All Forum Posts by: Gabe R. Gonzalez

Not sure about your jurisdiction, but in Chicago most leases have assignment clauses. Reach out to your attorney to review the leases to see if anything needs done. 

If and when you buy the building, if there's any leases that have run month-to-month I would have the tenants fill out applications, requalify them and execute new leases with them. Remember to mitigate your risk at every step that you can.  

Like Adam said, some attorneys like to have estoppels signed to make sure there's no open tenant claims against the landlord, the deposits are accounted for and their rent is accurate and current. I like the idea of estoppels, but they're a PITA to get signed by tenants especially in class C and D assets. If the landlord has good records and they're having issues obtaining estoppels, it's not the end of the world. 

Good luck

@Rene Hosman The only time I've seen them is larger buildings that have financing and the success of the project is contingent on a certain occupancy number, but then again what project isn't :) 

That being said, I'd always write concessions to start on the second month of full rent. Don't give the free month on the first month in the unit. Don't amortize the concession, that affects your NOI and the valuation of the asset.

What it comes down to for these larger buildings that use concessions is that they underwrote the project with a certain GPR. Sometimes the market changes or can't absorb the rents that they want, so they issue concessions to make it appear as if it's performing as intended. They calculate a "net effective" rent that's more appealing to the tenant, basically amortizing the concession over the lifetime of the lease. They advertise this and open the unit up to a larger tenant pool. What often happens is folks move in, find that they can't afford the actual rent and then move out the next year. 

You're then stuck in a cycle of offering concessions every year to fill your building because you were too ambitious during underwriting. 

TLDR: I don't see a reason for small landlords to use concessions - either the price is too high or you need a remodel if your unit isn't renting. For larger buildings with financing, it's worth the administrative burden and the potential for higher churn, just for the sake of preserving occupancy. 

@Regina Bailey The eviction process is long and drawn out - e-filing is a pain and a bit confusing if you're pro-se. I'd look into hiring an attorney by reaching out to legal aid. Most of the cost associated with attorneys is filing fees and service. 

My opinion would be to serve a non-renewal as well after you track them down. Maybe try their place of work and serve there. Tenants have the right to pay what they owe to stay, unless you're owner occupied. So, you want to make sure that you ensure that you'll have some light at the end of the tunnel. 

Like everyone else mentioned name "All unknown occupants" on there as well for both complaints.

You'll need to e-file the complaint with the courts. Make sure to upload an updated ledger, lease, the complaint and affidavit of service. Message me if you need any pointers! 

Best of luck. 

You could do FHA owner occupied for a two flat.

The FHA is more specific in what they want the property to look like and its condition, but it's typically easiest to qualify for as a first time buyer.

@Enrique Mendez Hop on google and look up "First Time Homebuyer, Illinois resources" 

There are $10K downpayment loans and grants available to first time home buyers. Get pre-qualified with a mortgage lender - I have a recommendation if you'd like. 

Once you have that pre-qualification, you can start looking. I'd recommend owner occupied 2-3 flat for your first one. When you start looking you will likely need that qualification letter to get you into the showing, some agents don't want just anyone walking through their occupied listings. 

Good luck and let me know if you need any help. 

@John Clark I tried forgetting about that huge deficit lol. Now that I have skin in the game, I'm definitely feeling the policy decisions impact me more so than ever. 

Kinda convenient that they're reassessing taxes this year as well, right? 

 Everyone is going to have a different management philosophy, there's no right answer here. But, if it's my tenant I'd plan on non-renewing. I'm not a big fan of the tenants who reach out when it's convenient for them, but don't when something is going on with the property i.e. water bill. 

Whatever you do, good luck! 

@Robin Thornton Whatever calculation you decide, make sure to include your insurance deductible on top of whatever you budget for repairs or vacancy loss. You never know when you're going to need it. 

@Summer B. Call the water department to see if they'll cut you a break since you fixed it so quickly. Some departments do, doesn't hurt to try. 

The tenant reported that the toilet was leaking, you sent out a contractor to fix the tenant reported issue. The contractor didn't do a good job installing the toilet and because of this your water bill is higher. 

Is the tenant otherwise cooperative and taking care of the place and paying rent timely? 

@Camren Ritchey Depreciation is a non-operating expense. I wouldn't include it in the operating cash flow. The depreciation of the asset is not a "real" cash flow for your purposes. 

Is it still negatively cash flowing if you add that $7K back to net income?