All Forum Posts by: Derek Luttrell

@Henry Lazerow would you mind posting the full analysis to show the cash flow/returns? Is the $4600 payment including the property taxes, which are likely a pretty penny on this type of property in this location? 

$235,000 down payment blows my mind a little bit, but you know what they say....takes money to make money. 

@Brie Schmidt that is great (albeit unfortunate) info. It's crazy that Garfield doesn't know what it has; any east/west street has skyline views, so many historic, classic Chicago greystones, several transportation options into the Loop...and then trash and despair in nearly all of the countless vacant lots. I'm sure it'll get figured out eventually, but that's been said for years. The tenant pool is definitely risky. 

@Brie Schmidt the building is currently CHA-approved, though with those approvals needing renewed annually, I was not aware that the inspection would be a 6-week ordeal. 

This is in East Garfield Park. People seem to be optimistic on neighborhood forums that it is headed in the right direction, but every time I drive through there, I'll admit it's hard to envision. Has Section 8 ever been part of your portfolio? 

@Henri Meli that is a good point about utilities for vacant units, stairwells, etc. While nominal, it's still a very real expense. Definitely something to remember about MF when I'm accustomed to SF. 

I've had my best luck with free platforms like HotPads, Zillow, Facebook Marketplace, etc for marketing, no cost there.  

@Henri Meli nothing was ever said about numbers being made up. The seller provided these rents, along with the costs of garbage and insurance. Tenants pay their own utilities, though I did forget to add the cost of $350/month for water (seller-provided). That brings the cash flow to $700/month with a 9.22% CoC return. Not the best, at least at full asking price.

HOAs and landscaping are nonexistent. Green space in Chicago tends to be saved for the 1%. 

@Joe P. good to know that you were recently quoted 5.125%. It's been about 6 weeks since I've been quoted, so it's very possible that 5% is outdated. 

I have only seem the property online as of about an hour ago, and there are no interior photos on the listing (hate it when they do that). All I know right now is that 5/6 units are occupied, so I can't estimate any dollar amount for repairs quite yet. 

@Brian Garrett @Joe P. could that be a calculator flaw, or is it something I entered incorrectly? The NOI is generated by the calculator, so I'm not sure what went into coming up with $29,504.

Hi All, 

Being a 6-unit, I take it this would have to be a commercial loan (which I don't know too much about yet), but please take a look at my analysis on a 6-unit in a rougher neighborhood here in Chicago. 5/6 units are occupied; 3 of which are Section 8 voucher holders. The $5350 in gross rent is from the 5 occupied units. The 6th unit is a 4 bedroom duplex-down that needs TLC, and when rent-ready would bring in another $16-1800/month. 

Anyone out there have a niche like this? I understand the pros and cons of Section 8, but this cash flow potential deserves a second look. I put in 8% for vacancy and 10% each for CapEx, Repairs and Mgmt.

@Taylor Ullmann the living situation you originally described is what I do in Chicago--bought a 3 bedroom, and rent out the other 2 rooms. I was paying $1,000/month to rent in downtown Chicago, and now I own the place and pay $250/month. 

I have a Conventional loan with a 5% down payment at 4.125% interest. Being a first time buyer with an 800 credit score, my lender actually gave me a 2% grant towards my down payment, which was pretty neat. Since I did not put down 20%, the PMI portion of my total monthly payment is $120/month. If I see no appreciation at all, that fee falls off after about 7 years of owning the home. If I do see appreciation, it will drop off earlier (whenever I hit 20% equity.)

Lastly, my loan requires me to live in the property for 12 months before being allowed to move and rent it out. 

@Jay Helms I'm trying to take Brandon Turner's advice and venture 30 minutes outside of my major metro to find something more affordable. My close friend and her parents have lived in this town for 25 years and tell me where is good and bad, and it is a stop on the "Metra," the major commuter rail that connects all of Chicago's suburbs to the city. But yes, property taxes here are wildly irritating. 

I actually did receive a recent water bill from the listing agent a few hours ago, and it was $130. RUBS sounds like it's worth learning more about, but as far as I've ever known, all Cook county landlords pay for water.