All Forum Posts by: Andrew Holmes

@Henry Lazerow @Jake Fugman @Tom Shallcross  All have made great point. The 2 unit seem to selling for astronomical prices. Yet for some smart investors some of the bigger buildings have been providing much better deals. I am not talking about 10 + Units but the 4-8 unit. They may be a bit out of the range of most house hackers but for investors with some cash or private money for the downpayment side with a commercial loans there are opportunities. Just looked at the numbers for 2 people on 4 flats for house hack they work with a good bit of cash flow and huge upside with very little rehab even a A market like Oak Park. Typically taxes makes some these deals not so juicy but there are things that keep popping up. Another 8 unit and 6 unit same deal. A lot of investors shy away because sometime they thing it's too big but there are some great opportunities to buy and refi out with 25% equity and great cash flow's. 

The recording delays have been going on since COVID started. You can walk in and get it stamped in person and they will give you an official copy. 

Rather than documented/undocumented Issues just see if they have someone that can be guarantor with credit.  Basically an additional signer. Most people have family or friends That can sign. Regardless of immigration status if someone has credit That does not meet our standards then we require an additional cosigner. 

💯- We are just putting the call to action out for all ChicagoREIA members. With ten thousand plus members that are all investors it affects all of us and will affect tenants and hurt them in the long run. 

Instead of encouraging more housing so the supply goes up they keep punishing landlords. Politicians at their best.  

@Brittany Booker - Most managing broker don't understand wholesaling and they want to avoid headaches. Most wholesalers don't know what they are doing so it creates an interesting situation. You will find friendly brokers that are out there the biggest problem as a wholesaler is there is a huge disconnect in terms of what is being taught by the Guru on the internet and the IDFPR rules. As long as you are will to learn and play by the rules you will be fine. You may want to reach out and talk with Bill Jansen at Pinnacle Power Brokers he is wholesale friendly. 

@Julio Aguirre - As far as your question about mailing to a list. It will all depend on who you are mailing. Expired,canceled, Probabte, People with equity that are pre foreclosure, Low or no equity list. Vacant properties and so on. We have 2 lists that we mail to and stick to that. Minimum of 7 contacts on those lists. 

$ 700 intital  mailing

Then $ 300 for skip tracing and phone text. 

Then sort out people who say don't call or text. 

Keep following up with the rest with 2 mail pieces and text again.

THen again clean and sort and 3 mail pieces and text and clear and sort again. 

You have to first narrow down the area, Then which list and then your exact strategy. 

Bandit signs, driving for dollars, mailing, cold calling or marketing for leads on internet or other media they all work and depends who you talk to you will get confusing answers. 

So the way I set this up is. 

Initial investment of $ 5,000 (That was the total budget allocated for mailing and text campaign)

1. 1st Mailing $ 700

2. Text Followup $ 300

3. 2nd Mailing $ 1000

4. 3rd Mailing $ 1350

5. Text $320

So on...

1 deal closed Gross profit 25K. Net 21K after expenses (This was Wholesaled)

7K allocated back to Marketing (14K put aside as profit)

2nd Deal Kept as rental 

3rd deal in process will keep as a rental 

Chicago is too big an area. Get it narrow down to your areas and then start marketing. Make sure you stick to what strategy you pick. The more you read and listen online. Every new thing you hear about will seem like to magic answer. The money is in consistency and repetitious boredom activities. 

Only do flips that are in your area and you can easily manage. A lot of people are overpaying for properties so wholesale the stuff out that you don't want or outside your market. Best yet you can keep some as long term rentals that are really good and fit your criteria. 

@Jaclyn Spinelli Avondale and some of the surrounding areas more life style areas and pricing in todays market is pretty high. Having said that your cash flow is going to be driven by the deal that you find in terms of purchase. Generally if you buy right it will cash flow but you will have to do some digging and then the other factor will depend on condition of the property. I own quite a few properties in Chicago suburbs but a recent purchase just south of Belmont (Just South Of Avondale) meets all the numbers we use. Some of these area in the city are what I call lifestyle or aspiration areas so you end up paying a premium for them and cash flow become tough. 

If you are looking to a house hack personally you use some back numbers that will set you up for the long term. So even after you move out of this property you can keep buying more and more properties and it's not based on your income in the future. 

75% of all rent collected should cover all expenses (Principal + Interest + Taxes + Insurance + Common Area Expense)

For Example you have a 2 unit Each will rent out for $ 1400 * 2 = $ 2800 

2800 * 75 % = 2100

Your Goal should be to hit 2 numbers 

#1 75% of rent collected covers all your expenses. 

# 2 DCR (Debt Coverage Ratio) - Min of 1.33%

If you keep these tow numbers in mind you will never go wrong and you can keep building one after the other regardless of your job situation. You can keep scaling property after property as long as you keep these numbers in mind. 

So assume you pay $150/ Month in common area expense like heating+ Water + Garbage etc. (Notice I did not put Cap X expense) that should not be taken into account when you do house hacking you will have plenty of cash flow if you follow these numbers. 

Insurance - $ 1000 per year  Property Taxes: $ 3000/ Year

Now if you we take the 2100 and all the expenses into account you can buy up to a $ 334,645 property and still hit all your numbers. You should be able to buy a 3 flat for that all day long all your numbers will be better. 

If you buy a 2 flat. When you are living in the your property it will cost you $ 700/ per month out of pocket to own it. When you move out you will have $ 700 in cash flow. 

If you buy a 3 flat. You will break even and make money. You will make even more money once you move out. 

I have attached the pics and calculation. Hope that helps. 

You may want to talk to Bill Jansen at Pinnacle Power Brokers. He should be able to acomodate your needs as an investor. He only has brokers that are investors and fees are very low. Andrew. 

You should get all the tenants to sign. If it can be done at a bank or currency exchange and get it notarized even better. If you know an attorney just check in with them. If you need an attorney to talk with just DM me and you will be happy to provide the info and he should be able to help you. 

@Shahab Siddique 

Great. thanks you.