IL SFH: Has this happened to you?

[Yuuj V.]

Hello BP!

I have a rental in the Illinois area, and currently it's been on the market for about 90+ days.

Cost: $100,500
Down Payment: $25,000
Rehab: $~6000
Vacancy: $~2600
Rent: $1650
CF: $370 (When rented)

So, my question is: has this ever happened to you?

My house does have a incoming tenant, section 8, through the Chicago Housing Authority.

The PM I hired attended all the classes and met all the requirements.

The House underwent an inspection by someone from the CHA, and they shot back that the house needs:

Furnace certification
Roof certification
Water Heater certification
Brand new carpeting
Re-seal/coat driveway
Replace all carpet
Install extension pvc pipe for sump pump behind house
Total: $5800 (est)

I'm in the thinking that I'm either being jipped (not by the PM, but by CHA) or that I should ditch the section 8 tenant/CHA all together and find another tenant. Of course, in IL, the law is that I have to entertain the S8/CHA request, but I don't know if I have to actually go through with all these repairs/requirements? Has anyone ever gone through something like this? Is it worthwhile to go through with it and suck it up and just move on? This is my first rental, and so far the experience has been.... not what I was expecting. I'm an overseas/out of state investor, trying to make sure I don't have to come home to a job.

Any insight/help/opinions are appreciated.

[Mike B.]

Hi Yuuj, 

Did you get a home inspection before you bought the property? If you did, the report typically outlines the life expectancy of all of those items you need a certification for. If you didn't then you made a mistake. 

Do you have pictures you can share? Sq ft of how much carpeting needed would help in estimating your repairs as well. Outside of that, The extension pipe is a nothing job. Seal coating the driveway should be about $500 (unless you have an unusually long driveway)... so unless you need a lot of carpeting, that $5,800 estimate seems a little high for a lower end rental. 

With all that being said, I would get the certifications done BEFORE you do any of the outlined work. If those items come back that they need to be replaced then you could be looking at a significantly higher rehab cost. It will make the decision a lot easier.