All Forum Posts by: Bryan K.

Hi all,

I'm interested in purchasing a SFH in Chicago that has previously been used as a duplex and there are previously listings showing as much. The whole place has two kitchens. I do not intend to use it at a duplex, but my loan officer has told me that it will probably need to be classified as a duplex, thus requiring me to put 15 percent down (as opposed to 3% down if it was a SFH). Does anyone have any suggestions for how to make sure it doesn't appraise as a multi-family? Any appraisers in this area you can recommend?

Thanks,

Bryan

Thanks, all!  The code sounds like a mess. Any knowledgeable attorneys want to chime in?

Are there any Chicago landlords out there familiar with smoke detector code in Illinois/Chicago?  My understanding is that all smoke detectors need to be hardwired near each bedroom.  I just bought a building and, for whatever reason, none of the smoke detectors are hardwired.  I cannot figure out for the life of me why they didn't just hardwire them during construction.  The only way to hardwire them now is the open up the walls.  Is there an exemption I'm missing?  Or are some landlords just cheap and opt to go with battery smoke detectors notwithstanding the law? 

On a similar note, if anyone can refer me to a cheap smoke detector installer in the city, I would appreciate the referral.  Thanks!

@Michael Facchini Do you have any response to George's comment?   I am aware of the Chicago city transfer tax, but wonder what your experience has been.

Lastly, what impact if any, will this structure have on the required loan to value ratio? Will if be higher if we do this through an LLC.

Thanks, @Michael Facchini.  Can I quitclaim the deed to the individual borrower(s) right before the refi, or does that need to be done months in advance? 

If we intend to do a cash out refi in 3-5 years, will the process be exactly the same? 

Hi all, 

2 of my business partners and I are set to close on an investment property in Chicago next Friday.  The seller already had an all-cash offer, and it was a great deal, so we looked for a way to beat out the other offer.  As a result, one of my partners arranged for a 4% loan from his mother for the full purchase price, which we used to make an all cash offer.  

The plan is and always has been to do a rate and term refinance through a bank after 1 year.  This seemed simple enough when we intended to purchase the property as tenants in common.  As an additional caveat, our plan is also to eventually do cosmetic renovations in 3-5 years when the rental market has matured a little bit and we can significantly increase rents.  It would be great to be able to do a cash-out refinance after doing the reno.  

Anyway, yesterday, my friend's mother insisted that we purchase the property through an LLC (shes a long time real estate investor and refuses to operate without an LLC). She also insists on having a lien on the property during the 1 year loan. After doing some research, I've come to realize that refinancing through an LLC is both complicated, and will result in a higher rate. I see there being 2 options if we purchase through an LLC:

1) Refi through a portfolio loan at an adjustable rate.  

2) Deed to an individual member of the LLC, refinance at fixed rate financing through conventional loan, then deed back to the LLC.

Does anyone have experience with this? Does it complicate things that there are 3 members in the LLC? I've heard that conventional loans prohibit this type of transfer activity; does a lender have any recourse if you transfer this loan back to the LLC? What impact could private lender's lien have on a future loan (assuming she drops the lien when we refi)?

Obviously the end goal here is to get fixed rate financing at the most competitive rate. I realize the LLC complicates that, but any other advice for how to best proceed would be much appreciated. If you could provide a step-by-step (including the time component i.e. 6 months seasoning), that would be amazing. Thank you!