New Member from Chicago!

[Alexander Chavez]

Hello Everybody!

I am new but old to BP as I originally joined back in the middle of 2014 and was following along until I began searching for a new job (Engineering)that was closer to home (was commuting Chicago to Aurora before) and of course offered more money and better career growth. I got a new and better Engineering job with an Integrator back in January and am now dedicating more time in learning the different aspects of RE Investing, but focusing on Flipping/Rehabbing. I decided to take a pause in my RE learning adventures while job hunting due to time. Also, I wanted to become more capable of understanding different RE terminology and concepts so that I know how to ask the right questions and truly understand how a lot of it works, as before I was just reading most of the posts I would get alerted from my keywords alert setting on BP and was not comfortable becoming actively involved in the conversations because I just did not know enough. 

So to improve this I took the advice of what seems to be plenty of different RE investors on this site. I purchased and read Rich dad poor dad, I also purchased both of J Scotts books and am in the process of reading them. I download the podcasts and have been listening to the ones that seem to match with my RE goals (during my commute for work). I use Redfin to search my target areas for recently sold properties and current properties for sale so that I can have a realistic understanding of what the market is like in these areas. Through what I am learning from these different sources I am starting to build my business plan/model. I am also hoping to build a good network of REI to learn from and possibly even partner with in the future. So now it is time to pull the trigger and become more actively involved. I do enjoy the work I do for my job so I do plan to do this all while holding a full time job, for now at least , we'll see if that changes in the next few years.

Here’s a little about me and my experience with RE. I am a 26 year old Engineer, born and raised and currently live in the city of Chicago. I bought my first home back in 2013, it is a brick 2 flat in the Avondale neighborhood of Chicago. I ended up doing a complete gut rehab on it. I rent out the 2nd floor and I live on the 1st floor. Although it was a stressful and time consuming task I am glad I went through the experience as it has helped me learn a lot about myself and rehabbing. This was a great experience and I enjoyed seeing the before and after results as the project was moving along. I did a lot of the work myself (as part of the learning experience, and since I was planning on living there) so it did take longer than one would want in a true house rehab/flip, so although I saved on rehab costs it did increase the holding costs since I did not have a tenant to help cover the mortgage until I was done (took 9 months- while working a full time job and dealing with a 3hr daily commute!). However, I look at that as an investment in my Rehabbing Education. I did use a contractor to help out with some of the major repairs (42 windows, brand new plumbing, new hardwood floors, and converting from radiators to central air) the rest I did myself so I got exposure to working with contractors and truly understanding what kind of work is involved and what some of the costs in a rehab might be and how to survey a property for needed repairs. I have plenty of good and bad experiences from this that taught me a lot!

So my current plan is to buy distressed properties near my actual residence (Avondale and the surrounding neighborhoods), rehab them and then sell them for a profit. I do not plan on doing the rehab work myself for these, instead I will use contractors as I will attempt to flip these within a short time frame. The plan for 2015 is to do one of these deals just to get the ball rolling (but that could change depending on how well it goes). Then for 2016 do at least 2-3 flips. I am in the process of trying to build my team and asking all the questions I have in order to make this work. For the financing portion I am exploring a few different options and was hoping to get plenty of feedback from “BP’ers” on what they think. So time to jump into some of the questions I have. Sorry for the extremely long post, hopefully you made it this far :-)

One financing option is to partner with my father (turning 62yrs old this year) for this first project. I will use my home and take out a line of credit to fund my half. He has some money in a 401K through work and plans on retiring in a few months. He is not very knowledgeable on how to invest it after retirement so is leaving it up to me to help him with that, and I feel that Real Estate will generate much larger returns than the stock market. I have been looking into Self directed IRA so he can roll some of that into a SDI to use for RE investments. Any SDI companies anyone here can recommend(hoping for something local where I can actually sit down and talk with the person face to face as there are a ton of IRS rules that will need to be followed)? Any insight as to if you think this is a good idea or not or what other options you may suggest? Any suggestions on using my home and taking a line of credit loan to fund my half and possibly my future projects?

This is the team I am hoping to build for my projects. Attorney, Accountant, Contractor(s), Inspector, RE Buyers Agent familiar with my farm area, selling agent, Title company. I have a few candidates for some of these but the more the better. What else would be essential? Any recommendations on the above that are local (Chicago)?

Thanks!