All Forum Posts by: Adam P

 Don't do your own eviction in Chicago. Your tenant is going to get a free attorney, mine was from one of the largest law firms in America, they use it as a chance to give younger attorneys court experience.  

These are very smart people who can prolong the process indefinitely.  Hire a specialized eviction attorney, and let them handle it all.  Been a few years since my eviction, at the time the attorney was about $1000ish.   

A process server is about $100 to serve, much better than wasting your own time.  

If I had a do over, rather than burning 6 months of stress and costs on an eviction, I would have done cash for keys. 

I sell by paying a local realtor $200 to get on MLS in their name, and pay 3% buyer agent commission.

I always buy through sellers agent using dual agency.   This has netted me incredible savings, as double commission tends to be a huge motivator for the agent to get my offer accepted.   I have also had many agents share the sellers lowest accept offer.  

I have seen some great agents, they are about 1 in 20.   The other 19 are just a speed bump to making money.   They are hard working, but their work is all in landing clients, not helping me.  

I am an investor and always use the seller's agent. I find about 90% of agents will do EXACTLY as above. It is only about 5-10% who are truly representing their clients interests, and won't help me as a buyer, drive down their seller's price to get double commission.   

 It's easy to forget the median realtor income is only about $42k.   At 2% commission per deal (after broker cut), that means they are selling or buying $175,000 worth of properties a month.  

 That's not much real estate, so offering double commission is a bonus month's pay for most.   

I used an agent on my first couple of purchases, then stopped. Today, I list on the MLS myself (lots of services that charge $100-$200 to list on the MLS through a local agent, then you pay buyer's agent commission), and I always buy using the seller's agent.

  
Never believe the seller pays the commission.  It is like saying the restaurant pays the sales tax.  Sure they do, but they add it to your bill.  

 If you are new, personally I would use a real estate attorney (they cost about $300-$700 on a deal).   They will protect your interests far better than a realtor will.    

By cutting out a realtor when buying is far more than the 3% commission.   A seller's realtor will often provide you insider information to let you drive down your offer price, or rise to the top of the pile in a competitive situation.   A realtor could lose their license for doing this, but I have worked with so many different seller's realtors on deals, and almost all overshared which helped me.  

The current real estate market is overheated.   Smart investors are cashing out, not building up stock.  

If you have access to any amazing off market deals, or see something on the MLS you can jump at on day 1, then go for it.

Don't venture into C/D class areas chasing cash flow.   You will never see it.   Too many middle class people in their bubbles have no clue what poverty looks like.   It isn't pretty, and you probably don't want to deal with it.  

Keep saving, and during next downturn start buying up.    A lot more of the successful investors here started during a downturn, than the top of market we see today.

Sell the home.   Ask your bank about a short sale.   Take out a personal loan if you need to get it off your hands.  

This is a massive loss maker based on; 

• low income area 
• you live an hour away
• rent only covers mortgage, taxes, insurance

Low income tenants is a specialized area.  They require a lot of management, which you can not provide from an hour away.   Many in this class of tenant need a landlord to make up for the lack of parents in their life.  

Low income areas yield much more money to make up for the additional management.   

About 40% of your rent is going to expenses (maintenance, utilities, taxes, insurance).   So unless your mortgage is less than half your rent, you are paying money every month just holding this property.   

We are nearing the top of the economic cycle.  This home will not go up in value over inflation.   Low income areas are pretty much tapped out today, due to all the dumb money flowing into real estate.   The only exception is gentrifying areas.   

You should sell.   Try to find local turnkey companies, and see if any are interested in marking your home to out of state investors.   These investors often pay far higher than market rates to buy investment properties.   They market to people in California and NYC, who don't understand housing is cheaper elsewhere.  

If I complete a 1031 exchange, which involves selling a property with suspended passive losses from prior years, do these transfer to the new property and continue to carry forward until I have passive gains to offset the losses?

That is really tough.  You should have never have closed on the purchase.  Your realtor works on commission, so often times their major motivation is to ensure sale closes so that they get paid.  That is why he coerced you into still making the purchase that day.  

It sounds like your issue is with your realtor who gave you terrible advice.  The whole point of the final walk through is to find issues like this.  You likely could have delayed closing until it was all fixed, or even easier would have been receive payment at the closing table to cover all costs.  

Have you valued what the cost to clean and repair is?  What you are describing sounds very similar to when a very long term tenant leaves one of my apartments.  People who don't move often find it very stressful, so often just pack up and go without thought of how a lived in now empty home looks.  The seller's may have had no ill intentions, and were highly stressed moving and just picked up and left.

 This sounds to me like it would be in the $500 - $2k range.  Not enough to sue over (legal fees would be far more than that).  However it is small enough you may get something back from the broker of your buyer's agent in exchange for you not escalating the issue.  They made 3% of your purchase price, and didn't really fulfill their end of the bargain.  

I have been scammed by a lot of contractors.  Mostly because I do plenty of rehab.  

 I now pay nothing up front.  I pay for all materials, so they are not out of pocket.  We have milestones, that when they are met and I am satisfied with the work, they get partial payment.  However you STILL need to backload payments.  If you make milestones equal, the number of contractors who won't complete the last one is still very high.  

Even contractors who did a great job on 1 project, can turn into scammers the next.  It is not usually that they are dishonest, just too many "chasing a bad job".  This means they underbid on a job, which went wrong and now they can't finish it without making a huge loss.  They may also have subs to pay.  So they bid on next job, take deposit money, and pay for last job.  They try to stay afloat doing this, while still paying the bills, and get themselves into trouble.   So then they are bidding on the next job, when yours is only 25% complete, to try and get next deposit.  You want their incentive to be to finish your job to get the money, not incentivized to move onto next job and collect another deposit.  

Some of these guys who collect 75% deposit could have 5 jobs going at same time.  Your job could take 6 months.

You want to get rid of this tenant as soon as possible.  The best outcome would be for the tenant to leave willingly.   

You can post a 3 day notice, but then the tenant may pay the rent, pushing you back another month.  In the long term, a bad tenant costs a lot more than a month's rent.  

I would post a 30 day notice.  Tell the tenant if they are out by the end of this month and return the keys and apartment in current condition, you will PAY them half a month's rent.