All Forum Posts by: Chase Gochnauer

We maintain some properties in Chicago land area and I believe the items need repaired before closing. For those that aren't lucky enough to experience this, some cities require an inspection before closing and will ding the property for things that you wouldn't think twice about elsewhere. Is it Cicero?

I've never had an assessment altered from a purchase on residential, though. They will just increase it on the next scheduled re-assessment.

Commercial-type property is likely different and they are more diligent there from what I understand.

My house came with 6.5 acres in a separate parcel. When I purchased it they conveniently switched it from Ag to residential last year and increased it from like $20k assessed value to $150k. That wasn't much fun :) They also accidently counted my outbuilding on BOTH my house parcel and my out lot parcel, so I was double assessed for it. Had I not been watching closely who knows how long it would have been to catch that.

I contested a lot of my rentals when they re-assessed last year. I've had good luck working with them in that regard. If I have an appraisal that says less, or I disagree with the condition, etc. they will adjust. I usually try to be data driven in my contest. 

I probably had 10-15 properties this past re-assessment that I got reduced back down.

Bought one for $312k in March 2017, then they assessed later in 2017 for $359k. I disputed and they reduced back down to $312k(less than the $324k it was assessed for when I bought it). I believe it's supposed to be the value of the property on Jan 1 of the assessment year. So even if I had bought in March and completely rehabbed the whole thing, it should be Jan 1 value, not rehabbed value.

In my opinion, smaller banks are way better. I was with us bank for awhile and they were fine but both of my new banks allow me to wire without going into office, less fees, easier to work with. Not to mention having that relationship with small bank would go a long ways if you go to get financing.

Katie, it's not exactly Loopnet that's the problem, but that sellers and their agents inflate/exaggerate the numbers probably 80% of the time. Sometimes it's obvious, like it sounds like this one is, and other times it's much more covert and won't be discovered until you really dig into your due diligence.

I had one that came on market, numbers were great and seemed right so I got it under contract without doing a full walk-through. I did my walk through and during that we asked a tenant what their rent was. It was like $100/mo less than the seller said. Long story short each unit of the 8 plex had rents over-estimated like $100/mo. In reality I think the numbers got mixed up with another 8 plex he owned in the same town, but either way, stuff like that happens all the time. 

Looking at yours, it looks like there is some sort of tax abatement making the taxes almost non-existent now, but will likely come back up at some point.

Originally posted by @Marcus Johnson:

@Chase Gochnauer

Sorry, but ya missed the point again.  You're thinking about the math again.  I'm talking about the person.  You cannot remove the human element from investing, it's everything.  Person B was more successful becasue, well, they made better decisions with their money and at retirement they did betrter.  Person A made bad decisions and therefor didn't make good use of their resources.  It's really as simple as that.  

 I think maybe the issue is that you're throwing leverage in to your scenario. It seems like you're implying that leverage is the reason person A was not successful, which is the part I disagree with. 

The simple fact that a person at end of their life or career has less to show for a higher income, I would agree that they didn't save as much as person B. But, that extra 150k a year went somewhere. Person A may have taken family vacations each year and travelled, paid for their kids college, splurged on a pool at their house, had a fun sports car, etc. while person B stayed home eating ramen noodles.

Originally posted by @Charlie Price:

Great to hear all the success stories out there. Congrats to all.

I have had rental property since I moved out of the small one bedroom condo I bought when I was in college in San Diego, CA, back in 1990. Boy do I wish I kept that one, LOL.

After filing bankruptcy back in 2011 and losing almost everything because of all the RE debt we had, my wife and I have rebuilt and gotten a little lucky over the last 6-7 years. We currently own the following:

- A nice victorian triplex in Midtown Atlanta that we have owned for about 15 years. Somehow our lawyer worked out our bankruptcy where we could keep this property. (Self managed by my wife)

- Triplex in Columbus, GA (we pay a property manager for this one)

- Two single family homes in Crestview, FL. (Sold 1 on a rent to own contract for 10 years, renovating the other one to sell.)

- 28 unit apartment complex in Crestview, FL (working on renovating two more which will give us 30 units here. I self manage these units)

So currently we have 36 units. $30K or so in rent rent roll per month with little debt this time around. Our expenses are about 50% including all debt service.

We have no partners on any of these properties.

We (Wife, 6 & 8 year old boys) enjoy traveling in our RV. We took a 3 month trip to Western US two years ago. This last summer we drove it to Alaska and took 6 months off. Currently planning a 4 month trip to North Eastern US. After his next trip we will only have Hawaii left as the last state for our family to have visited All 50 states! We stay almost exclusively, in National and State Parks along the way and meet some great great people. We’ve been to about 37 of the 50 or so major National Parks in the US.

 Charlie, congratulations. That sounds like a great comeback. Completely separate topic, but what do you do with your kids and school on extended trips? Mine are 4 and 6, we just did our first 2 week getaway and loved it and would love to do longer. 

Originally posted by @Marcus Johnson:

@Shiloh Lundahl

No, you've completely missed the point as have most people in this thread.  If person A has a W2 income of 250k and person B has a W2 income of 100k from their day job and both persons love RE, but person A when they are ready to retire let's say in their 70's have 100 units but because of the way they managed their income and the decisions they made using leverage and choices on properties, location, quality, repairs needed, person A only has 2 million in networth.   

Person B who has a much lower W2 income, but they have been very deligent with their income and have wisely chosen great properties and had much better success in their decision making, but only have 6 paid for properties and their networth at retirement is also 2 million.  Well as you can see person A is a UAW and Person B is a PAW.   

This example is very real and happens all of the time.  Again I'd advise all investors on here to read the Millionaire next door, it will help you understand on how people became self made millionaires.   

 This is again where I'd disagree with your comparison. There are missing pieces from your scenario to see the true picture, but what I think you're implying is person A owning 10mil in real estate, heavily leveraged at up 80% loan to value, having an 8 million dollar mortgage and 2 mil in equity/networth. 

Person B has 2 million in real estate, free and clear. 

In this scenario, person A is going to be making WAY more per year on their real estate than person B. Yes the risk is higher, but person A is making a much greater return on their 2 million than person B. Therefore in my mind, person A has done a better job maximizing their return. I understand what you're saying as person A made way more per year, and has the same net worth as B. That point I get completely. But you're implying that person A is not as saavy of an investor because they are leveraged, and I think the exact opposite.

Originally posted by @Peter Tverdov:

Originally posted by @Chase Gochnauer:

Originally posted by @Peter Tverdov:

I have to vent a little...

I agree with the one gentleman (from a high cost of living state naturally) who pointed out that how many doors someone has doesn't really measure anything. I see this remark far too often on this site and it seems like an ego stroke more than anything. A door in Ohio is not the same price as a door in New York, California or NJ. Furthermore, anyone can buy lots of doors. But who is doing it right? The guy with 20 doors in Ohio cash flowing $100 each or the guy with 2 doors in California cash flowing $1000 each?

Lastly, I appreciate another guy who mentioned he was an LP of a syndicate/partnership. I get aggravated reading success stories on here where the person says they have 75 units...and three questions later you squeeze it out of them that they own 75 units with partners...well then you don't own 75 units pal, you own a share of those units. Monster difference, ego stroke aside. 

I would be more interested in seeing a net worth comparison on this site to measure success...which would likely have to be anonymous. 

Net worth isn't a perfect metric either. Cost of living is the big difference here. Units maybe isn't the ideal metric either, but in your example, the guy in Ohio is doing much better than the guy in California, because his $2k/mo buys him way more in Ohio than it does in California and he pays less in taxes.  

The thought process I have, is that if I own 10 units in my area and you own 10 units in your area, we probably live a comparable lifestyle but maybe this is not true, of course there are different levels of units within an area. The alternative to this is that you have $1.5m net worth in New Jersey and I have $1m net worth in Iowa, but realistically we probably lead the same lifestyle.

Some fair points. My overall point was "doors" means squat. Having the same cash flow as someone else with 5x as many doors as them is not doing much better, it's much worse. You have 5x as many mechanicals to pay for when they break, 5x as many roofs to replace, so on and so forth. 

 True, but I would hope that is accounted for already in their cash flow. And as I mentioned in an earlier post, while you may be right on 5x as many roofs, etc. it's also 5x the number of mortgages you're paying down and 5x the number of properties that can appreciate. Cash flow is only 1/4 of the puzzle to me. The other 3 are mortgage paydown, appreciation and tax benefits. If you had 5 $100k properties that cash flowed the exact same as 1 $500k property, then I would agree that 5 might be worse. If I had (5) $150k properties that cash flowed the same as the (1) $500k property, then I would rather have the 5 doors.

Lots of scenarios!! If everyone could, please upload their tax returns from last year please so we can settle this! Ha ha.

Originally posted by @Peter Tverdov:

I have to vent a little...

I agree with the one gentleman (from a high cost of living state naturally) who pointed out that how many doors someone has doesn't really measure anything. I see this remark far too often on this site and it seems like an ego stroke more than anything. A door in Ohio is not the same price as a door in New York, California or NJ. Furthermore, anyone can buy lots of doors. But who is doing it right? The guy with 20 doors in Ohio cash flowing $100 each or the guy with 2 doors in California cash flowing $1000 each?

Lastly, I appreciate another guy who mentioned he was an LP of a syndicate/partnership. I get aggravated reading success stories on here where the person says they have 75 units...and three questions later you squeeze it out of them that they own 75 units with partners...well then you don't own 75 units pal, you own a share of those units. Monster difference, ego stroke aside. 

I would be more interested in seeing a net worth comparison on this site to measure success...which would likely have to be anonymous. 

Net worth isn't a perfect metric either. Cost of living is the big difference here. Units maybe isn't the ideal metric either, but in your example, the guy in Ohio is doing much better than the guy in California, because his $2k/mo buys him way more in Ohio than it does in California and he pays less in taxes.  

The thought process I have, is that if I own 10 units in my area and you own 10 units in your area, we probably live a comparable lifestyle but maybe this is not true, of course there are different levels of units within an area. The alternative to this is that you have $1.5m net worth in New Jersey and I have $1m net worth in Iowa, but realistically we probably lead the same lifestyle.