All Forum Posts by: Gabriel Alvarado

Thanks, Russell. I am not at the point that I can take advantage of economies of scale, so I plan to continue managing my properties. However, but is it market to enter into an agreement with a property manager on just a lease transaction? Is that something that is common? If so, is 1 month's rent market?

Thanks,

Gabriel 

Hi Team,

I have a 3 bed, 2 bath duplexed unit in West Logan Square that I have been trying to lease since late June. Unfortunately, I have not had much success as I have barely gotten 1 application. I have dropped my rental price (from the original rent listing price recommended by my agent), but I still don't see much traction. 

My question is, how do you guys typically evaluate real estate agent performance? I understand that a rental listing will not generate as much as a sale would, but I think a minimal standard should exist (especially since I plan to buy properties in the future). Any thoughts?

Thanks for that insight, Paul!

Quote from @Paul De Luca:

Quote from @Gabriel Alvarado:

Hi,

I am currently in discussion with my neighbor to purchase a 4-unit building in Chicago (Logan Square). The current layout of the building is 2 floors, with 2 units on each floor, and there is an unfinished basement (supposedly about 7 ft. tall). While I have not yet seen the inside of the building, he did throw out a number. However, the building is in need of a full gut rehab, as the building has not really been updated (has furnace from 1956, will need updated plumbing and electricity). My plan is to merge the 2 existing units, so that I have 2 bigger units measuring about 1,500 sq. ft. each. Additionally, I plan to have 2 new basements units (about 600 sq. ft. each). The building will need to have new roof, tuckpointing and the balcony will need to be possibly replaced. I understand that this is an ambitious plan, but what would the rehab cost me, roughly? I am trying to have some type of estimate so that I can assess whether what purchase price would be fair. I appreciate everyone's help in advance.

Thanks,

Gabriel

No contractor will be able to give you an accurate rehab estimate without a walkthrough. Talk to @Jonathan Klemm.

Is the seller motivated or saying they would only sell if they could get their number?

Thanks Paul! The neighbor has given me a number, which I think is a bit above what the value actually is and just high enough where I am not cash flowing (even just a little). We just started discussions, but it seems like he is looking to move quick fast. 

Quote from @Brie Schmidt:

@Gabriel Alvarado about $400k depending on the current zoning designation

 Thanks for the estimate Brie!

Quote from @Paul Welden:

@Gabriel Alvarado

For this type of 203k renovation, you need to have a 203k Consultant come out to the property and complete an SOR/WWU. This report will include all FHA MPR's and a cost estimate. Your mortgage lender is required to select them for you.

Hope this helps!

 Thanks Paul! I wanted to get a rough estimate before I made the decision of moving forward. Starting the process would cost me at least $3k, so I want to make sure that the project is at least viable before I paid for the consultant.

Thanks

Quote from @Christopher S.:

Gabriel,

Logan Square is great and there is still a huge need for smaller units. Logan Square also has moratoriums in some areas against de conversions of the sort you are describing. I would be very cautious because it seems hard to make the math work. Here's my high level thoughts:

1) Basement units that are below grade are going to end up in the ADU ordinance category and likely only could have 1 in the building if you live there. Also, is that 7 ft with hvac/pipes below that? You might not have enough space and legally would have to dig which likely completely negates the rental units value for some time. https://www.chicago.gov/city/en/depts/doh/provdrs/homeowners...

2) Full building systems alone are likely to run you well over $120k if you are doing everything on a building that size and age in Chicago. That building will have all cloth wire, case-iron pipes, and other fun things like the condition of the roof you will discover plus if you were trying to get a forced air solution.

3) You wouldn't get any more units on net with your idea and would than starting with a huge cost to reconfigure. You might be better off as an investment doing the major systems and updating the existing units. Have you tried running this through the Bigger Pockets calculators yet to see what your returns would be? https://www.biggerpockets.com/investment-calculators

4) If you have cost questions you could talk to one of the local BP builders in Chicago like https://www.biggerpockets.com/users/jklemm.

Good luck with the project and happy to help any way I can.

Chris

 Hi Chris,

1. That is an excellent point. I will need to get exact measurement of the basement, as I am not sure that we will have the 7 feet. Assuming we won't, I wonder what the cost to dig would be in Chicago?

2. I have not gone inside the building, but from what I've been told, the building is in need of considerable repair, including updating the plumbing, electricity and adding HVAC. Additionally, the roof is in need of full replacement and it will need tuck pointing. Thanks for that initial rough estimate!

3. Yes, I wanted to keep it at 4 units, given that I want to obtain residential financing, but I wanted bigger units, as I intend to live in one of them and rent the rest out. The issue with this neighborhood is that there are not a lot of 4-units out there, certainly not many with big units like this, and the few that are out there are pretty pricey. Thank you for that tip! I will check out the calculator.

4. Thanks for that! I will take a look.

Hi Jonathan,

Yes, my goal is to actually keep it at 4 units, but also wanted to make some changes so that I can live in a bigger unit, have a bigger unit to rent, and 2 smaller (new) units in the basement that I can also rent out. 

So currently, the building is 2 stories tall with an unfinished basement, where there are 2 units on each story. My goal is to consolidate the units on each floor, so that I have 2 large units on the 1st and 2nd level. Additionally,  I wanted to build 2 new units in the basements, so that I can keep the building as a 4 unit building. My plan would include building 2 additional bathrooms and laundry. 

At this stage, I am just in talks about whether it makes sense to buy this building and build it to the specifications above. That's why I wanted to get a rough idea of what I would be looking at, in terms of cost, before I started the process of talking to a 203K HUD Consultant.

I appreciate your reply!

Thanks,

Gabriel

Hi,

I am currently in discussion with my neighbor to purchase a 4-unit building in Chicago (Logan Square). The current layout of the building is 2 floors, with 2 units on each floor, and there is an unfinished basement (supposedly about 7 ft. tall). While I have not yet seen the inside of the building, he did throw out a number. However, the building is in need of a full gut rehab, as the building has not really been updated (has furnace from 1956, will need updated plumbing and electricity). My plan is to merge the 2 existing units, so that I have 2 bigger units measuring about 1,500 sq. ft. each. Additionally, I plan to have 2 new basements units (about 600 sq. ft. each). The building will need to have new roof, tuckpointing and the balcony will need to be possibly replaced. I understand that this is an ambitious plan, but what would the rehab cost me, roughly? I am trying to have some type of estimate so that I can assess whether what purchase price would be fair. I appreciate everyone's help in advance.

Thanks,

Gabriel