29 Sep 2011
- Written by Carlee McCullough
Carlee McCullough, Esq.: How did you get started in real estate?
Mike McGee: My brother had a friend that was a loan officer for Fidelity Mortgage. I started going to his office and eventually became a loan officer myself.
CM: Is this a good time to invest?
CM: With the downturn in the marketplace, who is lending these days?
MM: You have banks, private lenders and mortgage companies. The same people are lending but with different requirements.
CM: What is required to obtain mortgages?
MM: This one actually will depend on the individual lender. For first time homebuyers the norm is a 620 credit score. However, some lenders allow lower scores with compensating factors or larger down payments. Some lenders have increased requirements to 640 credit scores. For investment properties, the requirements are much higher scores and the ability to debt service the loan.
CM: What type of creative financing is available for investors?
MM: There is not much creative financing out there these days. If you can get some seller financing or hard money lending that will be about creative as you can get. Most mortgage companies and banks are conservative.
CM: How do you decide what properties to invest in?
MM: It’s a mixture of marketability of the property and what the property has to offer. Also I look at the price and resell value. I also look at proximity to schools and public transportation. There are many other factors but these are a few of the important ones.
CM: Do you prefer to buy and hold or buy and flip?
MM: I do it all. I buy and hold some properties and flip others. It just depends on the area and the activity of the property.
CM: How do you determine when to buy or sell?
MM: It’s always a good time to buy. I only buy if it’s a good deal. However I only sell if I can get the maximum benefit from my sell. Sometimes this does not mean highest price. There may be a property that I need to get off the books or free up cash for a bigger deal.
CM: How do you find good tenants for rental properties?
MM: I subscribe to MemphisDailyNews.com, which will give me any public records search on any individual that resides in Shelby County or had business in any of the Shelby county courts. I also have authority to pull credit to screen a tenant. Some tenants have been to court so much that they know the system and how to buy time in your property without paying anything.
CM: What would your ideal deal encompass?
MM: Finding a potential buyer and actually tailoring a property to their needs. This drives my holding costs down and I could turn that property over in 30 days.
CM: What has been your most memorable deal?
MM: I bought a note from a bank where the borrower was delinquent and I enforced the demand. I ended up with the property. This was for a piece of land and the bank did not want to foreclose because the land’s assessed value and true value was miles apart. Essentially the bank assumed they had a bad asset.
CM: What’s next on the horizon for you?
MM: Actually I am enrolled in the U of M Fogelman School of Business. It’s never too late to go back to school. Eventually I hope to earn my Masters in Real Estate Development. If I want to broaden my horizons with the commercial aspect I have to broaden my knowledge as well.
CM: What is your investment philosophy?
MM: Buy low, sell high.