All Forum Posts by: Frank S.

Hi, 

How much are you currently receiving in rent?  In RE you make money in cash flow, amortization, tax shelter and (sometimes) appreciation.  It's not only cash flow.  Look at those options. 

If you are not able to manage the unit and are not comfortable putting more money into it each month, you could consider taking the loss if there is value on your inner peace.   

Note that $210K from 2006 equals to $260K of today's money, adjusted for inflation. At $170K sell, the unit would sell at $90K less than what it was listed in 2006.  Your downpayment of $52K equals $64K today. You are paying about $10K in interst per year. Your amortization is about $4.5K this year.  

 What's your cash flow?  

What are your management expenses?  

Can you cut back somehow? 

Are you sure about the sell price? 

Can you increase the price by doing some repairs?

As you know, the sell will set you back $10K in Realtor comissions (6%) and about $3K in title and other costs. Assuming there are no other repair costs. You can try a lower flat fee company or do a FSBO.

How about a rent-to-own type of deal?  It all depends on your current rent. 

I'm interested in what others have to say.

Good luck, 

Property Assesment and Tax Appeal Attorney in Chicago

Hi there, 

Can you recomend an attorney in Chicago?  I wouldn't midn a second opinion.

Thanks, 

Frank

MEP can be very lucrative depending on the area you focus.  Healthcare is solid.  If you are interested in a carrer change and become more involved in RE, how about a construction management option at CBRE, Habitat Company, or other real estate managment firms?  You can also consider large general contractoring firms.

Good luck, 

Frank

I appreciate the  question about business pursuit,  for it made me double check my previous information and assumptions. However,  as noted  above this is not a business from my underwriter's perspective. 

Honestly,  please go ahead and talk to your own agent. Without an specific example regarding how my issurance is voided, this discussion is over.

For kicks,  I may check with another of the brand name underwriters. It wouldn't hurt. 

Good luck, 

Frank

Ryan, 

You could createa a DBA ($50/$100). It's super easy. This allows us to write our checks and contracts undera a ficticious name and open a bank account, too. The bank may ask for the Schedule E to see if you have a rental, some don't care and all they ask is the address.

https://windycitybloggers.com/everything-you-need-...

They will give you a business checking account without a DBA. They will do it based on your SSN only. I have a few this way.

For tracking, consider Neat Receipts, it's cheap, $10/month. It adds dates, amount, etc. You can buy upgraded level before tax time and then reset. Then, hire a tax guy from Upwork for $6 - $10/ hour to sort all the receipts, if needed. The LLC is a waste of time - see comment above on land trust and umbrella.

Good luck, 

I don't think this will hold in court.  Once again, make your attorney earn her money.  You could give the tenants a 30 day immediately after closing and keep your fingers crossed all works well.  In fact, the current owner could tell them this is coming so they can prepare. Tenats frick out when a building is sold, they should know what's coming.  If they have a lease, that is a problem. 

I had been contemplating this exact issue of  renting non-conforming units.   If the "space" in question is rented as part of a conforming unit, you may be ok - say, second floor with "attic access",  or first floor with "basement access."  The tenant can use it for "storage", right?  The tenant has access to the space, whaterver they use it for, it's up to them, and you can't necessarily monitor that.  I don't know if that will hold in court, I doubt it.   

Also, your insurance may drop your coverage if an accident happens and this is seen as  a "code vilation", "health hazard", etc.  I will talk to my underwriter.  Still, there is good money to be made on non-conforming units.   The more risk you take, the more proffit you should get, right?

 Great information.  Thanks alot gain!

Frank

@George Skidis and @John Clark

Thanks again for the info and feedback.

I double checked the "business pursuit" comment above with my insurance underwriter. I don't have a LLC and likely will not get one. (It doesn't seem to be worth the effort as one considers attorney fees, maintenance, and higher insurance costs for a veil that can be easily "pierced"). The land trust, it's a good way to avoid probate and hinder a bit the attorney research.

Regardless, per my discussion with the insurance underwriter (Allstate), based on the number of properties I have, their current use, and my involvement managing them, my current situationdoes not create a condition where it pushes me to the "business" category and I do not need commercial insurance. The property rental insurance (landlord insurance) and my personal umbrella policy cover me for my current involvement in my properties.

We discussed liability, slander, libel, broken legs, dog bites, defamation, etc., as it applies to being a landlord. We talked about going to home depot to get parts, driving over to show units,  and getting into an accident  while managing my units  - this is not comparable to the Uber or the pizza delivery boy above. I am covered under my particular situation, others may have a different insurance and different needs. 

Now, as we purchase more units and add them to my current policies, they will reevaluate the units use, location, condition (they visit the units), and risk. At some point, I they will require a commercial umbrella insurance, however, this is not the time. They do not consider I am in "business pursuit" and that's why they accepted to protect my units with the associated liability under my current policies. 

Here is another thing to consider, even with an LLC you can be personal liable to a lawsuit as the LLC is your personal interest. A subpoena to the LLC will disclose ownership. Just like they take away your assets, they can take away your LLC and whatever it's holding. (NOLO, Form Your Own Limited Liability Company, Anthony Mancuso). An umbrella is a must, and it's too cheap to skip.

Thanks,

Frank

That's for your attorney to answer.  I think they can claim  relocation assistance, check with your attorney.

Have your attorney push for vacant possesion as part of the negotiation. Have them provide the 30 days notice to the tenants.  You may need to delay closing accordingly. 

Non-confomring units are extra cash, with the associated risk of course.   A lot of people like them.

CHA provides classes. The income is higher at Opportunity Areas.

http://www.thecha.org/assets/1/22/2018_payment_sta...