All Forum Posts by: Devin Drowley

@Eric Wilkinson

Thanks for the recommendation and the welcome Eric! I'll check that group out.

@Andrew Alson

Thanks a lot for the suggestion Andrew! I just requested to attend the January class from that meetup. From your brief description of the group, it sounds like a great resource and community. The class sounds like a great introduction. I hope to meet you in person soon!

@Sarah Lorenz

Hey Sarah, thanks for responding right away! It's great to hear BRRRR works in this area - it is such a cool concept but I only have a very high level understanding of it so I wasn't sure if it was reasonable to expect that it would work around here.

@Joshua Birk

Thanks for the quick response and the recommendation to talk with Sarah!

Hey, I'm a newbie in Ann Arbor, MI hoping to meet other local investors so I can network and learn. I've been interested in real estate for years, but have only put in one offer (on a 4 unit multi-family in Chicago when I lived out there), which fell apart. Subsequently, I moved to Michigan and focused my investing capital and time on launching a business for the past 3.5 years. Now that things have stabilized a bit, I'm excited to learn real estate investing firsthand. I'm interested in SFR and small multi-family, and find the concept of BRRRR fascinating.

Are there any meetups or real estate investor groups in the Ann Arbor area? Any suggestions for people I should get in touch with in the local area?

Thanks!

Devin

Hi,

I'm new and I would really appreciate advice on whether to proceed with a deal in Chicago (this is my first potential deal).  Here are the details:

• I have the property under contract right now for $469k
  
  • Will take about another $20k to fix the property up
  • I'd be all in at around $115k (15% down, closing costs, repairs)
  • Cap rate is ~6%, which seems good for Chicago from what I've seen
• It is a legal 2-flat, but currently has 4 rented units (non-legal basement and attic)
  • If I lose one unit, cap rate drops to ~4.3%
  • If I lose both non-legal units, cap rate drops to ~2.7%
• Monthly income:
  • Current rental income is $4800/month ($1400/legal unit and $1000/non-legal unit)
  • No additional income
  • Total: $4800
• Monthly expenses:
  • Tax: $350
  • Insurance: $175
  • Maintenance and Capital Expenses: $650
  • Utilities: ~$300 (some of the units are not separately metered so there are caps on tenant utility expenses)
  • Property Management: $500
  • Vacancy (8%): $380
  • Mortgage: $1925 (I have a pre-approval for 3.75%, with $75 PMI payment/month)
  • Total: $4280
• Concerns:
  • I checked the city department of buildings website, and there are open violations against the property, one of which says to pull out the basement unit
    • The seller (and their lawyer) have stated that the violations have been handled, but they still appear when my lawyer checked into it
    • They've emailed me a dismissal order they got for the violations last may, but I can't really understand it.  I'm going to talk to my lawyer about it in the morning, but I don't know why they would still show as active violations if they've been dismissed
  • The housing inspector said the electrical service was at 100 amps, which is inadequate for the building. 
    • The seller says that it is at 170 amps.  I'm not sure if this is enough for 4 units, especially with 2 that have electric ranges, window A/C, and I saw space heaters as well

I'm afraid that I'll buy the property and then have an inspector come for one of the apparently open violations and I'll lose either the basement and/or the attic unit (therefore going to basically break-even or losing $750/month).  

Should I go forward with the deal?  I really appreciate any advice.

Devin

@Jesse T.

Yeah, I put in an offer at list price. Recent sales comps in the area looked like that was a fair offer. The returns look great compared to all of the other properties I've looked at as well - the cap rate is around 7%, and I think I should be able to live there essentially free next year with the rental income paying PITI, maintenance, etc..

The numbers all looked good before too, I was just scared that there may be something I didn't know about that would have the assessed value SO much lower.

Thanks again!

Thanks for the information and insight @Crystal Smith @Richard D. @Jesse T.!

It helped me set my mind at ease to put in my first offer ever last night.

I'm just getting started out in Chicago and am wondering why there is such a disconnect between the county assessor's value and the market value of properties.

For example, I've looked at several MFHs on the market in the mid $400k (with close comps), but the county assessor value is closer to $200k.  Why would there be such a disconnect? How should someone interpret this information? Does this just mean I should account for a big tax hike if the property gets reassessed, or are the listing prices just too high?

Thanks for any help/guidance!

Devin

Hey Bigger Pockets,

My girlfriend and I have been building up the courage (and knowledge) to get started in real estate investing for the past few months. I recently found Bigger Pockets and have loved reading the forums and listening to the podcasts, but I figured that if I just kept reading and listening, I'd never get started!

I'm an engineer and work up in the far Northern suburbs, and Steph is a teacher that works at a school in the North of Chicago. We have a few months left on our lease, and want to find something in the North side of Chicago or the Northern suburbs.

From everything we've read and listened to, it sounds like a great way to get started is to "house hack" with a small multi-family property. Do you have any advice for first time property investors interested in starting out with buy and hold properties? Is that a good way to get into investing? A few of my friends that invest in real estate have told me that flipping is the best way to go, but buy and hold just seems to make more sense to me (and line up with our skill sets..).

If anyone has a good investor-friendly real estate agent that is familiar with North Chicago and the Northern suburbs, I would really appreciate a referral.  Does anyone have suggestions about how I could get some hands-on experience or meet others to learn from?

Thank you for your help and all of the valuable insights I've already been gaining from this site!

Devin