny
Mike_Summey mark, try to find a good buyers agent who will work with you. I have such agents in all the markets where I operate and I let them do most of the legwork.
Mike_Summey Hi lbmustang
Roger Dawson Markl: remember that with the Weekend Millionaire system we are not concerned with the sales price of the property since we never intend to sell. We’re only concerned with the income the property can generate. If interest rates go up it will be harder for people to buy which means more renters willing to pay high rental amounts.
kjh Markl : I’d ask your agent to provide properties for you, not to say you shouldn’t call upon them either. Many bank websites often have a list of there REO’s too
lbmustang Sorry just got home from a meeting! Hello Mike and Roger! Happy Birthday Roger!!
Mike_Summey Richard, you say you had to load the OG to an SD card using a computer not running Windows 7??
Richard Mike – Yes, I can run the OG program from the SD card while plugged into my windows 7 laptop, but I had to use a windows XP computer to open the program and load it on to the card first. Seems to run fine from the card on my windows 7 laptop.
markl mike, great thought about inflation and rental rates.thanks. do the buyers agents call the banks directly or just check mls?
Roger Dawson Thanks lbmustang!
Linda Happy birthday ROGER… sorry i’m late to the party.
Mike_Summey mark, my agents wait for the properties to hit the MLS and then monitors them if they are listed too high. They have a way to put in a target price on a property and the MLS will email them if the property drops to that target.
Mike_Summey Hi Linda & Joe
markl thanks mike
Joe from CT Hi Mike
Mike_Summey Richard, thanks for that information. We’ll look into it. That may be a short term fix for people.
Mike_Summey I have an announcement!!!!
Keith Mike – I like the approach to lowering offers each time. I read about it in your book as well. It sends a message! For some reason I didn’t consider it with HUD homes because there’s always so many competing offers but I guess it makes sense.
Joe from CT Happy B Day Roger
Mike_Summey I just got to feed my little one week old grandaughter right before the chat started. She is a doll!!!!
Linda I was wondering if others have some creative ways of getting financing for MULTI family invest & hold properties, my Husband and I are Self employed, see potential but can’t seem to get the $$$
ATHU Congradulations!!!!
markl mike, have you noticed any decrease in numbers of reo’s lately? or same old stuff?
lbmustang Congrats Mike!
broadway Happy Birthday Roger……sorry I’m late!! 🙂
markl congrats on the granddaughter!!!!!
Roger Dawson Thanks Joe!
Linda Mike, Congrat’s on your new Baby in the family…
Mike_Summey Keith, I often have the banks send me a form to sign telling me they have multiple offers and asking if I have submitted my “highest and best” offer. I never go up on the offer and I’ve never failed to get one of the properties when the bank did that. Personally, I think they just use that as a negotiating tactic to see if they can get me to increase the offer.
Roger Dawson Thanks Broadway. I’m going to leave the chat in about ten minutes because my friends are waiting for me at the local pub.
Richard Happy to report I received my first accepted offer today. Been looking at a lot of properties but nothing penciled out using your system but we finally found one that made positive cash flow.
kjh Pour some out for the rest of us on chat, Roger. Happy BDay!
Roger Dawson I have a birthing annoucement to make also. On Friday I learned that my Secrets of Power Negotiating book will be published in Russia with an initial print run of 10,000 which is huge.
Mike_Summey mark, the numbers do seem to have declined in the last few months, but as someone said earlier, I think it has a lot to do with the banks pulling back to be sure their forclosures are in order. I know two that I made offers on a few months ago were pulled off the market to correct problems and they haven’t come back on the market yet and are still vacant.
markl mike or roger, do you have any problems with buying SFH with pools for rental?
lbmustang Congrats Roger!
markl awesoem roger
jsj020@aol.com Happy B’day Roger!
markl awesome
Mike_Summey Hi jsj020
barbie congrads on that Roger! that is BIG! oh yes, and happy b-day!
ATHU Congradulations Roger
jsj020@aol.com Hello Mike
markl that is good info mike, thanks
Mike_Summey mark, I reject any SFH with a pool. I don’t want the headache or the liablility.
Roger Dawson Congralutions Richard! Your first purchase is always the hardest. It’ll get easier from now on.
markl what bank was that mike?
Roger Dawson Thanks Barbie!
Mike_Summey Richard, I tell everyone…just keep making offers that will work for you and eventuall you will get one accepted. If you make one per week and only get one per year accepted, having 15 rental houses in 15 years isn’t bad.
Mike_Summey mark, I think it was Bank of America.
Linda I’ve been away for a long time, wondering Mike if there are past chats that talk about GETTING FINANCING? I spoke with a Mortgage broker (I know well) who said getting a commercial loan (5 or more units) is easier than a Residential Loan as they look more at the CASH FLOW OF THE RENTS, vs a personal income, does that sound right?
jsj020@aol.com Mike, When we calculate all the expense, as part of the insurance do we need to carry the “LIABILITY INSURANCE” in addition to the HOI? Is yes, how much “LIABILITY” do you recommend? – TanX!
kjh Have any of you heard that “No Docs” loans are coming back into play regarding financing?
Linda KJH, I was told that those weren’t even on the Horizon, have you heard something different? ANYONE?
Mike_Summey Linda, I think it is entirely a function of each individual bank. I have bank that love SFHs but won’t touch apartments or other commercial real estate and others that feel just the opposite. I have banks looking to make loans and ones looking to purge real estate loans. These are just a few of the reasons I recommend establishing relationships with several banks. Right now the smalleer community banks seem to be a better option than the larger national banks.
broadway I read there are some subprime bonds being offered out there in the market. I knew they’d come back in some form.
Wayne Happy Birthday Roger! Thanks for taking the time to produce the audio series on negotiating. It is the best series on negotiating I have found! Mike congradulations on the new member of your family!
lbmustang Mike or Roger – Is there an amount you use as a guide or a percentage of what kind of montly profit you want to make from the rental amount over the mortgage payment?
Mike_Summey jsj020, you don’t need homeowners insurance on rental properties, you need all risk coverage and liability insurance. Homeowners insurance is for people who are going to live in the property and it covers furnishings, etc.
dena gettleman Mike, how far away do you buy houses. Sounds like you buy farther away than WNC. I like to keep an eye on things and make sure renters are happy. I guess i would have to stop thinking like that…. not be so personally involved.
Roger Dawson Thanks Wayne! You made my day!
Mike_Summey kjh, in my opinion we will not see no doc loans again in our lifetime. The banks were hit so hard they are going to be overly cautious for many years to come.
jsj020@aol.com What is “ALL Risk Coverage” Insurance? What does it cover? What about Flood Insurance (we are in Louisiana)?
kjh I raise the question because in fact I did hear today that some banks have reverted back to them..nothings confirmed though.
Mike_Summey Thanks Wayne
Linda Thanks Mike, have YOU HEARD ANYTHING ABOUT NO DOC’S coming back?? Would be awesome for us, that’s how we’ve bought our last 3 properties. Last one was the week they stopped the program.
kjh I’ll throw that comment out the window
Roger Dawson Forgive me for leaving early but I need to get to my birthday party. See you next month.
kjh Later Roger!
lbmustang have a great bday roger
ATHU Enjoy your birthday Roger
Mike_Summey lbmustang, I’m happy if the property will just carry the mortgage in the beginning. There may not be any cash flow in the beginning, but over time as the mortgage pays down and the rent rises, the margin get wider and wider the longer you own the porperty.
lbmustang Thanks for that info!
Linda Have a great B-DAY Roger,
Mike_Summey jsj020, talk with your insurance agent and ask about the type coverage you need for rental properties. The all risk coverage covers you investment in the property, but not the tenant’s.
lbmustang Do you require your tenants to carry renter’s insurance? I only have a SFH for a rental (was our house before) but I require them to show me proof, is this necessary?
lbmustang So far we have only had military as renters so they are usually good about carrying rental insurance.
Mike_Summey dena, I buy in three markets, one in NC, one in SC and one in AL. I keep all of my purchases within a 10 mile radius of my property managers. That way I can visit a market and see everything in a relatively short period of time.
Linda Why would you require that? Wouldnt renters just cover thier contents?
lbmustang Yes it just covers their stuff, but I feel like it protects them and me. I know alot of appartment complexes require it.
dena gettleman makes good sense
Mike_Summey Linda, we always advise our renters to carry a renter insurance policy. I have a SFH that had a major fire a couple of weeks ago. I was fully covered, but the tenants lost everything because the chose not to carry insurance.
lbmustang I also don’t think a lot of people realize how inexpensive renters insurance is.
Linda I advise my tenants too, and explain the benefits, but I’ve never required it. I figure it’s up to them.
Mike_Summey lbmustang, we rent primarily to military officers in our AL properties and you’re right, they make very good tenants.
jsj020@aol.com Roger, as you and Mike recommend in the “W. M.” course, if we go for 15-years mortgage and all the expenses including reasonable interest on the invested initial capital…..my analysis results show in most cases that the offer price should be substantially lower (45% to 48%) than the asking price to generate positive cash flow.
lbmustang Yes, usually not problem with the rent being paid, especially when you know what their BAH is before they rent so you know if they can afford it or not.
lbmustang oops BHA!!
jsj020@aol.com Is it possible to get these type of low offer to be accepted?
Mike_Summey Hi CArleton, glad you could join us for a few minutes.
ATHU Hello Carelton
markl hey carlton
Penny Hi Carleton!
ATHU Sorry Carleton
jsj020@aol.com Hi Carlton, I have studied your course as well!
Carleton_Sheets You’re welcome. And hello Roger and Happy Birthday!
dena gettleman What is the average amount you pay for a single house and the number of bed rooms/bathrooms you shoot for?
Wayne Mike thanks for the weekend millionaire series. We just bought a fourplex using you calculations. We found some unpleasant surprises but thanks to your Offer Generator this has been the best property we have bought. Thanks for getting the Offer generator made it has been a great program! Thanks Mike!
Mike_Summey jsj020, your calculations are about right. I rarely buy a property for much more that 60-70% of appraised value or asking price.
Penny Roger just skipped out on us to celebrate his BD!
Carleton_Sheets Hello Penny and all of you!
Penny 🙂
Keith Hey Carleton
lbmustang Is that 60-70% only on a 15 yr. mtg?
Mike_Summey dena, that varies from market to market and from neighborhood to neighborhood. We just bought a 3 BR 2 BA with garage for $37,700, put $7000 in repairs into it and it rented last week for $695 mo. The asking price was originally $79,900.
Mike_Summey Hi awardssr
Keith Mike, do you use the tax rolls to guess-timate an appraised value, i.e. the 60-70%?
Linda Hello Carleton, have you heard anything about the “no doc” loans coming back? thanks, Linda
Mike_Summey Wayne, thanks. I don’t just hype the OG, I use it to calculate every offer I make.
jsj020@aol.com Carlton & Mike, in calculating expenses how do you deal with the “Lawn-Mowing”?
Carleton_Sheets Dena, I don’t know how Mike would answer this but you can work backwards in my opinion. I believe strongly in getting a minimum of 1% of the purchase price in rental income…and that is a minimum. Preferably 1.5% and it doesn’t matter whether you are poaying $50,000 for a property or $500,000.
Mike_Summey lbmustang, I only use 15 yr financing. If I can’t make it work with that I don’t buy it.
lbmustang Are majority of purchases foreclosures?
Carleton_Sheets Linda, no to “no-doc loans”.
dena gettleman thanks. good info
Mike_Summey Keith, I don’t even think about appraised value or worry about asking prices. I make offers based on what I am willing to pay for the property and I don’t deviate from that.
ATHU Thank you for the information Mike, Roger and Carleton. See you next month..
awardsr do you aquire any property through tax lien auctions?
Wayne Hi Carleton when studying the weekend millionaire program Mike Summey mentioned your program and how it changed his life! I purchased some of your systems and Mike was right I was really impressed. I listen to your audio programs when ever I get the chance. Recently your property management program helped me out with a tenant greatly! Thankyou for being so generous with your experience & knowledge! Thanks!
Mike_Summey jsj020, on SFH the tenants handle the lawns. On multi family that expense is one that goes in the “other expenses” block on the Offer Generator.
Penny goodnight all
Mike_Summey Who is going to win the basketball game???
ATHU UCONN!!
dena gettleman uconn
Carleton_Sheets Wayne, what a nice comment. Thanks!
Carleton_Sheets Good night all! should be a great game!
kjh Thanks for all the great information tonight ladies and gentlemen. I’m off to save the world one property at a time
lbmustang Ummm, it was suppose to be VCU but I’ll still watch!
Mike_Summey I’ll be leaving promptly at 9:00, to watch the game, but if the rest of you want to stay and talk with each other, please feel free to do so.
lbmustang Is foreclosures the best thing to look for?
Mike_Summey I have time for one or two more quick questions.
jsj020@aol.com Mike, so you have a clause in the “Lease” that SFH tenants handle the lawn. Do the tenants purchase their own – equipments?
lbmustang Do you mainly buy foreclosures?
Linda Thanks for keeping this CHATROOM going Mike, I love it even if I can’t always join in.
Mike_Summey lbmustang, foreclosures are definately what I call “don’t wanter” properties. The banks need to get rid of them.
Mike_Summey jsj020, yes all or SFH leases address the lawn requirement.
awardsr Tax Liens?
lbmustang Thanks Mike! I am still learning, but love the info here! See ya next month!
lbmustang Husband comes home this week from deployment !! Yippee!
markl thanks everyone
broadway Mike, thank you very much for the chat tonight. I missed half but, I’ll read every word of the post this week!! Thank you for all you do.
lbmustang Hope to find a rental to buy while he is home!
Linda Thank you for your husbands service to our country, and your sacrifice
lbmustang Bye
broadway Gnite to all
Wayne Good night everybody!
Mike_Summey awards, stay away from tax leins. When you buy them you usually aren’t buying the properties, you are only buying the lein and then you have to foreclose on it. Even if the taxing authority forecloses on the leins, there is usually a redemption period that can be quite long.
lbmustang Thanks Linda, he is in his 26th year!!
Mike_Summey Linda, that’s my son Matt who flies the Apache gunship. But thanks for the thought anyway.
Mike_Summey I’m outta here.
jsj020@aol.com Thanks & Bye
awardsr Thanks for the advice Mike!!
Mike_Summey See everyone next month. The chat will be May 2nd.
Keith G’nite all from Tx
Linda Good night all, hope to chat next month
eppic Hi

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