Chat Transcript – May 2, 2011

Posted on May 3, 2011

CHARLIE Hey davidd & sparky 37
davidd hello
sparky37 Hello
sparky37 Hello Mike
CHARLIE Hey mike how was your trip today
Mike_Summey Hi everyone!
Mike_Summey Long day Charlie.
Greg Hi all!
sparky37 Mike, did any of your properties get hit with the storms?
Mike_Summey Just got back less than an hour ago from Alabama.
Mike_Summey Sparky, not that I know of.
sparky37 Glad to hear that
Mike_Summey Sparky, we did have a huge tree blow down in a storm a couple of weeks ago.
Mike_Summey Hi mbroadway & athu
ATHU Hello Mike
CHARLIE Hey mbroadway & athu
mbroadway Hello Mike!!!
ATHU Hello everyone.
mbroadway Hello Charlie. Hope all are well tonight
Mike_Summey Hi Kel
Kel Hello.
CHARLIE Mike how did alabama look from the sky
Mike_Summey Hi Linda
mbroadway Mike, got a question on inspections. How extensive to you go with your inspection before you make any offer? Do you have contractors look at the houses for you?
Linda Hi Guys,
Mike_Summey Charlie, from 23,000 feet you can’t see much.
CHARLIE Hey jan-erik
Jan-Erik Good Evening all
Mike_Summey mbroadway, have you looked at the inspection form on the website?
Mike_Summey Hi Jan-Erik
Mike_Summey mbroadway, I follow the form right down the line. Ask Charlie to comment. He has been with me on dozens of inspections.
mbroadway Mike, yes, I have that form and use it too. I just didn’t know if, on houses that need some extensive repairs if you had a contractor you work with look at the houses prior to any offers.
Kel Mike, I had some tenants recently that were really filthy. destroyed carpet and paint. They wanted to renew but I declined. They didn’t really damage the structure. I am wondering if I should have let them stay since I was going to have to replace carpet and paint anyway. Does your property managers inspect between renewals and would you have let them stay?
mbroadway I thought Charlie would be heavily involved in those as well
ATHU With the way the economy is today will it be hard to obtain a loan for a mobile home.
Mike_Summey Roger just called & said he was having trouble getting in the chat. Has anyone else had a problem tonight?
Linda Mike, can I ask a personal question? How many income units do you own?
Jan-Erik Random request before chatting gets too heavy. Please consider offering books as ebooks.
mbroadway Charlie, do you get really deep in the inspection before you contact Mike on houses you come across??
CHARLIE I did on aol i had to go to another site
Mike_Summey mbroadway, if the repairs are very extensive, I would probably have someone more qualified look for me. I’ve been at it long enough now that I can handle most things.
sparky37 Mike, I got in fine
Mike_Summey Kel, my property managers are supposed to inspect between 60-90 days after a tenant moves in and then if everything is in order again prior to renewing a lease. If the first inspection turns up problems, they reinspect again in 30-60 days to be sure the problem is being handled.
CHARLIE Mbroadway i dont look at many of the properties before me and mike do, we look at them together. There is a few i will look at if i am not sure about the area.
mbroadway Mike, thanks!!! I figured you would have it handled yourself now but, just starting to build your home portfolio, I didn’t know if you used that or had that much trust in the contractors. Thank you for that form too. It’s great to use. I just don’t know all the ins and outs of what I’m looking for yet
Mike_Summey Linda, it is constantly changing. It is several hundred.
mbroadway Charlie, thank you very much
Mike_Summey Hi Ned
Ned Hey Mike
CHARLIE Mbroadway if you know the area well and property mangers no it well that helps alot
mbroadway Super Charlie. Thank you again!!!
Mike_Summey I went to Alabama to look at properties today, but was not impressed with what I saw. The 12 units I primarily went to look at were not worth making an offer on, so we looked at 4 others in addition. I will probably make offers on 3 of those.
Mike_Summey Also, I have one that Charlie & I looked at Friday that I will make an offer on tomorrow.
sparky37 Mike are you focusing more on AL more then NC & SC now?
mbroadway Mike, can you tell us what it was that did not impress you on those properties??
Mike_Summey sparky, no I just happened to go to Alabama today. I’m more focused on SC right now as that’s where I’m fining more deals and Charlie is doing a great job for me there.
ATHU Mike if you had a choice between purchasing a brick home or a mobile home with 4 arces attached which would you choose?
sparky37 Mike is there a specific area in SC you are looking at?
Mike_Summey mbroadway, they were much older than I was told and were very dated. Also, the tenant base that was in them was not of the quality I want. If I bought the units, I would kick everyone out, rehab the buildings and start over. I didn’t want to tackle that type project that far from home & without someone like Charlie to oversee it.
Mike_Summey athu, the brick home…no question. I wouldn’t even consider a mobile home with 4 acres.
Ned Mike, I would like to buy properties with cash/HELOC and then pull my cash out with a refi. But, the lenders I’ve talked with will only loan 70-80% of the purchase price. Are there banks out there who will finance a higher percentage if justified with an appraisal?
mbroadway Mike, that makes sense. Could you see those homes being an investment for someone else that they would make money??
ATHU What woudl be your reason for choosing the brick home?
Mike_Summey athu, acerage is not an asset for a rental property. It has to be maintained and taxes paid on the acerage which generates no income. Plus, mobile homes depreciate rather than appreciates.
Mike_Summey Hi Penny
Penny Hi Mike.
ATHU Thank you Mike
Mike_Summey Ned, don’t tell the banks what you paid. Just tell them you own the properties free and clear, they are rented for ___ and you want to get a loan based on the appraisal.
Kel Mike, you have said you have never sold a property. I have two, one rents really well, gets good tenants, the other attracts lousy tenant with increased repair costs every time. Wouldn’t it make sense to sell that one and go for another that attracts better tenants?
sparky37 Mike, do you still see property values falling and when do you think they stabilize?
Mike_Summey mbroadway, they could be for someone who was close enough to make sure the rehab and new tenant base was done properly, but right now there are too many good deals that don’t have those problems to waste time trying to make a silk purse out of a sow’s ear. 😀
Greg @sparky37: property values will flucuate. 😀
mbroadway Mike, 🙂 I love that saying!!! Thanks
CHARLIE Sparky37 the prices will still fall for the next couple of years in my opion. It also depends on where you live to when it will stop. Each area is different
ATHU Mike do you think that It is a good idea to deal with a hard money lender?
Ned I’ve heard the term “seasoning” mentioned by lenders, which I took to mean the lender wants to see that you’ve owned a particular property for some period of time. Is that typically an issue?
CHARLIE Hi mello1112
Mike_Summey Kel, that is your decision to make. I have a few properties that don’t do as well as others, but I have decided to keep them anyway. I guess it’s because I’ve never been in a position I couldn’t continue buying and the ones that don’t do as well are usually ones I don’t have much invested in.
Linda Has anyone here had experiance in working with a group of INVESTORS to purchase property (commercial, multi family & commercial) and if so what has been your experiance?
Mike_Summey sparky, I think we are still many months from seeing a bottom in most markets. The banks are holding too much inventory off the market and that will have to be absorbed before the market really rebounds.
Mike_Summey Hi mellow
mello1112 hello there
Mike_Summey Linda, I not a good one to ask. I’ve never had a partner nor an investor. That’s probably why I’ve chosen the slow and steady path to wealth rather than the get-rich-quick path.
Mike_Summey I think I’m going to have some “real estate speculator” coins made. One side will say “Get-Rich-Quick” the other side will say “Go-Broke-Fast”
Mike_Summey Every time you buy a property that you have to sell to make a profit you flip the coin. Sometimes you win, sometimes you lose.
Linda Mike, I took your advice and met with the commercial lender at a small local bank, and explained what I want to do in buying 4+ units, (defined as commercial lending), he told me what I’ve been told by others, as long as the prop cash flows (don’t remember the formular right now) but it’s one that I would ONLY CONSIDER as I’m conservative in my purchases, but he ran numbers for me, looked at my capital on hand and was VERY INTERESTED IN working with me….. I actually felt good leaving the bank, feeling like I have a shot to start buying again. THANKS FOR THAT ADVISE MIKE,,,
sparky37 Mike, those coins sound like the the “Tom Vu” investing you make mellons
Mike_Summey Thanks Linda! Banks need good loans right now and are anxious to find solid people to work with.
Mike_Summey sparky, ??? Not familiar with that.
sparky37 He was an infomercial real estate guru in the late 80’s with a chinese voice would say he teach you how to make millions but always sounded like mellons
Mike_Summey sparky, where have all the gurus gone?
sparky37 They are currently flipping burgers!
Mike_Summey Hi theresa
sparky37 It’s less expensive then houses!
Linda Mike, seems like the RICH DAD, POOR DAD shares your ideas as to solid investing, do you have an opinion on him and his books?
theresa hi, just a note, I had a really difficult time accessing this chat
theresa i have been trying for 30 minutes
Mike_Summey I have to chuckle every time I think back to the mid 2000s when all the gurus were telling me I was missing the boat. Thank goodness I missed it, because along about 2008 it sank.
Linda Lol!!!! You are funny MIKE….
Mike_Summey Linda, Robert has some good ideas and I think he is probably going to be okay. He has had his problems in the past, but I think he has learned.
Mike_Summey theresa, there must be a problem of some type, because Roger has not been able to get in either.
sparky37 Mike as you have said and I agree buy and hold and don’t buy to flip or speculate on price increase
Mike_Summey I’m glad those of you who are here were able to get in, it would have bben lonely being here by myself.
theresa the capithcha whatever it is called never allowed me to access; then i found another way in which prob. was the way i was suppose to originally be at. . .lol
Mike_Summey sparky, no one has ever been able to give me a good reason to sell. When you sell you cap your profit at the time of sale and then you have to buy another one to make more profit. I’ve learned that the longer you own a good property the wider the profit margin becomes as the mortgage pays down and the rent goes up.
ATHU Mike what is your prospective on hard money lenders?
theresa Some of us do not have the funds yet to buy and hold, and have no option but to flip. Right?
Mike_Summey Everyone, the first property I purchased many years ago only broke even after expenses. The second year I owned it I raised the rent $25/mo. and saw a small trickle of cash flow. I still own it today, it is paid off and it rents for $1095/mo. Think about that!!!
Mike_Summey Athu, I’ve never used a hard money lender. Most of them will expect you to sell and pay them off in a rather short period of time at a very high interest rate.
Mike_Summey theresa, do you have a job?
ATHU Thank you
mbroadway Mike, you are right on about buy and hold. I can do the calculations that show to sell after 10 years and make money but, you give up the long term profit you need in the ‘golden years’ and will be able to increase those profits through increased rents.
Mike_Summey athu, hard money lenders tend to be people who support flippers and don’t want to take the risks of doing the deals themselves.
theresa my husband is retired army officer, we sell real estate as a realtor on the side, and he works part time for the post office, but we are supporting two families (caps were an accident)
ATHU Mike the part of NC which I live in has many very old mill houses for sale would they be a good investment?
mbroadway I’m wanting my job income to just pay off my rentals so I can buy more rentals. Eventually, I’ll live on just the rental income and still buy.
Mike_Summey athu, probably not, especially if the mills have closed nad moved to Mexico like so much of our textile industry. Renters must have a place to work if they are going to pay their rent.
Mike_Summey theresa, I lived on the income from my job for 20 years before I ever took a penny out of my real estate. As a result, I’ve been able to live on the income from you investments for the past 15 years and haven’t had any earned income.
theresa embarassing as it is, we really have no money saved. All 3 of my guyes were unemployed which soaked up all our savings, when the nation had the restructoring hit our family hard.
Linda I’m all about streams turn to rivers turn to RAPIDS of income, but sometimes you have to sell to survive, we’ve been able to hold onto 2 properties = 3 rental units, and sold 3 that grossed about $ 860,000 neted about $500,000. Ready to start buying again, but limited income has been an obsticle. Sometimes you have to SELL SOMETHING TO GET THE CAPITAL TO KEEP MOVING, and I see nothing with that if the ultimate goal is the same, you just have to go down a different path to get there. Just my opinion
Mike_Summey Linda, I think you are talking about two different things. Some people work at the post office, some in a factory and some flip houses as their JOB. That’s different from investing, where you buy and hold for the income stream. One is active income, the other is passive income.
theresa how does one get there? we have been trying for 2+ years with hard money lenders. just trying to get our first deal to make some money to get ahead, but we just keep spinning our wheels.
Mike_Summey theresa, see what I just wrote.
CHARLIE Linda,thersa you make your money when you buy the property. You have to buy it right and it cash flow from the beginning
Mike_Summey There is a huge difference between investing in real estate and speculating in real estate. If you have to sell a property to make a profit, it is speculating, not investing. Unfortunately, the late night TV gurus have convinced millions of people that speculating is investing, it’s not!!!
Kel Thanks all. gotta run.
sparky37 Mike, you said it perfectly “how many of those guru’s are still around”?
Mike_Summey sparky, I asked that earlier.
sparky37 Mike I was quoting you 🙂
Linda I couldn’t agree more. It’s been tough times that pushed us to sell and get creative turning a 2 family with extra lot into 2 condos and a BUILDABLE HOUSE LOT, eventually selling all of them and moving. We made a killing, but we had to sell to survive. One of those sales we used via 1031 exchange into buying another 2 family in the town we now live…. we saved the capital from the land sale to purchase our primary home, and now the other condo $ will be used as seed money to buy more to BUY AND HOLD ONTO. Thats our plan, and thankfully it’s worked so far for us, through 3 years of very limited work for my husband…. my small business doesn’t make much $$, but grateful for what we have and what we’ve done….
Mike_Summey If you want to know the difference between speculating and investing, I can explain it very well…in nearly 40 years as an investor, I’ve never had a down year. In fact, the past two years have been the best ever for me. That’s because I was never a speculator and I never took the hits speculators take. On the other hand, many speculators made a lot more money that me for a while.
Mike_Summey I think Penny went to sleep!
ATHU Thank you Mike for all your input. I have enjoyed this evening.. Can’t wait until next month.
Penny nope
Mike_Summey mello, any questions from you before we conclude the chat?
sparky37 Have a good night all!
Penny still here, but just signing off. See you guys next month.
Mike_Summey How about you Jan-Erik?
Jan-Erik Just working the system. Join to learn.
Mike_Summey Thanks athu
mbroadway Mike and Charlie, thank you very much for your time. You guys are extremely helpful.
CHARLIE Thanks mbroadway
mbroadway Good night to everyone and hope you all have a super May.
Mike_Summey Charlie has been a real asset for me. Hopefully I’ve been the same for him.
theresa We find great deals. We know of one right now, no money for mortgage to buy hold our only hope is to buy flip; then eventually we can buy and hold. does someone know a better plan? what is the secret? or are we stuck struggling forever?
Mike_Summey I wish everyone one of you would go out and make a few offer during May and come to the June chat with some success stories.
CHARLIE Mike talk to you tomorrow & yes you are a asset to me, i am learning everytime we look at houses
Linda Have a great month everyone!! Good night, thanks for having this venue Mike.
theresa time to go i guess. thank you bunches. i guess i will keep looking.
Mike_Summey I’m outta here too! It’s been a long day. See you here next month. Until then “Happy investing!”
theresa by greg

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