All Forum Posts by: Henry Lazerow

This spring I was thinking about turning my airbnb into a LTR as last years numbers were terrible but for whatever reason this year the airbnb is doing amazing. Nightly rates up and running at very low vacancy had a few months over 90% even where any little gaps get filled. Definitely keeping it as airbnb now. Located on north side of Chicago. 

@Alan Lacey so if someone had no job they would still be approved for any cashflowing property that brought their DTI up to sufficient ratios?

Curious exactly how does DTI come into play when buying a non owner occupied investment property with conventional mortgages. From my understanding if 75% of rents cashflow over PITI it actually improves you DTI for approval is this correct assuming have 2 years landlord experience? What if you show low income on paper is there still limits, it seems almost as if someone making minimum wage or even no income could buy a million dollar property otherwise as long as it showed a net positive to their DTI? There must be other ratios that come into play to limit investment purchase size to income?

You might be right. Its too small to be an egress and since its unfinished space an egress shouldn’t be needed. 

We had way more showings when rates fell even .5% it was shocking how quick it picked up. It's interesting how everything will play out, I actually don't expect significant rate cuts until next year but who knows. If rates fell significantly (I doubt we see below 5s for years) it could also increase supply. 

Anyone experienced similar issues with basement egress windows? I have a 1960s brick 4 unit and each unit has these windows in basement which all leak when we get even moderate rainfall. We have had two different contractors try to fix using various types of cement/epoxy while digging up outside area and they can not seem to get it right but have decreased the water a bit. The building is in a cheaper suburb value only $250k range so I want to get this done affordably and need do all 4 units. Any ideas or expected costs? Maybe even just brick it up if the city allows? Below photo.....

Congrats on getting them to accept deed in liu will save your credit! Another option I thought of was pulling from your retirement funds if that can make up the LTV. You are in a solid market that should appreciate over the long term.

I have noticed an interesting trend that's been more and more common since about 2018. Buildings selling for example $300,000 which need $150,000 of work but the ARV is only $420,000. Maybe people buying and not fixing up who just want a multi unit at lower price point? It's a weird strategy I never would partake in. I have done two BRRRs and am still a huge fan of the value adds (working on a 3rd deal flipping it right now) but would say since covid 95%+ of value add deals do not work for any equity creation even the bs wholesalers send out. We have seen deals with strong equity numbers but they are in junk areas with bad tenant pool. This is with my contractor contacts who I refer out a lot and work below what retail pays.

Where I have had luck and seen many of my clients making it work is on bigger 3/4 units in class A/B areas where ARV goes to 800k-1.1 million, as provides a big enough margin. Duplexing is also a value add we have seen work for equity creation. For example you finish the attic and add a 3rd bedroom or you take the already there illegal attic or basement unit which are common in Chicago and connect it to the legal unit for extra living space so now you have 3/2 duplex rents on what used to be a 2/1 simplex. These 3/2 duplex units on northside are passing $3000 monthly rents now too so cashflows. Also seen many of the duplex units with old tenants at for example $1800-2000 where you update it a little and bump it a whole 20-30%+. Seems many old sellers don't understand how high of rents a duplex up can get in 2024.

So far I have seen 2-2.5% the only 0% was from a small local commercial brokerage who always had a reputation to lowball buyers agents so most agents just never send out their deals. 

I have a HELOC on my 4 unit and used it to help fund two other BRRR projects. The rates are high/variable though so you need to be careful/conservative. I wouldn't go pulling 100% of it but use it as half/half vs my cash for projects that way if the project doesn't work perfect I can still pay off the HELOC in full at the end.