All Forum Posts by: John Hauser

Welcome @Nathan W. One possibility for you is to network with some of us in the Fairfax area. Roger Lin organized a meeting in December over the "Meetup" website, and I know there is another one scheduled this month. I have an investment property in Chicago and want to learn more about buy-and-hold opportunities here, since it seems like we will have to do a little traveling to find places with prices that will let you cash flow. Best of luck and let us know how it's going for you. There is a ton of content on the site for you to start understanding investing, so you're in the right place.

John

Welcome! There are a bunch of Chicago area investors on the site. I don't know of any wholesaling books, but Podcast 12 deals with wholesaling. It's been a while since I've listened to it but there might be something for you in the podcast or in the show notes. www.biggerpockets.com/show12. Best of luck and let us know how it's going for you.

John

Paul welcome. There are plenty of Chicago investors on the site, so if you follow @Brandon Turner's advice and set up some keyword alerts, you can quickly network with us. There are also some good real estate investor clubs you can attend to meet people.

If you've never invested in Chicago before, you should know about some of the special rules for being a landlord there, like the Chicago RLTO (Residential Landlord-Tenant Ordinance). Among other things, you need to give a summary of it to your tenants every time you sign a lease, making sure to give them the most recent one. Not a huge deal but something to be aware of, as other Chicago people like @Account Closed were kind enough to point out to me when I got started on this site.

Otherwise, enjoy the BP community and I am looking forward to hearing about your successes over the months and years.

John

Thanks @Mike Knowles . I sent you an email too.

John

@Justin P. :

My advice is to back up a couple steps from financing the deal and make sure it's a good deal to start with. If you're not an experienced investor, there will almost surely be things about the deal that you haven't spotted yet. So it might be a great deal, but the devil is in the details and I would recommend you think through all the things that a lender might want to know. What are the carrying costs (taxes, etc.) for the property? What is the market rate for undeveloped land in that area? Why is the seller selling at such a discount? What are the risks (environmental problems for one) and is the seller warrantying the property? Do you have a developer lined up? What will you do if development does not expand to your area as planned? Sounds like you'd like to move quickly so a couple suggestions are (1) post the details of the deal on the Deal Analysis Forum, explain the deal and solicit opinions; (2) contact a real estate attorney and get a sense of what it would cost for an attorney to represent you at closing, explain your concerns about the risks, and see what can be done to mitigate them. I really don't mean to take the enthusiasm of your approach but especially if you are asking someone for money, you'll have to show you've thought all this through. If there's anything positive about needing lending, it's that it forces you to be more thorough.

As far as financing goes, I have a couple suggestions. One, you may have already exhausted this option but is there anyone in the family who might help you with your situation? Maybe cosigning on a loan or lending you the money until you can build up your credit. Second, you may want to bring in a business partner on the deal, someone who has cash and is willing to go for the opportunity with you, since you were the one who found the deal. That's all I have for now, but good luck and let us know how it turns out.

John

Thanks Dave I like that answer!

@David Doyle thanks for your kind offer! I have a 2-unit rental property that keeps having a backup in the main sewer line. We've had handymen rod it out three times, and each time it's paper towels and other paper products which are causing the clog (the clog is between the basement and the street). Of course both tenants deny responsibility. Landlord-tenant laws being what they are, we can't force everyone to meet over dinner and solve it like Agatha Christie or Matlock would. Any suggestions on how to narrow down the culprit? Thanks!

John

Eric:

My advice is to shop around community banks. In my case, I'm a buy and hold investor and I've been trying for several weeks to get financing for the purchase of a second property. The bigger banks will want a track record of successful rental income on the property before they will let you use it as collateral; the perfect catch 22 for someone looking to get started. But community banks are much more flexible. And if you can demonstrate successful cash flow on the property prior to your ownership, that might be a good start. At the very least, the deal gives you an opportunity to meet bankers and find out their criteria. Establishing relationships with lenders will be really important for your long term success. Understand that even if you're using the purchased property as collateral, you will have to personally guarantee the loan as well, so like @Brie Schmidt said, your assets and credit do matter.

The second alternative is to find another source of cash or collateral. Any chance of getting the up front money from a relative, or borrowing on your personal home? If you have the chance, do it and try to finance out as soon as you can with traditional lending, but manage expectations and understand that it might be a year or two until that happens, IF everything goes well. Another source of cash could be to partner with someone on the deal.

The final alternative that I see is using short term money to buy it and then resell; basically, treat it like a flip. I'd have to be VERY confident that my numbers were right (meaning your evaluation that it was selling at half its value) since buy and hold isn't really an exit strategy when you're paying such high interest rates on your money. Either that or have an exit strategy for short-term money that I'm not seeing. If it works, then you'd have some money of your own for the next deal.

Good luck and let us know how it turns out.

John

Welcome Ashlee. I know a couple of other Canadians who invest in the Chicago area, so you're in good company. I would echo Ryan's comments about doing research first and partnering with people who know what they are doing. It's the stuff you don't know that you don't know that can really come back on you. That being said, you're at the right website. The Beginner's Guide is a great resource if you haven't already read it. And if you follow through and start picking up places in Chicago, there is a good network here to help you along. Best of luck!

John

Neil you should consider checking out some posts from Jon Holdman on turnkey properties. He's a huge skeptic of a seller's pro forma numbers for turnkeys (hope I'm not misrepresenting you Jon but that felt safe to say). Some pitfalls for you to watch out for are unaddressed maintenance/rehab (so make sure you get a good inspection) and rents that are guaranteed for the first year but unsustainable over the long term. I don't have a ton of experience but I use rentometer.com as a quick, crude way to double check purported rents.

Anyhow, be sure to verify everything you can. It seems like one of the key selling points is that vacancy rates for the building are lower because the upgrades are better. If that's true, ask to see proof that tenants have stayed there year after year (or is the low vacancy rate based on a seller prediction?). What is the reputation of the turnkey seller?

Good luck with this and if you buy please keep us posted on how it goes.

John