All Forum Posts by: Ian W.

Seems to be the consensus a non-refundable move-in fee is preferred in Chicago -- legal reasons.

What about getting, in addition, first and last month's rent prior to move in? Does this open you up to more litigation similar to a security deposit? 

Does anyone implement this or similar? 

Renting an apartment building and wondering if both wife and husband should fill out an application? Is it standard to have all people 18+ in the household fill one out? 

In this particular situation the wife filled out an application and her credit score was pretty bad (531) and supposedly he is over 600; how much do you take a situation like that into account? They both have good income.

How invasive can I get with questions; thinking of asking for two month's bank statements to prove income? 

Recently heard about NestEgg, which is basically a software that helps manage rental properties. The idea sounds great, I'm just not sure if it'll pan out in practice. I've also heard of apps like Rentfolio and Buildium, which seem similar but may be more geared toward the Property Manager rather than the landlord. 

I'm looking for the (mostly) hands-off approach to rentals, so I didn't give the apps much consideration. But it seems, at least in the Chicago market, they have a link to most issues that would arise. 

Brief synopsis of the app: 

-They have a leasing company which lists the property, takes photos, etc.
-Leasing company gets the tenant setup and runs through applications/vets them (fee of 1 month's rent; same as PMs)
-No renewal fee (PMs 200-400)
-Repair requests, tenant pays. This is how NestEgg makes their money where they negotiate the hourly of the contractors down then charge the landlord whatever the going rate is for that service per hour; supposedly the vendors are all vetted and have a 14-day money-back grnt which sounds unheard of. PMs all claim they have good deals with contractors and they get stuff done cheap, but all that I talk to say 50-80/hr for handyman work which seems similar)
-Evictions, this is where it could get sticky. NestEgg auto calls and emails the tenant if the rent doesn't come in, then they leave it up to landlord to serve notice/contact evictions attorney who they refer. The PM is doing the same on their end, but would just be a middleman for coordinating things w the attorney. 
-Walkthroughs, NestEgg (in Chicago area, not sure nationally) can do walkthroughs on request ($100) which seems inline with what PMs would charge. 
-Regular maintenance with PMs is nice, but you're still paying for it. NestEgg sets it up where they give reminders on items that regularly need attention; cleaning furnace, mowing lawn, etc. and then they give suggested vendors to perform those tasks. 

The leasing company can handle any of the questions regarding suggested rent, advice on areas, suggestion on things to fix prior to renting. I'm sure I'm missing some stuff, but with most PMs there are cancellation fees, admin fees, reserves needed. 

Another feature that could be good or bad is there is a direct connection to the tenant through the NestEgg app. My thought is to list my name on the app as 'Property Manager' so they never know they are speaking with the owner. So, like Brandon suggests on the podcast, you always have that buffer -- or perceived buffer. 

I'm going to try out my next rental with NestEgg and see how it goes firsthand, but it seems if you don't mind being 95% hands-off this will save the 7-10% that would otherwise go to the PM. 

What am I missing? Is this the future of landlording?

I'll be buying it with cash as an intended rental. 

Fixing up, then will get mortgage on it. 

After the mortgage, is that when I deed it over to the LLC name?

Best rates for the mortgage and most options will usually come when it's in your personal name rather than an LLC with no history correct?

I know there are small banks that will lend to the LLC, but afaik it's a lot more difficult to find them and less options out there.

What is the ideal way to do this? 

Jason, what kind of areas are you buying in? 

Can you give any examples of houses you’ve bought and renovated recently and their numbers? That would be awesome. 

I've heard many people in Illinois / Chicago area talking about how they can still get $500/month cash flow on single-family houses. I'm not sure how they're running their numbers, but it seems difficult to even get 200/month. 

Am I running my numbers too conservatively? 

Purchase Price: Generally it seems good discounted properties can be bought for 100k, put 15-20k in and refi out for 150k. 

Down Payment: Being conservative with 25% down which will help the cash-flow. 

Property Taxes: Illinois is bad here. Very hard to find an investment property with under 3k/year on taxes. I've looked at all the supposed rental hot spots: Elgin, Streamwood, Homewood, South Side of Chicago, etc. South suburbs have the highest property taxes based on percentage. You can petition these down, but that'll only get you so far. And there's a fee if you use an attorney. 

Maintenance: Account for 1 month's rent per year, little under 10%. Going in the ghetto I'm sure 500/month is obtainable, but the maintenance number would have to be at least 3X normal rates. 

Monthly Rent: This is where Illinois wins out. The rents are rather high for the values of the properties. 1500/month is reasonable for a 3 bedroom. 

Vacancy: This can be anywhere from 5-10% depending on the area. I went on the high side. 

Management: I know once you get multiple properties you can negotiate lower than 10%, but to start that seems to be close to the going rate. 

And the results ...

Only $144/month per house. With as quickly as the property taxes are rising all around the state I wouldn't feel safe with that small of margin. 

Wondering how these people are getting the $500/month, unless they're just leaving a ton of equity in the house when they refinance to boost the cash-flow. 

Every one of Andrew Holmes' videos seems to talk about him or his students getting 5,6,700/month and they're based out of Illinois. Do they not account for maintenance? How would their numbers differ from the ones I presented here? 

Thanks all for the suggestions. I've been not the site since January and have seen just how helpful the BP community is. I look forward to taking advantage in the near future!

@Andy Mendez, what is it you are doing in Aurora? Do you have any other areas around there you like?

Well, the plan is to be living in Naperville in a year or so. I'm originally from the Chicago 'burbs, but currently living in the heart of Tokyo for the next 11 months or so. 

I was introduced to BP 6 months ago and have been hooked since. The fiancé and I plan on a house hack to begin our journey to financial freedom when we move back to the states. The goal is an accelerated "retirement" with the help of a combination of rentals and flips (both mid 30s).

I have a million questions, but right now I'm mostly curious of people's opinions on what they would do if they 100% knew they would be investing in a year. You are 3,000 miles from where you will eventually invest and you have 12 months to learn, do something with your money in the meantime, buy from afar, etc. What do you do? If you've got 2 cents, I'd love to hear it.

Arigatou gozaimasu! - that's thank you in Japanese. FYI.