All Forum Posts by: Jake Hartnett

I have a friend making a killing doing Airbnb in Chicago. Is that an option? Or is there a rule that you have to occupy the property to do short term rentals in Chicago?

@Tamara Deering Thank you so much, this is great information.

I am going to do a full rehab on one of my units and I want to use it as a template for all rehabs in the future. I am looking for ideas and best practices for low maintenance materials that are relatively cheap and timeless. I want these rehabs to last a long time, and I want to attract great tenants who will pay more and take care of the property. 2 bedroom units will rent for $1200-$1500 in my market depending on location and quality, most buildings are 1900-1950s built.

Here are some of my strategies, any others you can recommend?

-natural maple cabinets will look good even after being banged up a bit

-quartz or solid state countertops are durable and relatively cheap

-refinishing wood floors and tile in kitchen and bathroom, no vinyl or carpet

-tile shower, no plastic surround

-pedestal bathroom sink, vanities tend to get water-damaged and gross

-grey walls, white trim, white ceilings

-I have never had stainless appliances myself, do you think they last as long as white before they look worn?

-any thoughts on glass block vs vinyl for shower windows?

-any thoughts on chrome vs brushed nickel fixtures? seems like brushed nickel will last longer.

-thoughts on plumbing fixture brand? I've had trouble getting replacement parts for cheap fixtures so I'm planning on going with Moen.

-anything else I should be thinking about?

Thanks.

Portfolio lenders and partnerships are the obvious options. Portfolio lenders can be more flexible in their underwriting criteria. Many people have a friend or family member with high income that will be willing to co-sign a loan for a piece of the action.

Seems thin: you have max $180/month for management, utilities, maintenance, vacancy, permits, and profit. I would guess when you honestly factor these things in you are maybe breaking even. Check out "how to analyze a rental property" articles if you haven't already. Unless you expect the market to improve wildly in the near term you might be better off taking the cash and redeploying it closer to home and saving yourself some headaches.

I have never heard of a benefit to having a credit score over 740, and credit pulls temporarily drop your credit by just a couple points, so you should be fine.  Also, if you do a bunch of mortgage pulls at the same time it counts as one pull. So you can do a few pulls to get your bridge financing, then do a few more to shop for your refi and it will only count as 2 pulls. This should drop your score by less than 10 points, probably closer to 5.

1. Talk to a lender

2. "No and Low Money Down" -Brandon Turner

3. "Real Estate Finance and Investment Manual" -Jack Cummins (This is upper division material.)

Reach out to a few local lenders, they will be happy to help you out. Be sure to talk to them about 3% down conventional loans, because FHA loans are notoriously difficult, and sellers will prefer a conventional over an FHA, because the FHA appraisal requires the seller to fix little things like peeling paint, broken window panes, loose handrails, etc. while conventionals typically do not.

Some borrowers are approved for a higher loan amount through FHA than conventional, but I believe the MIP is generally higher.

Also, this is something your agent should be helping you with. If you don't have one, get one.

Good luck.

When you are putting next to nothing down your cash on cash can swing wildly with small changes in your income and expenses. This looks like a rehab loan but you don't have closing costs. You might have to pay closing costs twice, so make sure that is calculated somehow, maybe you are rolling that into the loan amount, or maybe that's what the $5,000 is.

Assuming your numbers are accurate this deal looks like an equity play rather than a cash flow play. ROI is kind of irrelevant when you are putting less than 5% down because a few dollars a month can make or break your ROI. If your CapX is actually 8% instead of 10% you are getting 10% ROI, if its 12% instead of 10% you are getting 0% ROI.

Another thing to think about is your return on equity, which will be pretty dismal for the next 15 years. You can change this to a 30 year mortgage for better cash flow in the short term, you can just sit on it and take the cash flow when you pay off the mortgage in 15 years, or you can flip it and invest the cash in a property with a higher return.

You are walking into $50,000 in equity, so you need to figure out what you want from that equity.

Welcome @Glenn A Walker,

you've come to the right place. Congratulations on your first deal.