All Forum Posts by: Jake Fugman

Check out the Straight Up Chicago Investor Podcast.  Also, the agent directory on BiggerPockets is a great resource.   If you have any specific neighborhoods in mind it easier to provide feedback. 

@Kadeem Kamal - Congrats on adding value and creating some solid equity in recent years!  As mentioned your biggest challenge is going to be selling the package at/close to same time. In 1031 world this is called a "consolidation exchange". Selling several properties and using the proceeds to purchase one larger property. There are a couple of key components to this. But it is very doable...

1. Your replacement property needs to be equal to or greater than the aggregate amount of your net sales. Ex: Sell 3 properties for $500K each and purchase one larger MF for at least $1.5M

2. The purchase of the new property needs to be timed so that it can meet the 45 and 180 day deadlines for every property you want to put into it.  If you get 2 of them sold close together and 1 hasnt, then use just those 2 to purchase your larger MF. 

Here's a couple of things to look for as well.

1. As mentioned, sell them as a portfolio if possible. You may have to take a discount. But it may be worth it.

2. These types of exchanges are great for purchasing new construction. Find a builder building a MF you might like. Get it under contract to close in 6-12 months when it is done. Then wait until it is about 5-6 months from completion and start selling your old properties. Get as many of them sold as possible and then close on your new property when construction is complete (but still within the 180 day timeline from the date of your first sale).

You can go into contract for your purchase before you close your sales.

@Garrett Kula  Congrats on getting started.  If you plan to do multifamily in the "Far" suburbs it can be harder to hit your cashflow targets VS city/near burbs simply because there is limited inventory.  Additionally the suburbs have higher taxes compared to Chicago proper.  You do potentially get more stable tenants in some far suburbs due to better schools but the rents typically dont proportionately match the higher prices. 

SFR rentals typically make the most sense in suburbs where the taxes arent too crazy and you can get 3+ bedroom houses for under $325,000. Anything much higher and you'll find the #s start to get tough. Watch out for the village requirements and make sure your team knows what areas require rental and pre-sale inspections.

@Terrance Coleman - If you are looking to start with a fix and flip I would recommend getting on a few solid wholesaler lists.  Feel free to contact me and Ill share our vetted contact list. 

@Jacob Nevarez Congrats on getting the process started!  A few quick items:

Red flags / tips:

- Seller not willing / able to produce a written lease. Dont trust a verbal "month to month" with nothing in writing. Inheriting a bad tenant can ruin your experience. 

- Evidence of water damage in the basement.  Typically issues repeat themselves.  

- Always do a sewer scope during inspection.  90% of the "major" expenses Ive seen that surprise new buyers are sewer related.   

You might consider the Elgin area.  It's on the far NW side and has inventory in that price range, but consider that taxes are relatively high in Elgin VS most suburbs.   If you are open to doing some light rehab some inventory might open up in Geneva and St Charles areas.  

@Andrew Burrell congrats on the first purchase!  House hacking is an awesome way to leverage a low down payment to build your multifamily portfolio.  

I would recommend first establishing what your financing options are based on your cash on hand and cashflow expectations.... 5% down? Conventional? FHA? etc. Then speak with several investor friendly brokers in the area to gather feedback on what the cashflow #s look like with those options. Ex: Can I break even post move out with 5% down in X areas with X budget? There is a "Find an agent" tool on BP that will connect you to agents that act as solid resources to get started.

I also recommend the "Straight up Chicago Investor" podcast that @Tom Shallcross and @Mark Ainley host. 

@Christopher Petsko You are correct that the STR laws + HOA rules here make doing AirBnb here tough unless you buy a commercial 5+ or mixed use building. I would recommend targeting a 2-4 unit (perhaps with a "bonus" unit) that you can furnish and rent out MTR (30 day min). This allows you to dodge some of the nightly/weekly restrictions. There are lenders that offer portfolio loans with 15% down on pure investment 2-4 units. This could allow you to be more highly leveraged VS a conventional 25% down investment mortgages, and thus get into a solid neighborhood with your budget.

@Jacob Lopez The price point sounds reasonable if in solid condition. Outside of Chicago city limits you need to watch out for the property taxes - which even in suburban Cook county can be 40-80% higher VS Chicago addresses. Make sure the current assessed value is w/in about 25% of actual market value or you will have to underwrite in a decent property tax bump w/in 1-3 yrs. Your agent should be able to help you run some current VS pro forma cashflow #s to make sure it meets your ROI expectations. The gross income is the largest "lever" you can pull so make sure its realistic/accurate.

@Kyle Williams Congrats on getting the process started!  Chicago is an amazing market to leverage a 2-4 unit house hack.  BP has an investor friendly agent and lender directory where you can find some great contacts to get conversations rolling. Check out the "build your team" page.

  What type of medical RE are you interested in?  Commercial medical office space?  IF you are an MD or PA you can also leverage amazing low down payment owner occupy financing.