All Forum Posts by: Blake Alan Quarrie

From a methodology standpoint, I would buy/rehab an empty property first first then choose to either Section 8 or rent to complete the BRRRR. Buying a tenant occupied property can be a bit sticky because you didn't choose that tenant, so you could be stuck with a possible eviction.

If you're set on that specific property, I would list concurrently on the HUD website and your normal listing platforms. Prospective Section 8 tenants go through a normal application process, so it wouldn't be advisable to miss out on quality renters just to secure a Section 8 renter as this could increase your vacancy cost. There's also the approved amount that the voucher will be valid for, so it's a bit more difficult to predict your pro forma with a Section 8 property.

Section 8 can be great tenants, but I would also suggest a higher vacancy reserve just to protect yourself in case of the worst case scenario if you go the Section 8 route.

Hey Will,

Owning a residential property in an LLC will not make the property itself a commercial property. Generally, any property that is 5 or more units is considered commercial, but you may also see incremental tax increases on 3-4 units depending on your insurance coverage.

Generally speaking, this process is true. The IRS gives your heirs a step-up basis in the asset that they can then sell for tax-free gains. 

For example, say you buy a $100k house, it appreciates to $700k for a $600k built-in gain. $100k is your cost basis, $700k is your FMV.

If you sell, in a basic example, the IRS says you will need to pay capital gains on that $600,000. If you die, however, the IRS provides that the asset will be transferred as if it was valued at a $700k cost basis. So if your heirs go to sell it, they will do so as if they bought it for $700k, not $100k.

Following that example, if the property appreciates to $1M after you die and it was transferred at $700k, your heir will have a $300k tax liability if a sale occurs.

This situation could definitely be handled remotely, but I would still recommend going with an Illinois-based CPA since you'll have to file a state return as well. As far as the selection goes, I would recommend interviewing them, and asking what types of returns they typically handle. Presuming both your names are on the mortgage, I would advise you to seek out a CPA that specializes in both REI and partnerships.

Hard to provide an opinion without all the data, but if you can get $3,000 and break even that seems like the optimal option. However, given the seasonality of the Chicago rental market, it may be more difficult to find someone.

A potential solution could be living in the condo until springtime, which in Chicago typically provides higher rents, and aiming for a $3,000-$3,200 range. You could mitigate the financial burden by finding a roommate to split it with, or try a mid-term rental. Breaking even in this situation may be better than selling since you'll likely end up losing money after closing/holding costs, attorney fees, etc. 

Hey Victor,

There are a couple of things that can change the answer to this question. If your property is in Chicago or general Cook County you will need to follow the applicable RLTO. These can vary slightly, but it's important to understand both.

Cook County RLTO: https://www.cookcountyil.gov/rtlo

Chicago RLTO: https://www.chicago.gov/city/en/depts/doh/provdrs/landlords/...

If your property is 5 units or under with you living in the property (house hacking), then the RLTO's will not apply. If so, then please see the Illinois tenant's rights information below for guidance.

Illinois tenant rights: https://www.hud.gov/states/illinois/renting/tenantrights

I would also recommend the following podcast from Straight Up Chicago to learn more - https://www.straightupchicagoinvestor.com/podcast/episode-42...

Feel free to reach out with any additional questions.