All Forum Posts by: Ibn Abney

Big things happening this weekend in Bridgeport!!

Come meet the team!

Topic of the month: Deal Analysis 

Wanted to share a recent deal we did. So much disrespect thrown out towards Chicago and specifically the South Side of the city, I hope the numbers will change a few minds.

In the words of a local developer I highly respect Leon Walker "the difference between Gentrification and Venture Development is INTENT” http://www.dl3realty.com/venturedevelopment

If you are not in the City, you may not know there is a tremendous resurgence happening on the South Side of Chicago.

As a native of Brooklyn, if you would have told me my neighborhood as a child in the 80s (Bushwick, Brooklyn, NY) would have turned into Million Dollar homes a on every block I would have laughed at you. Fast forward to today, tear downs on my block start at $1MM. This is why I choose buy and hold as my preferred investment style!

So, a few years ago, I notice similar trends in Chicago. New constructions, extensive remodels, additions, and larger developments popping up. I made it my goal to get involved and not let Brooklyn happen all over again. 

Now I am not saying this will be a Million property or Chicago will see such appreciation!!

However, my point is there are great purchase vs. rent ratios in the area. If you are willing to rehab, the numbers are even better. Also, the closer you are to downtown Chicago, I find the tenant pool to be of a higher standard and less violent crime. Properties of similar quality North of the city will sale for easily 2-3x the price.

The Deal:

Purchased 02/13/19 off the MLS... yes, no deals are there, please don't look now :-)

Rehabbed took 33 days. Holding Cost includes $600 Appraisal fee, Utilities $175, HOA Fee $75, Interest on Credit Cards $415. I did the entire rehab on credit cards 😊

Refi-Loan: 30yr, fixed at 7.85%, commercial note, at 65% ARV (this is a non-warrantable condo, hence the high rate)

Rented in 6 days at $1280, tenant pays all utilities including water. $400 move-in fee. Not section 8 (nothing wrong with section 8 renters, I just don’t do it myself)

My Lender does cash out refi 60 days from purchase date. I self-manage as well. Now its rented and I have no money left in the deal.... Pics and numbers below!!

@Steve Iaco I'm from Brooklyn NY!! Live in Chicago Now. 

Chicago is a great market and has  good cash flow/appreciation mix.

Not the fastest eviction state, but if you screen properly and have some boots on the ground (PM) you will be fine. The Chicago MSA is still the 3rd largest city in regards to commerce in the USA.

I would target bronzeville, bridgeport, kenwood, pilsen, rogers park, and west ridge. Solid areas. Wont be scared to walk down the street at night. Can still find deals which hit the 1% rule or more.

PM if you ever want to chat more!

Best of Luck!!

@Garrett Pearson I use to think that about mold too. These days I only target extremely distressed properties and I can tell you Mold is the least of your worries. When I smell urine and mold, I see $$$ signs :-)

If you are doing a good rehab, chances are you have to replace the drywall anyways. I would not cover it or paint over it. I seen people spray and disinfect, but I always remove and replace brand new wood studs/drywall/etc.

Mold tells me water in getting into the unit somehow. You need to determine how its getting in first! roof leak, no bigger. Stole copper pipes caused a water leak, no problem. 

water backing up from the sewer or coming in through a wall is a much bigger deal!!

my 2 cents.. good luck!!

@Kevin Zhang cash flow wise its a great area!!! Over the 2% rule.

definitely will need experience managing, but returns are there if you are comfortable.

reach out to @Tom Shallcross. He is crushing it in that area.

Best of Luck!

@Josh Sanders Few things: 

4% INT looks way to low. Especially on the a 30yr commercial note. I believe its closer to 6.5%-7.5%

4% on a conventional loan ?? Do you mean personal loan/line of credit? 4% still looks low. I would guess 8-12% unless private lender

water looks low. I pay about $850-$950 for a 2bdroom townhome. Non-metered though!!

Insurance looks low too. I have a 3 unit which is $3400/yr. Different area, but $4K looks low for this area.

Where is your PM fees? Are you going to self manage? do all the leasing?

I do see landscaping/snow removal?

Also, you are assuming 100% occupancy. If one unit has an eviction issue, that 4-6 months no cash flow. 1/7 is 14% roughly, of monthly gross rent.

Best of LUck!

@Glenda Watson reach out to my guy Keith.. done several deals together. Including wholesale transactions!! Best of luck!!

http://keithfenceroylaw.com/?page_id=85

Tell him I sent you!

@Ray Harrell You are a nice guy!! LOL

@John Warren @Marc Winter May be alittle too early as @Corey D. McCray mention, but if Corporations can access criminal history for employment, then I feel Landlords should have the right as well. Even in legal cannabis states, companies and landlords can deny applicants for "following the state law". 

@Dan H. I think the small guys like me will be fine. HUD dont have time to go after every body, but larger apartment portfolios will definitely feel the impact over the long term.

@Del Kirksey Welcome!! 

I would suggest renting for 6months to a year to learn the market and areas. All the areas you mention are great place to live. I would throw in Bronzeville, woodlawn, and kenwood as well to consider. Close to the train and easy access to downtown. 

Also, as time pass you can save more. ideally $275k-$450k is ideal for a 2-3flat. In Brighton Park you may be able to find 2 flats under $250K. that is alittle more SW of bridgeport area

Good Luck!

Cook County makes it illegal to refuse to show or rent property to people with certain criminal records.

Looking for thoughts and advice from more seasoned landlords/ property management firms. Especially in urban markets.

Ever been faced with this issue? How do you screen without checking criminal history? even credit sites search criminal records as part of the credit search process. Ex. Transunion Smartmove

Now what?

https://www.chicagotribune.com/news/local/politics/ct-met-housing-ordinance-arrest-record-20190425-story.html