All Forum Posts by: Adam Juodis

@Matthew Olszak The property has a class C interior in a A neighborhood(Westmont, IL). I'm planning to rehab with durable materials, but with the rehab, it should attract a higher class tenant which would most likely take better care of the property, to generalize.

We all know the 1,2% when it comes to renting. How about a rule on the return you can get on improving/rehabbing a rental unit to raise rents, is there a general rule for that?

For example, I have a multifamily of 3 units that are renting each for $850. The interior serves its purpose, but is very dated. If I put $15,000 of rehab into each unit, installing modern rental-grade cabinets, granite countertops, nice laminate flooring, stainless steel appliances, modern light fixtures, new plumbing fixtures, etc., is that worth getting $250 extra rents per unit?

The additional rents for the rehab price would pay itself off in 5 years, and it would of course attract a more desirable tenant. Thoughts?

I'm gonna give you a single blanket answer that is, it depends. Here are a few tidbits of info:

Real Estate Taxes (estimated 4% purchase price)

Rural northern illinois is very broad. It depends on the county. I suggest you find a similar comp on the MLS/pseudo MLS sites and see the tax information for the previous year. You can also call the county assessors office.

Property Insurance (estimate 0.75% purchase price)

What's your purchase price? 0.75% on 100k is $62 per month, while 0.75% on 500k is $312. Multifamily and tax go along the lines of economies of scale. The more units you have, the less insurance/unit.

Property Management (11% rental income)

I think 11% is a good, conservative number. The more units you have, the bigger discount you can get though.

Repairs & Maintenance (10% rental income)

10% is a solid amount.

Utilities ($75 water / month / unit + $25 trash)

Call the local utility provider and ask them for an the average water bill amount

Lawn care (estimated $100 / month x 6 months)

$100 per month is way too much if you're buying a duplex. As always, it depends on the size of the land. $100 may be a good estimate if you're buying a bigger multifamily on a big piece of land.

Snow plow small driveway / parking (estimate $100 / month x 3 months)

$100 again probably two much for a small driveway. 

Capital expenditures (10% potential rental income)

10% is a good, conservative number for Capex. If the property is in newer/nicer condition, you could budget for less.

There are a solid amount of multi-families near me that are landlord pays all, or most, which is a deal breaker. I was looking into converting to sub-metering when someone mentioned the RUBS(Ratio Utility Billing System) to me. It sounds pretty ideal as each tenant pays their split of utilities in respect to square footage of their unit and how many occupants reside in the unit. 

It is legal to implement in the state of Illinois. I was wondering if there's any other caveats I should be looking for when it comes to utilizing RUBS? How do the tenants react to this system? For example, I wouldn't really be a fan if I were the tenant, since I always turn off lights not being used, don't take long showers, and don't keep the windows open while blasting AC(As examples), but having a neighboring tenant that isn't efficient with their utilities seems unfair.

I want to get a good idea, so when I'm analyzing these multifamily properties, I wouldn't have to account for the monthly utility expenses.

@David Lilley Did a brief search and this looks like a possible solution, as it is legal to implement in Illinois. Do you have any past experience with using RUBS for splitting utilities among tenants? To calculate utility bills per square footage seems like a good estimate, but you can have the tenant that is efficient and likes to save power, while the other tenant blasts AC with the windows open and always has the lights/TV on. Wondering how tenants feel about this system.

I've been searching for a property to invest in for a while now, and I've come across a handful of properties which would have been good deals if the tenant would cover their utilities - that's been the deal breaker. I was thinking if I could convert to a sub-meter system, and have the tenant pay the utilities(Water, Gas, Electric), it could give me the desired cash flow number I am searching for.

I'm not familiar very much with converting to a sub-metering system. I imagine there is a respectable up-front cost, but that surely gives you a good ROI over time. For those who have converted to sub-meters, how much did it cost you? When sub-metering electricity, gas, and water- or planning to, what should I look out for? I know not all multi families have the infrastructure for the conversion. Does converting to sub-meters also require any permits or licences?

@Mike Oresar welcome to Biggerpockets. It really is an amazing place for REI content. I go to a REIA every month in Downers Grove at Emmetts Brewery. It's all networking, no selling of any sort. I'll post the BP announcement for this months meeting below, but meetup.com has more info/updates on the meetings.

https://www.biggerpockets.com/forums/521/topics/415735-dupage-county-real-estate-investors?page=1#p2603686

@John D. But now when you look at your credit Karma, those credit queries now only combine for 1, not 4 correct? Pretty sure they combined if your score only dropped 20 points, but I'm just very cautious when it comes to my credit, haha.

@Jeff Dulla In order to receive pre-approval, wouldn't the lender have to pull your credit? My credit was pulled last Saturday. Also, in my current case, I don't  have a specific property yet, but when the time comes, I want to have a lender set in mind.

I know current rates will fluctuate based on the actual date of closing, but I would like to figure out required downpayments, structuring of PMI(For FHA), mortgage fees, and how move in ready does the property have to be in order to receive financing(Ex: some Freddie/Fannie based loans are strict on only lending to houses that are move in ready).

I received pre-approval last weekend, but I would like to shop around and see what other lenders have to offer me. What I am trying to prevent happening is my credit score being pulled multiple times, and the pulls actually adding up against me.

If I ask a few more lenders for mortgages, will the credit bureaus combine the hardpulls? Is there a certain time limit between the inquiries or amount of times that is the so called 'grace period?' Also, should I let the potential lender know that I have been shopping around- does this work to get a more competitive rate? Thank you!