All Forum Posts by: Andrew Kougl

We are going through this now on our property in Chicago Heights. Tenant delayed and delayed and now finally tells our property manager they are leaving. I think they were just stalling while looking. But we are taking this as an opportunity to raise the rent, get a better tenant (selection was limited for the last one due to it being winter), and possibly vet for a new property management company. Sometimes a fresh start is the best option. Fingers crossed for your situation. The important thing is get the deposit from the new tenant, until you get that financial commitment it means nothing. 

@James Gates

Congratulations, we're looking at huntsville as well and would love to connect.

Also HUGE props for responding to everyone's comments, that's very nice of you

Thanks for sharing.

Depending on the area and tenants, that might work but that is a very aggressive number for reserves. I assume you are going to self manage with no PM expense?

Personally I use 28% for reserves which breakdown: 5% vacancy, 10% capex, 5% repairs and 8% PM. I've seen many on this board estimate 30% conservatively which helps offset any bumps in the road.

Had an HVAC repair needed in the first 6 months of my SFH and it was $4500 so make sure to think about reserves and how long it'll take in months (based on your percentages) to cover the things that will end up needing replacing.

3 deals at once is quite a feat, that's very exciting. I'm looking across several markets (Jacksonville is one) and looking for multifamily properties.

Cheers to closing smoothly, 

Andrew

@Alain Labrada 

$400 per month on each SFH is fantastic. When did you purchase? Is that after PITI and reserves? What % are you using for reserves?

With 1st installments of property taxes just having come out, it's a great time to revisit the thread.

I invested in the Southside neighborhood of Chicago Heights as an out of state investor and the numbers looked great BUT the property taxes are a killer! They've gone up 40% on my 1st installment since last year. I can't raise rents fast enough to keep up with the rent hikes. Meanwhile my property has appreciated but as a buy and hold investor that equity is tied up and can't be used to pay property taxes. 

Word of warning to those interested in Chicago suburbs, watch out for property taxes, mine are almost 7% of the value of the home and it's a cashflow killer basically locking in a loss already this year. My lender told me taxes would be $451/mo, they were actually $561, now they are set to be almost $700. Make sure you are getting accurate tax estimates that eliminate the $10k homeowner discount. 

My advice would be to use common sense. In talking to investors here on bigger pockets they are running things like a business and it all comes down to their returns. Why would an investor sell a fully occupied, cashflowing multi that's putting money in their pocket? They likely wouldn't. There are very few legitimate reasons they would be willing to offload the property and if they did they would want fair market value for the compensation. Getting a good deal on a multi that cashflows and is already occupied with great tenants is likely too good to be true. There is likely some deferred capex right around the corner, problem tenants or the realization that vacancy is a problem. You mentioned one of the units is vacant and so you need to do your due diligence and make sure this is in a good area from a crime and amenity standpoint where it won't be difficult to rent out should you need to fill the units yourself. Personally I'd always opt for an empty property where the tenants can be screened to my standards and rent and expectations be set correctly from the beginning. Not to mention raising rents to market value.

I'm looking for a BRRRR deal myself! Piggybacking on this thread, my understanding is that a BRRRR property with significant ability for forced appreciation is usually from a dilapidated property that banks wouldn't lend on through traditional financing. Hence the reason you typically need to buy with cash or a hard money loan to acquire these properties. My question is, would a bank take on these types of homes if coupled with a 203k rehab loan? That seems like the best of both worlds since you can still acquire the property using leverage. Is this possible? Anyone used this strategy or any lenders on here that can confirm if this is even possible?

I have invested in Chicago heights, message me if you'd like a referral.

Andrew

I use Jo'ell Management for my SFH in the south suburbs.

@Joshua Zapin

I had this same question and another investor pointed me to a very helpful site: http://www.cashflowdiaries.com/31-questions-to-ask-a-turnkey-seller-before-buying/