"Brain Pick a Pro" Interview with Rehabber Mike Ivie


Larry: This is our first Teleconference or Tele-Seminar and we just kind of did spur of the moment. Sent out an e-mail actually today and had a lot of people registered. We are going ahead and get started. My name is Larry Goins and as a lot of you know I am with Financial Help Services and Metrolina REA up here in Charlotte. We do hard money loans and buy and sell about five to ten houses a month. Some of them we wholesale, some of them we retail and some of them we buy and fix up and sell. What we have started wanting to do is to start having a weekly Teleconference. Someone sent me a great e-mail today with a great idea. Daniel Shortage on the line? He signed up for the Tele-Seminar but he mentioned that we should probably do this after 9:00 pm when the rates go down. I thought that was a pretty good idea. We are going ahead and get started. Michael how about you introducing yourself and tell them a little about you.

Mike: Okay, I am Mike Ivie. I have been in Real Estate for about thirteen years. I buy and sell property. I buy it to hold it and rent, have approximately little over thirty units. I also have commercial property and just mainly try to accumulate these properties and rent out the better properties I have and maybe just sell for a cash flow some of the other units that are not as maintenance free as the ones that I keep.

Larry: How do you go about determining that, Mike?

Mike: The properties I am going to keep, I look for all brick. If it has vinyl on it that is good also. I am just looking for basically the outside to be pretty much maintenance free. To where there is not a lot of fix up cost for the outside time and time again, like it is wood it can rot and weather and you have to paint it and all that. I just look for properties and am going to keep the ones that are real strong on the outside, structurally sound and that are the ones we hold on to.

Larry: You know that is a good point. For the one that I keep, I like a three bedroom, one and half bath, brick ranch. That is my favorite kind of house.

Mike: That is the easiest thing to maintain, because brick will last as long as you want to last to pay it off and still have something good and sound.

Larry: I don’t like the real old houses, although sometimes I buy them. I used to say I didn’t want anything older than me, but that did not work out too well. I ended up leaving a lot of deals on the table. How did you get started in Real Estate, Mike?

Mike: I got started with an Accountant who told me I was paying too much in taxes and I needed to do something with some money. I had a buddy of mine and he said, “ let’s buy some houses.” We just went out on a limb and bought four houses in the first two months.

Larry: That is pretty strong.

Mike: In fact, those four houses as of today, are paid for, I still have them and they are just cash flowing.

Larry: That was about eighteen years ago?

Mike: The first ones I did was an owner finance group. It was an old fellow and he had enough and he said he would finance it, so he didn’t get killed on his taxes. He did ten year notes on them with me. We just paid them and got them down to where they were small and just paid them off and started having the income.

Larry: Some people may not know and explain a little about this why he would want to take back a note and have your make payments over time, and how did that help him out on his taxes?

Mike: If you take a big hit like that, in his case it was $120,000.00.

Larry: For all four properties?

Mike: Yes. That would have put him in a higher bracket and he would have been paying Capital Gains and he had already depreciated them all the way out. He didn’t have anything there. His options were to take the money and pay the taxes or he could finance them to me and he did. I think the rate was 9% when he did it, so he just became the bank. He made the money, the made the interest and he had an income every month for ten years and he only had to pay a little bit of taxes versus one big huge chunk that takes away from your money.

Larry: Just to take that one step further, whenever you depreciate a property you can actually depreciate it down. What you are doing you are depreciating that your cost base of the property, so after you have a property for some many years your cost base is zero after you have depreciated it down. If you sold that property. If he sold it for $120,000.00; if he had done a cash sale he would have had to pay taxes on $120,000.00 long term capital gain. Is that right.

Mike: That is correct.

Larry: By taking what they call an installment sale, which is an IRS term. What he could do is, he could claim the income from the sale of the property as he received it. Like for example, what was you payment on that, Mike?

Mike: I think my payment was around $900.00 something.

Larry: $900.00 a month, so he really only claimed only $10,800.00 a year, each year for the next ten years until it was paid off.

Mike: And made the interest off of it also. The thing that I like about the owner financing, is it eliminates having trouble when you go to want to borrow money. An owner finance does not show up anywhere. You don’t have a bunch of money you have to offset due to the fact that you have these loans out. They just don’t show up. It enables you to do more, if you don’t have to say, “well, I have this loan and this loan and this loan!” You can just right through and do your regular loan.

Larry: Exactly. A lot of people do strictly owner financing. I know some people who just do that, they do not like to go to the banks or deal with the banks or lenders or mortgage companies. Of course, that doesn’t help me any.

Mike: Those are hard to find. Everybody gets worried that somebody is not going to pay and than they are back with the house. A lot of people just wants their money and they will pay their taxes and they will go on their way.

Larry: Tell us, Mike, what you look for in a property that you are going, to say rent versus you are going to retail and how you determine that.

Mike: When I go to a property, I like to check out the neighborhood. I like to get a feeling if the neighborhood is doing well or if I think it is on its way back. If the neighborhood has been flat. I just weight those against what I have. If I go into a neighborhood and I think it is going to do well, that may be potential for me to just rent and try to build the equity, just hold onto it so I can make some money in the end of the sale. As renting is, the way I put it is free money as long as you have it rented you have somebody else paying for it for you. You are just making money each month as long as you keep it rented.

Larry: Do you look for a certain amount of cash flow on each property over and above your mortgage payment or how do you figure that?

Mike: I like to at least make a $150.00 after my payment, taxes and insurance. I will go to $100.00 but it will have to be a really strong property that is going to grow at a good rate.

Larry: In other words, in a better appreciating area.

Mike: Exactly. As long as it is going up, I will make the numbers a little tighter. $150.00 is where I like to stay.

Larry: Do you actually put any of your own cash in the deal? I know some properties you pay cash for, some you go and get a loan. This $100.00 to $150.00 a month cash flow, is this after you have fixed up the property; and either re-financed it and got all your money back or do you actually keep any of your own cash in the deal or try to pull out cash?

Mike: I have several ways that I do it. Most of the ways, if I do pay cash for it, I will re-finance it and pull the cash back out and move on to the next one, out of that money. With the hard money loans, if I have one that needs to be fixed up and it is extensive, I will borrow the hard money. Normally I try to get it fixed within a thirty day period. When I am about half way through that fix up, I will go ahead and start my process for the re-finance. By timing it good, I have sixty days there where I do not have to make any payments and I have used the hard money plus I have re-financed it back with the regular bank and there is no money/no payment being made in those sixty days. That is what we try to do. When we do it, I try to set it up, when I go look at a house and make an offer on it and that offer is accepted, I will set up one day to have the house inspected. I do have them inspected.

Larry: You hire a Property Inspector?

Mike: Yes, I do that and all he does is structural inspection. He does the crawl and he does the attic. I do everything else. On that particular day, I set up everybody I think I need when I went to the house to look at it to make the offer. If I need the electrician, the sheet rock guy, the plumber, I will set those up at the same time; so when we come to the property everybody comes and I say, “look go through, check everything that you need to check, get me a list of what you see is wrong, or what you see needs to be done.” They will each one of them individually do that, then they will call me back later that night and say here is the number and I already have raw numbers and I decide then if the fix up is pretty much where I thought it was going to be and then I will call them back and say, “we are going to do the deal, we are going to buy and fix it up and we are closing on Friday.” If we close on Friday, on Monday everybody shows up on the job ready to go to work knowing what they need, what they have got to have and we start working immediately.

Larry: Wow, you have a system down to for that.

Mike: We don’t run back and forth. It is okay, I got the house, I need a plumber, I need to do this and I need to do that. It is already set.

Larry: You have it lined up in advance.

Mike: Yes. The week before I purchase it, I go ahead and get my scheduling down so everybody knows when they are coming, what they need to do. All they have to do is get it and get it done and that is why we try to stay in that thirty day period so there is no payment out of pocket. We are just using their money and getting it done.

Larry: Let me ask you this. If you are able to get all these guys lined up and they meet you out there at the same time. You obviously have been using these guys for awhile. How long does it take you to, or did it take you to find the right crew or the right team and what do you look for in building your team of subs?

Mike: It took me about five years to find these guys that I have. What I look for is I try to find guys who are maybe starting their own business that are you ready to go to work and are willing to stick with you through thick and thin. As they grow obviously, you are going to grow too. You want them to stick with you after they start growing. Most of the guys I have now own their own company but they still know that when I call they still take care of me, just like they always did. I am blessed to have those guys. They are true to their word, I don’t have to check on them or anything like that and it is just, we kind of bonded together. I will always try out somebody different if they come recommended by one of those guys. There is enough work for everybody and it is just like my carpenter guy, he came up to me the other day and said, “Mike, we have about four houses going on. I know this guy, he is really good. He is wanting to get started in this” I took him over to a house and I gave him a shot, because after doing it for so long, after about half a day you know if somebody is going to be good or not at what they doing. I don’t give too many third and fourth chances to somebody that doesn’t want to show up. The key is getting it done, getting it done right, and either get it up for sale or get it up for rent before a lot of time has gone by.

Larry: Obviously, a lot of us do not have five years to wait to build that team. What would you recommend in trying to find the right kind of person or right kind of subs or even a General Contractor, what do you look for and what are some of the questions that you ask and that sort of thing?

Mike: I am a true believer in referrals. If somebody is going to refer somebody to you, it is a good sign. I just try to find people who, well you pretty much by talking with somebody, if they will tell you if they can do it and everything, but actually doing it you have to test them out. I try to test them all out and see what they are capable of doing and how they are going to handle me with what I have going on. See how they take that and if they are just wanting to line up a bunch of work and have three or four jobs going, I check that out to because I want them on my job and I want them there until they are done and we can get finished. A guy who has a lot going on, you know he may become short on help or he may be at the other job. Depending on who is paying at that point is pretty much where they are going to be. I just look out for that. It is gut instinct, just keeping an eye on them and knowing if they are going to be good for you or not, if you work well together. I refer a lot of my guys around to new Investors to help them out and they get started.

Larry: Do you not worry about somebody else taking up a lot of their time and them leaving you behind?

Mike: Not really, there are a lot of good guys out there and you just have to kind of weed through them; but the ones I have, I tell them, “I don’t mind giving you work but you have to take care of me first, if I have something come up”. They usually do, they are pretty good. If you find somebody good and you are paying them good, they are pretty loyal to you.

Larry: That is a really good point.

Mike: If you nickel and dime somebody to death, they want to move on to the next guy that they can make the money from. My guys really cannot say that I nickel and dime them to death; because I tell them, “just take care of me and I will get you other jobs that you if you need to make up, you can make up on somebody else.” They do take good care of me and we just established a good relationship and I still every now and again I have to look around to see who is doing what and how they are working, to see how somebody will benefit me. Other Investors will tell you that, “I used this guy and he was good, or don’t use this guy”, word of mouth is a big selling point.

Larry: I have found too that ever once in a while you have to, even the great people, whether you are talking about subs or an Appraiser or an Attorney, Lender or whatever, they will get lazy, You have to keep them in check. I know a good friend of mine, Fred Hoffman, one time he had a heating and air guy that worked for him. It got to where he did even ask him for a price, he would just go out there and okay go ahead and do it. The last three the guy went out and checked, had to have a new heat pump. So he called the next guy, he was going to call and have him go out there. He said “no, the coils just needed to be cleaned.” So when the guy called back to see if he was ready for that heat pump, Fred said, “you did this to me twice, third strike and you are out. Don’t do this to me anymore.”

Mike: If you get comfortable with them, you have to mind your p’s and q’s with them.

Larry: You have to keep people in check, I guess.

Mike: I have seen some of these guys that go out and they want to get three prices. Don’t fool with that at all. If you beat somebody else enough, they are not going to fool with you anyway.

Larry: That is absolutely true.

Mike: They know that every job they are going to, they are having to price it out, along with two other guys. They are going to get where they don’t even show up to give you a price.

Larry: There are two other things that are just as important as price to me. That is good quality work and getting the job done on time. Like you said, you try to turn a deal in thirty days.

Mike: That is the key. That is where we try to stay.

Larry: Now do you actually do some of the work yourself?

Mike: It depends on what is going on. If there we have just one house going on, I will go over there and do as much as I can possibly do. I don’t do electrical and plumbing and stuff like that. As far as the other stuff, like adding a closet or adding a wall, stuff like that putting in the cabinets and all that stuff is things that I will pretty much do myself. But I won’t get into a time issue, I don’t say to myself, “well I could my this house and save $1,500.00.” By the time you paint the house, if you look at what you saved, you really did not save anything. If you had a painter come in there and he painted it in two days and it took you ten.

Larry: So there is not really a lot of advantages to doing it yourself.

Mike: If you put the dollars to it. I know a lot of guys who say, “I can go in this house and I will have this thing fixed up by myself and not spend any money, and I will have it ready for sale in four months.” Well I am try to have that baby on the market and have marketed it for three months, if not sold it in that timeframe and they are still working theirs. Then you may turn your money over quicker and you are able to do more, your money is not just sitting. Even if you pay cash for it your money is sitting not drawing any interest, that it could be drawing no matter where you put it. You are losing daily money.

Larry: It is a lost opportunity. You have to look at it that way, even if it is your own money and you are paying cash. You have to look a the better deal theory.

Mike: If you had it somewhere else, you would be making money. If you are painting them walls every day, it is costing you every day to get it done.

Larry: That is true. Some people do maybe one deal at a time or whatever and they will buy it and go out there and fix it up. That is okay if that is your goal, but if your goal is to do two or three a month and build a portfolio, or buy, fix up and retail. You cannot make any money holding a paintbrush. You make your money in the deal.

Mike: Plus you do not have many deals that come your way; because they will say, “you know Larry is over there working on that house, he wants to buy another one when he is finished with that one.” There as if people knew you were turning houses they would be sending you houses because they know you could do the deal and you would just keep rolling and that makes you even more money.

Larry: Let’s jump up a little bit, can you tell us about how you determine how much you are going to offer for a house.

Mike: When I see the house, I normally have the comps of the neighborhood with me.

Larry: Where do you pull those from?

Mike: I pull those off of relators.com or I will actually have a Realtor that I work with, he will pull them. I try to get a gauge of my price range when I go to look at it. If I am looking at a house that I think will do well and it is priced decent, I will eliminate the price and try to work with my numbers on what I need that I am comfortable with for that particular house.

Larry: Not even take into consideration what they are asking for it.

Mike: Right and then I will take that price and look at what they are asking for it. I probably going to be either a lot low or I’ll be right in line with they are; because they have done comps too. Where that number comes in, I just try to make an offer based on that, whether my offer is lower than that asking price or if I come in a asking price or I pay more.

Larry: I was going to ask you about that. You told me just the other day that the last what two or three you bought you actually paid more than what the house was listed for. Is the right? Tell us how that worked.

Mike: I went and looked at the particular house I was telling you about. I went and looked at and I did the comps and everything and the neighborhood is really strong and it is really coming back. They had the house listed at $35.000.00. It was a three bedroom, one bath and plus too, you have good bit of competition bidding on it also. I did my numbers on it and without the price in there I came up with about $38.000.00 that I could be comfortable with if I was to purchase it. So I made the offer of $38,000.00 and I did buy the house and I bought it roughly a thousand dollars more than the other guy was that was closest to me.

Larry: Okay, so it was a kind of a multiple bid situation?

Mike: Right, but still, I figured that my numbers came out exactly where I needed for them to be at $38,000.00 and I was comfortable with that. With the banks and dealing with these foreclosures, they will get those offers in a rapid rate and than tell everybody to come back with their highest and best and they will play ball with the highest guy. I just eliminate all of that and say, “here is what I am willing to do, what I am comfortable with.” If I get I get. They came back with that one and said, “you bought you a house.” If you ten days to get your inspection done and that is when I go to work. We did one other one where we went over $500.00 from what they were asking. We were able to get it because the next guy below me was at asking price. I just nudged it up $500.00 because I wanted the house, but it didn’t matter to me at all if I got it or not. I just bumped it up a little bit to still be safe, very safe.

Larry: What is the most you want to have in a property as far as investment to value? In other words, like 70% of after repaired value or 80% or 85%?

Mike: 70% is my magic number. That or less.

Larry: That is what we sell our houses that we wholesale to other investors. We have to be able to buy them cheap enough to where we can re-sell them to investors. Including hard money rehab, closing cost, rehab cost and the purchase price at 70% of after repaired value. In fact, you can always re-finance the deal at 75% or 80% if the loan amount is over $70,000.00 which is now what most lenders require to do an 80% cash out refi with no seasonings. You can actually money in your pocket on the refi and then rent it out at a positive cash flow like you said $150.00 to $200.00 a month.

Mike: Right if you are pretty positive if you have a rental. You have got done and completed and you got 70%, you are in pretty good shape in the rental market for making some good profit.

Larry: That is true and the other is advantage to is if you are in the resale market for retail, you can keep your purchase price to your retail buyer at appraised value and then you have room enough to pay their closing cost, buy their rate down, or how about carrying about 10% seller profit, anything to help get the deal closed.

Mike: You have to be safe, you have to do your own homework yourself. Most guys go on what somebody tells them, what a Realtor tells them is is worth. You have to do your own homework, so you don’t get bit in the end over what somebody has told you they think.

Larry: That is true, nobody is going to do it like you do for yourself.

Mike: Your are the one who has to pay, you are the one who has to do the numbers. You are the one who has to be comfortable with what you are getting and what you are doing, so you can make the money you want to make.

Larry: That is true. Do you do your own property managing?

Mike: Actually, I have two different property managers right now at this time. I have my regular guy that I use but I have these other guys referred to me by several people and I put the numbers to it and they saved me some money. So I have been giving them a little bit here and there to see how they handle things; and if we are going to be able to work together and how they treat the tenants and handle everything in certain situations. I am slowly learning about them to make a change one way or the other.

Larry: Is there anything in particular that you look for in a property manager?

Mike: Well a property manager is a rent collector, that is pretty much their deal. I mean every house that I have up for rent, I put up for rent myself. Their sign is usually right beside mine, but I advertise every house everywhere I can.

Larry: They are okay with that?

Mike: Yes, I mean the key is getting it rented. If you have a property manager who has three hundred houses, they are not going to be sitting in your yard every time somebody calls and wants to look at the house.

Larry: That is a good point.

Mike: You as an individual can make it easy for a tenant, just by saying when do you want to see it, driving over there, meeting them, talking to them about it and showing it to them. They are more apt to deal with you versus going to the Property Manager, picking up a key, going to look at the house and then going back to them to drop the key off. So if you are there when I go, I take my applications with me, I meet with them and they can look at the house. If they want to fill out an application, I help them to fill it out then I take that information and call the Property Manager guy with it and I say here is the information. They run the credit, they call me back and say she checks out okay and I will call her back and I tell her I will meet you back at the house with your keys and the lease. We will sign you up, you will give me some money and we will move you right in.

Larry: So you basically just use the Property Manager to collect the rent. That is pretty strong. You know, Mike, I never thought about that. That is a great idea.

Mike: They do advertise for you and everything. You have to look at it from their standpoint of view. I mean they do not have somebody that they have hired to go show property or do all that different stuff. I mean you have to pretty much do the things like that yourself. Some guy will say well just let them handle everything and then you talk to them three months later they are complaining well why hasn’t my house rented. My first question to them is well what have you done for yourself? Well I hired a Property Manager to do that. Well that is good and well, but you are one of a 150 or 200 that he has you are not going to get that special treatment unless you do it yourself.

Larry: You know that is one of the things that always scared me about having a Property Manager lease my property. They have their sign in my yard and when they get a call I don’t know about it. I am worried that they are trying to rent one of their own properties or somebody else who is down their back a little bit heavier about getting their property rented, when the person actually called about my house.

Mike: You are exactly right. As long as I have been doing this, people will deal with an individual before they will deal with a Property Manager, if they have that option. They would rather deal with somebody one on one than to just deal with just whoever is answering the phone that day at the Property Management. They want to know somebody, they want to be able to call somebody and that is pretty much how I present it. They know me, they know that they are dealing with me now, but I tell them I say, “look I turn this over to the property manager. Here is the girl you will be dealing with, here is her name, here is her number.” They get uncomfortable in a situation where normally it is just like a machine. You walk into the office, you get your application, you go pick up this information from the Police Department, you go do whatever they need for you to do. It is just like a machine, you do not feel like you are being treated like a person. If you that yourself, you will have greater success in renting your property just by putting a little effort and doing things that are simple

Larry: That is a good point. One of the little things that I do when I have a property for rent. Everybody that calls, I tell them the same time to meet me over there and if I have five people who say are going to meet over there, three people will show up. They are all running around hoping that the other one doesn’t get and trying to corner me in the back room somewhere.

Mike: That is it. They want the one on one attention. That is just the way they work.

Larry: That is true. Plus, it is a good time management tool too.

Mike: Plus too, if you do it that way, I guarantee you have a one friend who is going to need a place to rent and they are going to call you. They are going to say, look this guy took care of me and you know, he was super nice and I didn’t have to do all the running back and forth. He showed me the property, he showed everything to the house, that is what people are looking for. I mean they have to work eight hours and they 45 minutes to an hour for lunch. With Charlotte nowadays, how far can you get in an hour. You cannot get across town and back anymore. If I am meeting somebody at 6:00 or 6:30 pm that is when all usually want to meet.

Larry: Yes, after work.

Mike: It is convenient for them, everything is there. They do not have to do anything but get their application in and I check out everything and put them in. Tell them that I have something else for them that is not as expensive and that way I am still showing them my property. The Property Manager guy, if they don’t work out there, he is going to show them something else and may not be mine. That may be on his mind. As long a I keep my hand in it and I can keep showing them what I got and hopefully they will find something they want. If I don’t have anything, I say, “now look, they have a list over there, go over there and get the list and see if you can find something that you want.” I will tell them that I have been helping you and you know you will be pretty much approved and that will be it. They will still get the attention they want.

Larry: Even though you have a Property Manager collecting the rent, who make the repairs on a month to month basis, if there is some kind of little repair that needs to be made on the property.

Mike: The way I am set up, anything less than $100.00, they automatically take care of. Anything over a hundred, they call me and I will determine by what they tell me is wrong if I need for them to get one of their guys or if I am going take care of it. If is is anything over $400.00, they will call me with the repair plus an estimate from their guy and I can determine by what he is charging me if that is fair or not. With the Management Company having so many properties, normally their guys are pretty fair with the amount of work they get from them. You learn over time what cost what and if somebody calls you and says you know our guy can put the hot water heater in for $500.00. You run those numbers through your mind about what the hot water cost, what the labor is and the time that you would have involved in it. More then likely you will just go ahead and let their guy do it and it is done that day and you do not have a headache. I try to keep my hands in every repair unless it is less than $100.00.

Larry: I don’t blame you, that way you care keep control over it. You and I were talking the other day and you told me about this program, I thought it was awesome that you do. The Free Rent Program, tell everybody about that.

Mike: I do free rent for one month. It is the thirteenth month, they have to stay the full term to get that thirteenth month free. In that thirteenth we sign a lease for another year.

Larry: So they are in it for twelve months and the thirteenth month is free as long as they sign the second year lease, it that the way you do it?

Mike: Yes, that is correct.

Larry: Now you promote, I mean you have signs that you put on your property that say that, right?

Mike: Yes. The free rent sign, just like any advertisement, those that call that is going to be their first question.

Larry: What is the gimmick?

Mike: Yes, that is like all of us do. I sign them up for a year and has been really successful, that month I don’t have any money for that particular property. But it is rented, I would rather have it rented versus not rented cause them I am spending the money any. Plus, if they do not stay there is nothing lost there anyway.

Larry: Right, that is true.

Mike: If they do stay, than I more than likely have another year out of them, but I just do it over the course of those two years. I do it on properties that I really think are going to be hard to rent if there is a lot in the neighborhood for rent. I just kind of weight it on that. Normally, I put the rent sign up when I am almost finished with the house to see what of kind of activity I have before it is done to determine if I am going to have to rent it that way, or what other avenues I am going to need to go down to get it rented.

Larry: Mike, how about telling us a little bit about some of the other things that you do. I know you said you get an inspection of the property, you meet your guys out there to do a take off on it. What are some other things, like termite inspection, or survey, or dumpster fees or any other things that you figure into the cost, including carrying cost when you are looking at a deal?

Mike: My two main things that I do and I do on every property is the inspection and the termite letter. If you find an inspector that you stay with, your prices will get better, the more you do. My guy, for $150.00, he will crawl the house from one end to the other, he takes digital pictures. He gives me a full report. He does the same thing in the attic, the roof and everything. So I actually have a full report that comes with pictures, so I don’t have to crawl under the house and do all that stuff; and then the termite guy will do his inspection and give me his report and that is $60.00. For $210.00 I have got the house inspected and plus too, if I find something wrong that I really don’t like, I have justification not to purchase the house. I am not just calling the bank up and saying, “look, I think there is something wrong with the seal, I don’t want the house.”

Larry: You can send them the report.

Mike: Right, I just send them the report. I highlight the problem that I have been noted from an individual who inspects houses and I do not feel like that I am interested the house due to that fact. They know the codes and it gives you a different look at it.

Larry: You know another thing to, Mike. I’m sure you have used this before too, but you can use that as a negotiating tool, if you can get to a happy medium price knowing that there is more work, at least get it on paper, get a deposit up, get anticipating a close, whether it be a bank or Seller or whatever. Then when the inspection comes back it needs all this work. You knew it needed to begin with, then you send it over and say, “this the best I can do, I’m going to have to have another $3,500.00 off. But you have already what I called “got’ta ‘em in the glue”. You know you get them in the glue and get them anticipating a close and then they will okay, alright.

Mike: That is true, if you are deal with the bank. They have not seen the house, the only thing they have seen is pictures. If you have got justification from somebody other yourself it makes it more realistic like.

Larry: Creditable.

Mike: Yes, more creditable, you actually can say here this guy does this for a living, he is licensed, he has found a bad seal all the way across the front. A seal is $125.00 a foot and here is what we are looking at. Can you at least split it with us or something, it is a good negotiating tool. It is money that is well spent. It is just like, a good way to explain it is. You would not spend your money on a stock unless your researched it just a little bit to see what it was doing and what it was going to do. If you are going to spend $40.000.00 or $50,000.00 why not spend $210.00 to research it to where you know pretty much all there is to know about it. All houses have hidden damage, but it still $210.00 well spent for your investment. It is not going to sneak up behind you when you crawl under there to work on something and see something else.

Larry: Yes, I agree with you it is money well spent. You know those things can be intimidating too. With all everything they put into them, but that is good information. I think it is important too to know that if you get an inspection from a Property Inspector, there is going to be things on that inspection that may make you nervous or may scare you, but a lot of that stuff is easily repairable or some of it is really irrelevant. Wouldn’t you agree.

Mike: Exactly. Even if I do a house to re-sell, or retail it, when I am done I will get it inspected.

Larry: So that way, you know you do not have to worry about anything with your Buyer.

Mike: That is right, I tell the buyer. I say, “here is my inspection report, here is what was on there, we fixed everything, if you want to get it inspected you are more than welcome.” I would love for you to get it inspected. We just go through that process because nowadays, people want to move in, put their underwear in the drawer and set in the Lazy Boy and not have anything to do. If it is inspected and I fixed everything, but you know you miss things and somebody else come in there and sees things that maybe you did not see. It is an easy fix. If they pay, to get it inspected you are going to more than likely have to fix some of it or something so why not just go ahead and “nip it in the bud”

Larry: Be done with it.

Mike: That is it. Just say here it is.

Larry: It is comfort level too for the buyer.

Mike: Exactly. If they walk into one of my houses they get everything they need to know about the house in that report and it gives them peace of mind.

Larry: That is a great point.

Mike: For most people.

Larry: That is true. Mike, how about for the last few minutes we can take a couple of questions, if anybody wants to ask some questions. Is there anybody that wants to ask a question?

Participant in the Teleconference: I have a question.

Larry: Sure.

Participant in the Teleconference: Hey, it is Glenn Woodson from Spartanburg, how are you?

Larry: Glenn Woodson, the world famous Real Estate Entrepreneurial Mogul.

Glenn Woodson: I appreciate you letting South Carolina hicks get on this line.

Larry: Anything for you Glenn.

Glenn: I wanted to ask you, I have heard these techniques about when you are interviewing, you get three stacked up at the house, you are showing the house, do you charge for the rental application? Some people I have even heard make it a profit center. They want twenty applications on one house and maybe they only needed three or four.

Mike: I personally do not.

Larry: I don’t either.

Glenn: I don’t either. I don’t feel right about it.

Larry: It is not good business, as far as I’m concerned.

Mike: Yes, I would rather feel like somebody get comfortable with me and not thinking that they have to pay me for that just for me to check their credit. I have never done it and have never been able to do it.

Larry: You know it is kind of true, there are even a lot of commercial lenders out there that will do the same thing, when you apply for a commercial loan. They charge for an application fee and sometimes it is several thousand dollars. Never anticipating closing your loan for you. It is kind of the same principal, but no I do not do that and I don’t it is right to, not at all.

Glenn: I have done the three stack thing, it is kind of fun having a few people sitting around, all wanting to rent your house; but at the same time it is kind of awkward on you part as well. I was just wondering how do you handle that? Do you just say I will get you in a minute?

Larry: What I do is I stand at the front door myself and have them come in , welcome them and tell them to just make themselves at home, look around, let me know if you have any questions. I walk off by myself somewhere. It may be outside, or it may be in one of the back bedrooms, or in the living room by myself. The ones that are interested, will come looking for me. It is kind of funny, it is almost like they end up waiting in line. It is kind of like everybody wants what they cannot have. If there are two or three people, another little thing that I use, is I show up about five or ten minutes late. That way no one knows what is going on, they are “do you own this?” “no I’m just here to look at the house.” “oh, well me too.” That work pretty good.

Glenn: I have gotten in situations where I obviously from my attitude am showing a willingness to stay and talk with everybody, but I tended to stay with one person for a few minutes and then that person will go, “well are they serious about it too?” I say, “I haven’t talked with them yet but they are still here.” I like what you are saying, Larry. That is a good idea just to kind of stay neutral and let them; like many times in business we are only looking for people that look and obviously the ones that want it will rise to the top, right there. It takes some of the awkwardness about it.

Larry: I know we only have a few minutes left, but I have been blessed in the sense that I have gotten to the point where I do not want anybody to think I am trying to slam them into something or force them into buying something from me or slamming them into a lease or a contract or anything. I would rather just kind of keep it low key and let them seek me out and just have fun with it and just always do the right thing with it.

Glenn: Everything you said on the telephone was good as far as your integrity, I was very comfortable with the way you handle this.

Larry: Thanks, it is our very first one and I do hope to do some every week. I am planning on trying to get it set up on Wednesday night. I think maybe what I will do is wait until after 9:00, what does anybody think about that?

Glenn: That is good.

Larry: Yes, I think that would be a good idea.

Glenn: After Knots Landing.

Larry: Yes, I hear you.

Glenn: I have never seen that show in my life, it just came into my mind.

Larry: After Seinfeld re-runs.

Glenn: I have never seen any of them either.

Larry: Glenn, I am going to get you on here and interview you next.

Glenn: I will tell you how a guy can spend ten years in jail and get out do a deal in one week.

Larry: Easy now! Well I’m sure they are about ready to cut us off. I appreciate everybody signing to night and I appreciate you listening and I hope you were able to get something out of it and we will send out a notice next week with a new number and PIN number to get in and we will have another. Thanks a lot and everybody have a good evening.