All Forum Posts by: Eric Hardt

Hi @Kelly Kormos

I went to school at western about 5 years ago. I'm only familiar with it from that regard. However, I have been back a few times. I know enrollment is down almost 20% from 10 years ago, so be careful with that. They built a few new complexes in the 2000-2010 timeframe. When I started there, they were full. My understanding is those places are under 90% occupied now. I think that is partially because of Illinois being a mess, but Macomb also doesn't need have a ton of job prospects for people to work during school. And I know some bigger places closed while I was there. I would just trend lightly and really watch that admission level if you do decide to jump in.

I'm hoping someone can offer some guidance. I'm really struggling to get a lender for this property (Marquette said no). I also reached out to a few local credit unions, people's local home equity, and wintrust.  The target property is a nn-warrantable condo. It's only 70k. The association consists of 3 12 flats, so 36 total units. 22 of them are rented. Every portfolio lender I spoke to has said no one would underwrite it, which actually surprised me a bit. Does anyone have any recommendations?

@Frank Pilipauskas after reading a few of your other posts, I thought I would share a bit more info.

It looks like your condo was bought a bit over a year ago based on a previous post. Assuming you got conventional loan on primary residence. Make sure that only calls for 1 year to live in property. I know mine are only a year, but some lenders I spoke to had 2 year requirements.

I would talk to a realtor about what they feel your place would even sell for as that may even limit your options also. I know the area well and condos haven’t done much of anything in regards to appreciation in the last 2 years, so I’d be concerned nearly all of your down payment will be gobbled up by commissions and closing costs if you sell, unless you got a downright phenomenal deal on the place or made significant improvements. I really think you’re going to see even more downward pressure with the tax bill in states like Illinois and areas like ours that are still prob 20% below 2007 highs, especially on a larger condo that is probably more likely to sell to a couple.

Lastly, I presume you’re talking about properties in aurora. I’m definitely not saying you shouldn’t go that route, I’d just encourage you to be very honest with yourself about what you want to achieve. You’re going to have a very different landlord experience renting in Orland vs Aurora. 

Two random things I forgot. Also keep in mind with the 1% rule, hoa's are very expensive. I'm presuming your hoa is about $250 a month, which is roughly $50k in regards to a monthly mortgage.

Also, definitely check out any kind of smart thermostat if you don't already have one. Although electric heat is still pretty meh, I'd hope that would cut some of your costs as well as potentially help renters if that's what you decide.

Hey @Frank Pilipauskas

How much money did you put down on the condo? I'm presuming your 1150 month payment is also with the escrow as well? Obviously the 1% rule is going to be just a rule of thumb as a lot of things vary. 1% could potentially be better ina nice area of Indiana vs Illinois because of the property taxes being 2-3x. Im going to assume you're paying at least 4K in taxes, which will also go up next year with reassessed value, then again the following year when you lose the homeowners exception. I'm guessing that would add about $70 a month to your payment.

My story is somewhat similar. I bought a condo several years ago at a low rate and only put 3.5% down. I decided to rent it out at ratios that are similar to yours. I wouldn't buy again under those same circumstances as an investment, but it made sense to me to keep due to the very limited money I had in the deal and the low rate from buying as a primary. It's incredibly easy to manage as I have phenomenal tenants when take care of the place, so I'm personally happy with the little money it makes + principal pay down + paper losses from depreciation. Others may disagree, but I'm very happy with a lot of what I've learned from that first deal and it really helped me move on bettter cash flowing properties afterwards.

In regards to moving for a new property, from my experience lenders are going to want to make sure you can afford both this mortgage and the new one at underwriting. If you can't afford both, you'll have to make sure you have a lease signed on this one and they'll use 75% of the lease amount. But good luck finding a 2-4 unit if you're looking to stay in the area. There just aren't many out there and all the ones on market are just ridiculously priced. Most are older and going for 130-150k a door and only bringing in 1100 or so rents from my experience.

Good luck in whatever you decide.

I figured I would post a property I'm viewing and get a little bit of feedback from the community. Everyone has different criteria for investing and will say they hate condo's, or it's not enough cashflow, etc.. So I'd like to give a little bit of information about me and what I'm looking for.

My fiancee and I currently own 3 rental condos. My reasoning behind condo's initially was pretty simple - I thought they would be easiest to manage while learning the ropes of REI and it appeared to me that a lot of the SFH in my area were sitting vacant for quite a while (plus they wouldn't cash flow). I wanted to stay local initially so I can both learn, manage myself, as well as having a great knowledge of the area. I'm ready to invest another $50k or so and was considering investing out of state, small multifamilies in less desirable areas near me, or to continue investing in my comfort area.

About the target property: I would classify it as an A or A- area based on what a lot of people call B and C areas around Chicago. I would classify it as a B+ building. Only real potential unknown for me is investing in a non-elevator building and unit is on 3rd floor. I'd definitely welcome any feedback or experiences investors have heard from potential renters on this. 2BR 1 bath unit that is decently updated and wouldn't require any work beyond paint. Property is in the south suburbs of Chicago. It is within 1.5 miles of major hospital, train station downtown, and major highways. Below are my numbers.

Purchase price: 80k

Down Payment: 16k

Closing costs: 2k

Anticipated Rent: $1150

Expenses

Vacancy: $50 (some might say low, based on my experience, I think this is reasonable)

Insurance: $20 (I have a separate umbrella)

HOA: $197 (well run association with decent reserves)

Repairs/Capex: $100 (I don't have a ton of experience, but I think this would be attainable. I'm definitely curious what figures other people are using that invest in condos)

Property taxes: $200

Payment: $344 (5%, I'm hoping I can get this, but going to reach out some banks in the next day or two)

Monthly Cashflow: $239

Yearly Cashflow: $2868

Cash on Cash: 15.9%

Again, I'd very much appreciate any constructive criticism and thoughts. 

Good evening everybody,

I have a couple investment properties and have used a large national due to simplicity in the past. However, I'd like to start building a relationship with a new regional. Does anyone have any recommendations to better help me sift through my list? I'm looking in the general south suburb area around oak lawn. The properties I'd be looking to finance are conventional single family homes and condos with 20-25% down as investments. If anyone could share any information, that would be greatly appreciated.

Thanks,

@Bryan Bokowy Check the assessor website. Cook county was just reassessed last August or so in batches. I'm assuming Chicago is same as suburbs. Assessed value absolutely makes no sense in cook county. All 3 of my properties went up 60% over the previous assessment 3 years prior. After disputing, I was able to get them down to a 25% increase, which was right about market value. You won't be able to dispute yours until next year, but check and make sure your dates as each township is different in regards to dates.

I think going to the cook county website and checking your pin(s) would be the best estimate to what your increase is going to be based on the assessed value change. However, as some others have stated, your assessed value may be brought up to purchase value in the coming years also.

@JM I. I know you didn't ask for advice here, but who are you using for a lender? I'm surprised with your credit and down payment that you couldn't get a rate a bit lower. I figured you'd be able to get 3.875 right now.

Just make sure you shop around. Some big banks will even match the rate of discount/online brokers.

didn't mean to post.

Property management - if your goal is to continue to invest, at some point your time may be better suited towards other things. An extra 8-10% of rents can put a dent in cash flow. More on a personal level, I'm new and started doing the same thing. I want to self manage to get an idea of things that pop up for down the road. My properties cash flow at about 10% CoC between them, but it would virtually be wiped by PM.

As you mention, make sure you account for small things. Any idea of the cost of landscape maintenance? Is that covered in your repairs budget?