All Forum Posts by: Elbert D.

Hello BP, it’s been awhile since I made a post on the forum. I figure I’ll chime in on this topic since I wholesale(among other things) in Illinois and the city of Chicago. Now what @Jay Hinrichs mention about how annoying the city of Chicago is with permit pulling and inspections is totally 100% true. And some sub cities of Chicago and certain suburbs are even worse! It’s very very annoying. To be working on a project or monitoring a rehab project and go on that cities schedule. It throws off your rehab schedule. Which sometimes throws off the rehab budget. So now. To this topic. I’m not surprise to be honest lol. We live in a society where complaining thrives in America. America is a Corporation and it’s all about paperwork. Licenses. Accreditation. Degrees. Etc.....it’s used for generating revenue for the government. Now I think the realtors association is might be lobbying or complaining because of the lack of inventory that’s available to everyone. But we are in a market cycle that shows that there will be a crash soon. It’s been that way for the past few years.

So this is affecting everyone because of the high prices. Now let’s get to the meat and potatoes. Illinois is a liberal state overall and the City of Chicago is a extremely liberal city. It’s all about money....I know a lot of people get into real estate thinking they are going make sooo much money and when reality hits they are sadden. This goes for everyone. To realtors to wholesalers and lawyers. I know many realtors who don’t make much of anything. Sometimes the cause is some realtors that aren’t that good or just plain lazy. In fact. I’m going be honest and just admit it there are many realtors that aren’t that good. It’s been many times I have tried to contact realtors and they don’t return calls or drag their feet with the smallest and simplest things. Same goes for wholesalers. Really as you gain more and more experience in a industry....you find out there are only about 15-20% of people that are very good and passionate about what they do. While the others are just looking for a check. Combine this with the fact getting into real estate the barrier of entry is kinda low so you have everyone wanting to just jump in.

Now some people would argue “hey just go get your realtors license” but as someone already mention in this post it’s no secret that you split the commissions with the broker you work for and then with other brokers as well. Then lastly have to pay tax on that commission and any other ones you earn. Plus other broker fees. Which by the way just because you obtain a license to broker real estate doesn’t mean anything. How many people on the road are driving but can’t really drive? How many people have licenses to practice medicine or advise people about law or taxes but aren’t good doctors or lawyers or accountants? All that license is a certificate to make people feel good about themselves. Saying you went through a program or passed a test. But unfortunately sometimes doesn’t transition into the real world. That’s not to take away from your accomplishment but people should strive to constantly obtain knowledge about their industry in terms of real world experience.

So all this will lead to more people getting a realtor license. Further Crowding that segment of the market. Everyone and their mother has a realtor license that I know. Let’s think about this for a minute. Economically speaking. If we have millions of people license to broker real estate what’s that going do with the prices and fees of being a broker? It’s going to up? I think so. There are so many realtors that don’t make money and point the finger at someone else because things aren’t going there way. The same goes for some wholesalers. Many of them aren’t making money as well. All this regulating is going do is drive more people to quit real estate altogether or quit doing real estate in Illinois and go to another state and do it there or just make the influx of people get there license and people will still find ways to complain about the money they are making. To be honest we live in a crybaby society......I’m just being honest.

I can’t count how many properties I been to where the seller. Rather private owner/landlord or a bank was asking for “market value” for their property and it needs A TON of work. All this stuff about people

Getting screw out of equity is propaganda. Not saying it doesn’t happen at all because I’m sure it does but I don’t think it does at the scale people are making it out to be. People don’t take care of their stuff. That’s the cold harsh truth. If your property needs all kinds of tuck pointing. Roof issues. Plumbing issues. Electrical issues. Windows are terrible. Basement has leaks everywhere(many properties in Chicago do) and some minor other problems. All that stuff adds up. How do you think your going get anywhere close to market value??? No.....YOUR the one that didn’t keep things up so that you can actually get market value for your house. As far as bank properties. Many of them and those tax/sheriff sales do the same thing. Sell properties to people without you going to see it. You think your getting a deal when in reality sometimes your getting a headache with all the repairs that’s needed and city violations which by the way as a reminder.....Chicago is very annoying to deal with.

To ethics. I seen and heard of several realtors treading the line of being unethical. Just to get a sale. It happens all the time. Sales is everything. But once again just because the majority of people are average to borderline terrible at what they do doesn’t mean there are a few that actually care and take their job serious. In reality realtors and wholesalers can coexist. I work with realtors all the time. Excuse me. Sorry about that. I work with competent realtors and wholesalers all the time and. There is never really a issue. Most realtors only know about the retail side of things which is why most of realtors don’t make money. Realtors who truly know how to hustle and work hard know it’s no issue with working with wholesalers and flippers. Other than inventory that is. But that’s dictated by the market.

I talked enough lol. But to conclude things this bill is nothing more than putting more regulations on things to draw people elsewhere and generate more fees. How ironic that the most liberal states in America. NY and Cali and IL are also the ones in deep debt and have a plethora of issues. I’m not align with any political party nor have any of their ideologies but we have to deal with reality here and not just cater to people’s feelings. Laws like this is just one of many that addresses the surface problem and cater to people’s emotions and not address the root cause of the problem. So many laws like this exist in America. If we don’t start addressing the root cause of problems. It’s going continue to spiral downward and more and more cities across America will have these kind of laws. We have to do better.....

Not to be negative or anything. Wholesaling commercial property seems like a huge pain....Thinking about the chain of command....Hedge funds, big brokers and everyone else at the top more than likely already seen that property. Passed up on it because it wasnt a good dea for whatever reason. Or you lucked up on something nobody seen....but whos going pay for this property? Can they use a loan to close it? more than likely as others mentioned the seller is far from a noob so either hes going expect for you to come back to him or her with a contract extension or the seller may ask for more terms in their favor with the contract.....side note...50k is a lot of money for EMD. So if you arent able to get a finders fee of whatever your looking to make, you would need to double close(if that title company does those, some dont allow it)....but in this case you are the buyer so you would need to put down the 50k in the A to B transaction then sell it to the end buyer. Thats not to mention the terms in the contracts....lol Im thinking of so many things that can come up....

Commercial real estate is where the big boys play. its a much higher barrier to enter but you dont have to deal with the unprofessional and  I just started investing last week people in residential.

I want to follow up on what @Charles Goetz mentioned. There are many bad general contractors just like there are many bad doctors, teachers, accountants, etc.....a lot of people just dont care and never forget the "almighty dollar" is still the main focus in America and the people who inhabit the country. Wit that said, I will list out what makes a good GC IMO.....

• Time!!!!-some GCs come and go when they please when they have work, not caring how long a project takes...these guys can totally ruin a project from inspections, your profit, etc....
• Under and Over rehabbing- a good GC should have a general idea where they are rehabbing and rehab the project base on that neighborhood....with that said more than likely a average to very good investor isnt flipping properties in bad areas, so the idea of just making things work and looking ok should be ideal so the investor can finish the project and place a tenant there
• Tidy & Cleaning up- Not just when the project is done, but some guys are just sloppy with stuff, at the end of each work day there should be atleast a nice pile of dust or whatever swept into a corner. If someone is doing roof work he shouldnt be just casually throwing nails and shingles on the ground without a tarp or some sort. Everything should be organize. 
• Receipts!- this is also important because everything should be tracked and kept....If a GC is careless with that it means he also doesnt care about over spending on materials. Know ALL of your numbers and the cost of EVERYTHING. Little things add up overtime

Basically just interview and really vet the guy....unfortunately with GCs, you get what you pay for in most cases LOL....so hoping someone can do 75k of work for 30k is unrealistic unless there are some major terms negotiated. Also with good GCs, they are performing a service for you so, you should tip them something nice....even if its small.....$500-1000 extra can make someones day.This is business so both parties should be happy with one another. 

Congrats....You should defintely hit the ground running again and use maybe half or 1/3 to start another project.

buy and sell more real estate.....

side note: Its a reason its hard asset and not a soft asset....IMO nothing beats land and property. Thats not to say all real estate is a good deal because its not. But I would take hard assets(gold, silver, precious metals, natural resources ala oil/gas, spice mines, etc....) over soft assets. In fact in most cases intellectual property is valued as the highest soft asset. So i'll also take a patent over bitcoin.....

Wars are fought over hard assets not soft assets.......

@David Zheng Huge congrats to you. We are about the same age and you've done more than most people will. Some people wont get a chance to retire unfortunately. But keep in mind you dont want to have a idle mind lol. Its good to live a little bit and have fun. Whatever fun means to you, but if I was in your situation, you should look into starting a business that cash flows since you have the time and money. Then sell it after 5-8 years later. That way you can really sit back and enjoy the fruits of your labour.Its something I'm focusing on now myself. Buy huge 100 unit apartments or a large hotel or a large skyscraper.....possibilities are endless. Keep thinking and putting those thoughts into action.

I would say it depends on the rehab of the property. You mention 250k and putting down 50k. So keep in mind that doesnt include rehab which most MFHs being sold need heavily. Especially in the basements. With that being said....I would say the South Shore, Woodlawn, Avalon Park, and maybe some parts of Garfield Park. All of those areas have been increasing in price for the past few years and have been getting better slowly. They also arent that expensive(for now) due to the crime that may still linger on certain blocks. You would also get a very good cash on cash return or CAP rate depending on which you use to evaluate a deal. Some of the areas above mention are very nice areas but are far too expensive(IMO) and/or the cash on cash return isnt that great. Actually in some of those areas 250k wont get you anything in that area lol. Also...quiet as kept, please do your research a little bit on any area's mayor and city rules about real estate because some are a serious pain in the you know what to deal with......Thats one of many reasons some properties sit in certain areas.

Lastly, Englewood is getting better slowly as well. Maybe not now its not worth purchasing, but in a few years there will be more development there. Driving up prices and stabilizing the area's crime rate. More and more working class people are getting property there.

Hello BP, I have 22 houses that are being sold as a package by one owner. He is looking to retire and sell off his last remaining assets. This package would make a great portfolio to any landlord looking for cash flow. A property manager is strongly recommended. If you need a property manager recommendation I can assist with that as well. The properties are all in C areas and scattered across the south side of Chicago and the south suburbs. The south suburb location isnt too far from Northwest Indiana. The cash on cash return is 15%. So all of the properties are cash flowing nicely. If your not living anywhere near Chicago, don’t worry, Location does not matter. The previous owner held the properties out of state for 14 years.

Please reach out to me for pictures, inspection reports, and anything else if you are interested.

I think if you been in the real estate industry anytime longer than a year you slowly see how many irrational people are within the industry. That’s on all sides.  Tenants to property managers to any and everything above and in between. It’s a reason some people call it the professional drug game....With that being said. I think people should be allowed to protect themselves if a situation came arises or for any potential harm. 

Well in my opinion, there are a ton of variables to think about. If your trying to scale your flipping business I would stick strictly to flipping. Wholesaling is a nice tool in the toolbox to have but without any serious buyers your going be sitting on a lot of properties. Unless your buying them yourself. In wholesaling if you dont have any buyers....As in actual other landlords and flippers then its pointless.

Moving forward, If you plan to scale flipping you need to be on a very strict deadline with all of the properties you close on. Moving quickly and having atleast 2-3 going at one time. One way is to have a partner and go back and forth closing on deals together to create a volume result. Or you could aim for the higher end homes and flip those the same way. The issue is how the current market is all over America its going be tough to come out with a nice ROI with those homes. Also although deals can still be found, they are becoming harder and harder to obtain. Thats not to mention you will be sharing the profits as you scale up. The next is having a great relationship with your lender, doesnt matter if its a HML or PML. Yeah I know everyone says "We can close in 7-14 days" (LOL surrrre) but having one that doesnt have hidden fees and fees that fall out of the sky is very important too. The most important IMO is hooking up with a knowledgeable wholesaler who knows what they are doing and how to run ROI. They should know a good deal that could be a great opportunity for a flip. If you can manage to find one or a couple keep in contact with them and whatever their fee is just pay it. Many people flip out when they see what a wholesaler profit is in closing docs. Your getting the better end of the deal since your the buyer and they are the middleman. Lastly, is finding a competent realtor who knows what a good opportunity is for flips as well. Rather they are off market(usually those are the best) or a listing that hasnt come on the MLS. A working relationship with them is also important. Real Estate as a business is all about having people you trust assist you. Teams are very very important to be successful in this industry. Essentially having 3-4 people that could do the same thing means better efficiency for your flipping business.