All Forum Posts by: Kathia L.

I put in an offer on a duplex. And there are tenants on both sides. One of the tenants are being evicted. The other side is on a year lease....there is a property manager already in place which I may consider keeping..

IF my offer is accepted, how should I prepare to enter this. Should I introduce myself to the tenants? Should I not? Should I set up a business account for the rental income? Should I set up an LLC? What are some systems I can put in place?

I was planning on house hacking it, so I'll be living in the side where the other tenant is being evicted from.

Congratulations on getting your first deal. Now letting the tenants know you're the new owner can go down 1 of 2 ways:

1. They nag you constantly about things that are not really emergencies, little things they can handle themselves like changing light bulbs or expect you to fix the sink on the spot yourself just because you live there. Regardless of whether you are handy with plumbing or not. They may or may not be on time or pay the rent but that can happen with a PM too if the PM is ineffective.

2. They like having the landlord around and give you your space and only contact you with necessary things, or urgent things, and pay the rent on time.

it's up to you also if you even want the hassle of self managing, cause the PM already has the contracts, and RE lawyers etc ready to go, and think about if you really want them to know who you are.

Personally, if the PM is good I'd keep them, its 1 less thing you'll have to do as a newbie LL. I wouldn't want the tenants to know who I am-but that's my POV.

I would talk with the PM about how they handle evictions, how fast, repairs, do they do basic book-keeping, etc. and ask them if they can get the current tenant in the other unit a month to month lease-so if that tenant turns out bad you've already got them on a month to month and it's easier to get them out and get a new tenant in.

I think the LLC could work, I guess if you want it to be a business and not have the tenants writing checks to you personally, then they'd know who you are eventually anyway. you'll need an LLC to get a business bank account where the checks or ACH debit will be deposited. But maybe the PM can help you with that with a RE attorney referral if you want to be incognito and get the benefits of an LLC. To collect you can look at ACH debit straight out of the tenants checking acocunt, and pay near me its a cash payment option at locations all over America it's linked to Appfolio and there's a electronic confirmation/payment trail, tenant gets a receipt too. Maybe some of the more experienced REI can chime in.

2 Votes

Originally posted by @Karen O.:

Kathia,

In the 4 square method, where is your allocation for RE tax?

You're right, I missed that.

well I plugged that in and voila. Wow that's a really big change. thanks.


Income		Cash Flow
Rental Income	$3,700.00	Income - Expenses
Laundry	$0.00	Total Cash Flow	-$90.33
Parking	$0.00
Pets	$0.00
Storage	$0.00
Total Income	$3,700.00

Expenses		CoC ROI
Taxes	$685.33
HOA	$0.00	Down Payment	$83,800.00
Lawn/Snow	$140.00	Closing Costs	$3,000.00
Vacancy 5%	$185.00	Est. Rehab Budget	$1,000.00
Repairs 5%	$185.00	Misc/Other	$0.00
Cap Ex 10%	$370.00	Total Investment	$87,800.00
Prop Mng 10%	$370.00	Annual Cashflow	-$1,083.94
Mortgage	$1,855.00	Cash on Cash ROI	-1.23%
Total Expenses	$3,790.33

0 Votes

Hi BPers,

So this is one of the many possible REI I'm pouring over before finding my 1st deal and taking the plunge. I'm having a little trouble coming up with an offer Price. I'd like to get some feedback on my numbers and if you think this is a good deal cashflow or equity or both and why. Also is it my calculations or is there a big discrepancy between the 50% rule numbers and the 4-square? I haven't asked for any detailed info yet, just want to see if it could be a decent deal. Thanks

Brick Duplex Chicago Area (B,C neighborhood) 2 blocks away from a sketchy possible war-zone on Austin Ave

Est property value $254,280 (from property tax website)

Taxes from 2015 $8223.94 (OUCH!)

Asking Price $419,000

Unit 1 3bd rent $2,200

Unit 2 2 bd rent $1,500

Total Cash Flow $3,700

50% Rule

Its recently remodeled in good condition outside, decent curb appeal, nothing fancy, new appliances stainless steel, both units leased and occupied. I haven’t asked fo detailed info yet cause I’m still getting the hang of analyzing deals. So by 50% rule with this asking price.

$3,700 = $1,850 left after estimated NOI

30 fixed mortgage at 4.09% and 20% down:

$419,000 - $83,800 = $335,200

Monthly Payments of $1855

$1,850 - $ 1,855 = -$5 Net Cashflow

Using Brandon’s 4-Square Method


Income		Cash Flow
Rental Income	$3,700.00	Income - Expenses
Laundry	$0.00	Total Cash Flow	$595.00
Parking	$0.00
Pets	$0.00
Storage	$0.00
Total Income	$3,700.00

Expenses		CoC ROI
HOA	$0.00	Down Payment	$83,800.00
Lawn/Snow	$140.00	Closing Costs	$3,000.00
Vacancy 5%	$185.00	Est. Rehab Budget	$1,000.00
Repairs 5%	$185.00	Misc/Other	$0.00
Cap Ex 10%	$370.00	Total Investment	$87,800.00
Prop Mng 10%	$370.00	Annual Cashflow	$7,140.00
Mortgage	$1,855.00	Cash on Cash ROI	8.13%
Total Expenses	$3,105.00

0 Votes

Good for you, Happy Holidays !

0 Votes

Hi BPers,

I'm a off an on lurker and currently looking for my first REI deal I'm asking for some referrals for a good RE lawyer, title company, that are seller financing savvy/friendly. Also a decent property management firms in Chicago proper but I don't mind if they're also in the suburbs. Although I'm looking at properties in both Chicago and the suburbs.

Please post here or PM me with the contact info. Thanks in Advance.

0 Votes

Originally posted by @Kathia L.:

Originally posted by @Chelle Knijnenburg:

<=My concern stems from the leasing agent who told them they were approved when we had not approved them I am concerned with the agent looking to us to come up with a reason we are rejecting them. They dropped their demands, but we are not comfortable with them any longer. Now that they were told they were approved, do they have type of case? Looking back, we were naive. such as agreeing to check into accepting the escrow account and the large dog. We truly did not know how much damage a dog can cause. Now I feel we weren't guided correctly by our leasing agent.

First let me say I find it pretty out of line and arrogant of the lawyer to think they can dictate your terms of sale. ???

Ok you have to look at this cut and dry.

1. The leasing agent made the mistake of telling the lawyer they were approved when they were not.

2. As any lawyer will tell you a verbal agreement is NOT legally binding.

Now you did not approve this tenant because of the demands, now the LA lets the prospective tenant know, and kawyer

Says they'll drop their demands and now said leasing agent doesn't not want to own their mistake or loose whatever payment will come from leasing to the lawyer.

You are not bound by anything here but being afraid of the "big bad lawyer" they have no legal ground to stand on here. They can huff and puff, your inside a brickhouse, get it.

Just tell or better email leasing agent they did not have the authority to approve a tenant without you agreeing their mistake.

Sounds like LA is trying to "force" you into accepting this tenant so they can get paid- don't do it.

I would send a certified letter to the prospective tenant bypass the lease agent alltogeher stating that :

1. Their original application was never approved and the leasing agent took it upon themselves to approve tenant without having been given authorization to do so or having any approval agreement from you the landlord.

2. The requests made in regards to the lease, escrow, and he dog are just not feasible and you are unable to accommodate those requests for any tenant at any time.

Then call a lawyer friend to look over the letter if you feel you need to. But I think it's simple lawyer wanted to dictate the lease in terms you may or may not understand the future implications of and leasing agent appears to be lazy and doesn't want to go through getting a new tenant. Then let the lease agent know you will no longer need their services at this time thanks.

I would drop them both fast and run away. LOL

Adding those reasons are why you're declining their application and cannot rent to them.

Then keep their name on a list or something so if you have more properties you have your "professional tenants list"

0 Votes

Originally posted by @Thomas S.:

The fact that they withdrew their lease demands so easily is another big red flag. You may be dealing with a con artist/professional tenant.

Inform your agent that you have decided to changed your policy on allowing dogs. If you decide to reject them you should not have any personal contact with the applicants. Make sure you tell your agent that you never authorised her to approve them.

Did your agent perform the back ground, employment, criminal, eviction and credit check. Was the screening done by your agent or yourself.

If no actual screening was completed you defiantly need a different agent.

I think you're right here this lawyer sounds very manipulative and it sounds like they've done this before or they're using heir law degree to intimidate mom and pop set ups to get their own way. If this lawyer really just wanted a place to rent they wouldn't have even started with all those demands