All Forum Posts by: Gilbert Dominguez

Hind sight is always 20/20. Since you are asking about how to handle this matter it seems obvious to me that you did not cover this in your lease agreement and since the tenant has made no agreement they have accepted detailing this possible occurrence then I would say you take care of the plumbing bill and add an addendum to your lease and have the tenant sign it. 

As far as the bill you can always ask the plumber if he would be willing to discount the charges not that he or she will but it would not hurt to try. 

I love these kinds of posts because it only helps to educate the rest of us on knowing what to think of when drawing up a lease agreement. 

This is only a suggestion and its not for everyone but if you are thinking of investing in several areas and be all over the map I would suggest you try investing in a Syndication that concentrates on developing their investments in a single area like Chicago for instance 

Example:

They will concentrate on Multifamily properties, apartments. The initial investor/buyers buy on a per unit basis. Let us say  an apartment building is purchased to rehab that has 15 units. The units are priced at cost for investors including rehab costs. So let us say each unit all in is $19K to you. Secondary investors then buy the units turn key at plus 40%. The turn key buyers are given 10% equity going in. They will then earn from the rents less management fees of 7%.

If you choose to hold the unit(s) you buy being one of the initial buyers at sale you are offered a split of 50/50 with the sponsor group. From the sponsor's 50% will be taken all the money necessary to pay for property tax, and all maintenance charges and general upkeep. 

Again for those that hold either initial investors or turn key buyers property management is offered at 7% of rentals , that is lower than the usual 10%+. Tenants are vetted and leased to at no extra charge. Then when and if you desire your units are sold at the nearest appropriate time, which usually will mean as soon as  another willing buyer or the syndication sponsor group buys the unit(s). This is an option but not mandatory for the sponsor group. 

The whole thing is structured so that each unit can be legally sold as a separate property or rights, typically exclusive rights is what would be sold. 

The goal of the syndication is to steadily move up in asset class but making sure or as sure as be reasonably expected to  achieve both appreciation which  will typically do by forcing appreciation through rehabs and additions and  of course cash flow. 

Advantages:

. You do not have to be a globe trotter

. You do not have to worry about getting, having, or paying for a good property manager

. You do not have to worry about vetting good tenants

. You do not have to worry about holding costs

. Property taxes and insurance are taken care of for you. 

. Over time better quality units, higher rents, and better tenants are made available to you 

. You are assured as much as can be reasonably assured of a minimum 20% gain if you are one of the initial investor/members. For secondary investors who buy turn key they are assured within reason a minimum gain of 10% equity plus 93% of rental income. 

Disclaimer: 

This is not a solicitation to become part of a real estate syndication. I have provided this information only to inform you that there are other ways for you to accomplish what you want in real estate investing and generate cash flow and realize appreciation other than globe trotting and going into far away and unknown markets. Also this  information is provided to exemplify how one syndication may work and not necessarily applicable to all syndication projects out there. Some Syndications are set up on a project by project basis. I give an example of one that would be set up to work on a more permanent and on going basis. This is meant to serve as an introduction to Syndication and does not in any way represent the entirety of all that's involved in real estate syndication investing.

Yes you can say that ARV = Market value. Market value is the average price people are willing to pay for your house and any house that is comparable in the same area at a given time. Market value is an indicator of buyer sentiment, interest rates, whatever is contributing to demand at any given time and momentum. etc. If houses are selling it is also an indication of the strength of the economy. It means people have jobs and are risking taking on the expense of paying for a house. If the economy is down and few people are getting jobs then few people will be out taking on the burden and expense of a house. So you want to be sure there are plenty of comparable houses that are selling in your area before you think of putting your house on the market.

Suppose I was told by my doctor I needed an operation withing the next 15 days and I did not have insurance or enough insurance to pay for my operation and recovery time but I have a house. I might offer to sell my house at a discount in order to make sure I will have to money to pay for my operation. Also suppose I am getting a divorce and the court ordered me to sell my house and give half the proceeds to my wife. I may be motivated to sell my house at a discount just to get the divorce process done with as quick as possible. 

Lets say my kid just entered college and we do not have to money to pay for their tuition. Once solution I might think of is to sell the house and get the money we need for tuition. There can be many reasons why I would be willing to sell my house at a discount as compared to market prices. 

Then again I may just use a marketing ploy as say I am selling below market when i know my house needs many repairs and I do not have the money to make the repairs. Still I get people to come over and see the house and maybe someone will offer to buy it. 

Below market may not mean below market as is. It can mean below market for a house or my particular house if someone were to fix it up, add some square footage etc. 

First of all you can never and should never count on getting any property rezoned... Period. 

Look up the zoning for that particular piece of property at you local building and planning departments then either research or ask about the kind of commercial uses that are allowed for that property . Not all commercial uses are the same, for example there could be retail commercial or multi-residential commercial. There could also be other types of designations and use permits depending on the date of the current zoning ordinance. Ask first before you even consider buying it. 

First of all I would not ask the bank over the phone for the loan pay off. I would go directly to the bank in person with your father in law and ask them to tell you what is the loan pay off. They have to tell you. Take the package of documents they gave you and tell them you absolutely need to know what the loan balance is. 

I would agree. The new building going up will have fall out of tenants wanting to live in the area. Like it was mentioned it will offer you free advertising. Might even result in you creating a waiting list for your units. 

You found a buyer before, find one again but this time pay for the property. Forget any compensation you are now trying to protect your rear end ............ period. 

I am no judge but if I was I better see you doing something to remedy the situation and fast. 

Allot of people do not know that Chicago has an awful lot of condos. Million dollar condos and the lower end condos do not sell because people just cannot afford the HOA fees. That is why you find so many condos so cheap. Allot of low to middle wage earners to not even know what an HOA is or why you need to pay HOA fees. They only look at the purchase price and think its a good deal. Your mortgage payment may be $600.00/mo but your HOA fees may be an additional $400.00. After 18 months of paying your HOA fees you will not think you got such a good bargain after all.

What I have found it to make friends with local GCs. Have coffee with them, ask them about all of their projects and suggest you want to work with them. When you need them they may make themselves available to you for estimating rehab cost, real cost not just guesses. The best place to invest in the Chicago Area are West, North , Lake View and the infill areas. Anything close to those areas will mean good appreciation and plenty of renters who have jobs and can make good on the lease payments. Look at those areas with a microscope and you should find the properties that need improvements, offer add value opportunity and can usually be bought for under comparable market once you can establish a reliable ARV.

You want the most bang for your buck and you get that with slightly more expensive properties than in South Chicago but much better neighborhoods and a greater percentage of economically upwardly mobile population. Your cash flow may not be as high but far more reliable and sustained and of course your appreciation will be better. That is better than paying $120K for a property what will be worth $70K within 18 months. 

Chicago property taxes are generally high just make sure what your property taxes are based on. There may be opportunity to be reassessed but no one will listen to you if you do not become the actual owner of a property. Don't dream calculate on present day conditions and expenses and figure they will also go up, expenses I mean. Don't go out on the edge because you will get swallowed up by the big economic black whole that can just appear out of nowhere. 

Try not to get stuck with heating bills. Allot of landlords in Chicago offer paying for heating to attract tenants but if you stick to the areas where you get tenants who have good paying jobs they can afford to pay their own utilities. Also do not be so attracted by prices because a very high percentage of Chicago real estate is very old. They were built back in the 20's, 40's and 50's. Allot of residential buildings have brick because it takes the weather well but when brick needs to get replaced it is very very expensive. 

The way they have chosen to handle this situation and so obviously price gouge you tells you already their general attitude. There is only one thing to do with people like. GET RID OF THEM. They gouge routinely and out of habit that is my feeling about these people. I would not delay in cancelling whatever contract you have with them. Don't worry too much about the inconvenience you may have to work through now because its much better you know right now and take action to protect your interests.