All Forum Posts by: Francis Rusnak

I fix 'n flip in Chicago area and always want to get sucked into rentals. But when I run the numbers and account for EVERYTHING, the numbers don't add up. 

Maybe I'm being too conservative but 1-200/month cash flow is what I'm ending up with. Add in turnover cost and I don't see how everyone is making money with rentals in IL. 

Property taxes are through the roof; are you able to petition those down similar to your own residence? 

Went from Foremost (Farmers) to NREIG to Arcana. 

Piggybacking off what @Kim Tucker said, rates if your a member of National REIA for Arcana are very good. Roughly 50/month for each 100k insured. However, I have not had to file a claim with them yet. Our are vacant houses.

Note for anyone using NREIG for rehabs, the price goes down quite a bit if you let them know rehab is complete and property is just vacant.

Don't see how most of these places are cash-flowing positive. Seems like you'd have to manage the rental on your own and not account for maintenance and cap-x to be cash flow positive in most of Chicago and suburbs. Or, just not have a mortgage. 

Two examples of houses we got as flips and considered using as rentals. 

437 Bayview, Naperville

Purchase 170k

Reno Budget 5k

Likely Appraisal Value 220k

Property Taxes: $4,629

Insurance: $900/year

Expected monthly payment with 20% down from 220k: $1,352/month

Avg rent $1,361/month

9033 S. Jeffery, Chicago

Purchase 100k

Reno Budget 60k

Likely Appraisal Value 215k

Property Taxes: $2,852

Insurance: $900/year

Expected monthly payment on 160k mortgage: $1,123/month

Avg rent $1,336/month

That's not accounting for property management, vacancy or anything going wrong with the house. 

We have a house in Morgan Park (South side of the city) that would make a little more sense numbers wise, but it is a fairly tough neighborhood and I can expect the maintenance numbers to be very high there. 

Didn't even run the numbers on our Dolton or Olympia Fields houses since the property taxes are so insane. 

What have you found are the best areas to get buy-and-hold rentals in the Chicago area with good true cash flow?

Looking most at price to rent ratios with a combination of good area.

Prefer South and West Suburbs. I'm staying out of Englewood and the rough crime-infested areas in Chicago, no Harvey, Riverdale, Robbins, etc. 

What I've found is you can get good rents fro South Suburban towns but property taxes are so high in Dolton, Olympia Fields, etc. that it is hard to cash flow after accounting for maintenance and cap X. 

Can you unknowingly buy a house with violations on it that stick with the house? 

Maybe we've just been lucky so far, but we never got a house with any violations on it. We've had unpaid utility bills with one of our houses, but those stick with the individual luckily. 

I was told by our lawyer that having clear title doesn't make it certain you won't get a house without any violations. Title insurance only protects against liens, but if it's violations before they've turned into liens that's where it could be an issue. He said that was our responsibility to find out if there are violations. 

How do you guys make sure the houses you buy don't have violations on them? Is it not the responsibility of the lawyer or agent to find this out; or I thought the city/village would have to disclose that when releasing over the transfer stamp.

I want to buy my own windows for our flips, but the place we use is 10-days until delivery. 

At what point are new windows put into a house on a reno typically? 

In a perfect world, the General Contractor will have his guys in the property right after you get the keys on each new flip. 

But how long does it normally take to get workers in the house; assuming you couldn't get into the property prior to purchase to get bids. 

I was thinking to get your own demo crew and have them begin right away. While they are going you can have GCs in there to get bids. But that doesn't seem like it would work because demo would take 2 days max, and there's usually a gap from when GCs can start.

Any tips to get the project off the ground as quick as possible?

How much do you pay a lawyer on the buy side of a transaction? I saw another thread that said they work with lawyers that have $250/hr rates. I've been told $550 and $700 by individual lawyers to close on a property.

Also, do experienced flippers still use a lawyer for each transaction? Is it more or less to represent on an off-market acquisition?

Appreciate the input boys. Calling around to RMLOs now to see what I should be looking for out of her in regard to LTV, Downpayment, credit score, etc.

Haven't seen you around Steve, hope you're well. 

Sage advice @Mitch Messer Thanks for the feedback.

This is making me look at this in a different light. But there must be some type of terms that would make this deal one we'd want to go through with where the reward outweighs the risk. Is that a higher downpayment, a higher interest rate, some other legal paperwork signed beforehand, etc.? 

Maybe it's not a deal as you say and we are trying to force it too much. But since we are still in the negotiating phase, I'm thinking there should be a mark where it makes sense to go through with it.