All Forum Posts by: Bogdan Cirlig

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 All south of I-294 to Chicago Heights

Hah, yes that's the theory.. practice is different. I am very very hands on that area. I see properties completely abandoned all over the place, or boarded up and spray paint written out "nothing to loot, no floors no copper". If you look on zillow you will see every other house is in foreclosure there, banks hold onto so much REO that they will be happy to give it to you if you pay taxes and stuff. The amount of "zombie" houses in there is staggering. I'm not smoking here, I have first hand info... not "hypothetically speaking".

 All south of I-294 to Chicago Heights. The best probably is to quote one of the lenders I used to work with: "We do not currently give mortgages to properties located South of Chicago to Northwest Indiana". I have checked this with other Realtors who live in those parts and the rule is generally true nowadays regarding lenders. :(

 Yeah no biggie. Contact the Collection Agency, tell them you have a bad paying tenant you'd like to collect after. They will ask if you filed with the court, you say no, then they get going.

What they will do is to get documentation of the actual claim from you and the amount then they will start sending mandatory letters out to them (once they located where they live). They need to show proof that they've tried to collect for at least 30 days before taking further action, generally 45 days. After that, they will ask if you want to file with the court and you will need to pay upfront for the court fees etc. 

From there you end up with a Judgement against your tenants. enforcing it (aka collecting) is a different business.

You as a person can NOT post to their credit unless you have a business relationship with either Credit Bureau. (separate app with them). A Credit agency can because they are already in a reporting relationship. It costs them few bucks to report an occurrence.

 If tenant Vacated you can NOT evict them unless they left "substantial presence" behind such as personal items, clothes etc. It's a VERY crappy situation. If the property is empty is you can (and should) take immediate possession and change locks as it saves you from mandatory eviction later if they return. Have a witness with you (non relative).

You can use a Skip Trace Agent (aka Collection Agency) to locate your "asset" (tenant). If you know they have decent jobs and can recover after them, might be worth pursuing. If they don't have documented income or so, you're out of luck. Don't throw good money after bad one. From what you describe, tenants skipped town, I suspect they don't care about their credit either so you will have to file in court. You can sue them even if they left.

Again I'm not an attorney, you may want to consult with one.

 Whoa, teach me how to do that. I hold 20k in various judgement and I can't enforce them. What do you mean Arrest them? Can they do Jail time for unpaid Judgement?

 Well, it depends a lot on how much your tenants care about their Credit Score.

Sadly most Collection Agencies I've worked with tried to "make a quick buck" meaning use scare tactics to make the tenant pay before formal litigation. I've had tenants which I ultimately evicted that cared less about that. They will contest the debt and most likely you will end up needing a Judgement which you then hope to enforce later (good luck).

The main leverage you have in your desired scenario is Posting negative item in tenants Credit Report and hope they care. Been there done that, and I learned that if your tenant doesn't get scared of the 5 day letter and the letter after that you started eviction process, they won't care about their credit much either. So you will end up evicting which is another 30-60 day process depending on how backed up is your local courthouse.

Also eviction costs are added to tenant account so generally I started the eviction within 30 days of delinquency (most judges will throw you out of court if you file under 30 days lol).

Actually I own such properties in that area (yup, bad experience) and this is what happened. When i bought them, circa 10 years ago, the neighborhood was low income but the crime was not outrageous. My math was simple: 3 BDR SFH 1000 sqft selling at $80k renting to Sect 8 at $1250... wow wow.. I grabbed a handful and I rented them to sect 8 and I lived happily ever after until circa 2009 :). So these areas yes passed the initial test, I knew it was low income, blue collar but not 90% unemployed as it is right now.

Today's situation in all South Chicago is very very different. Crime skyrocketed and this is the single handed driving factor that pushed even the safe and sound Sect 8 renters out of the area leaving you completely naked with 1+ year vacancy. My RE Agents in Chicago tell me same story, you'd be happy to get a tenant with FICO of 500 and 10 open collections lol. So like many others I chose to board them up and store them for later.

Demographics didn't change, but the local economy changed dramatically causing lots of people to lose jobs and be pushed into crime.

To answer to your question, yes, there's a fine line between the same financial numbers and in my personal experience it's the crime alone that will push a nice Sect 8 tenant out of a violent area. My top question I ask when I look at new areas to pick up for investing is: Can I keep it rented for next 10 years with virtually 0 vacancy? It's a lot of numbers that go behind that to answer it.

 Hard to make it a "one thing" but it boils down to: Can you collect the rent in a consistent manner with virtually 0 vacancy and that rent allows your property to cashflow for the next 10 years at least? To answer that it's a lot of things to "dot and cross". If you can answer yes to it, next thing is to start leveraging your cash position to rinse and repeat and get more of those.