All Forum Posts by: John Casmon

Couple thoughts before you get a leasing agency. 

You may want to just lower the rent. Just because your unit is listed less than other 4bd/2ba units doesn't mean it's priced right. Dropping it $50 will be a hit of $600 for the year. Taking it to an agency is probably one months rent - $1,950. 

Also, sometimes units don't rent until the middle of the month when the sense of urgency kicks in. May want to stick it out through the weekend and see if you get a tenant. If you're doing a showing, tell them you'll drop the rent $50 bucks if they put in an app today. 

Going forward, You're going to need to understand the demand for a large 4bd rental in that area and plan accordingly.  It's a smaller tenant pool so you may need to employ other strategies. 

If you've done quite a few showings somethings wrong with the unit or at a minimum the perceived value. Have you followed up with tenants about what they like or don't like about the unit? Have you had any applications? What's the price point?

Not sure how the drug charges come in to play here. Sounds like they were "stopped by the police" which indicates the drugs were found in a car, not the house. If she's selling to get money to fight those charges, I'm not sure how the two are connected anymore than someone selling due to a divorce.  Would definitely be good to contact your attorney though.

Welcome to the site @Matthew Koczwara

Always good to have another Chicago investor with ties to Ohio. As others have stated, an FHA loan is a great way to get in to a small multi with little out of pocket costs. It does not require the 203 rehab loan and you can put down as little as 3%. With that said, keep in mind that these are not just tenants, but they're also your neighbors. So choose your location wisely and SCREEN, SCREEN, SCREEN potential tenants.

Welcome to BP @Mike B.

You'll find some great contacts on the forums that can help you. If you're looking to do flips, especially with a novice investor, you should certainly search for posts and articles on flipping homes. Sounds like you have experience with rehabs, but flips are a bit of a different animal than just buy and hold rehabs - especially when it's your money! Would also suggest J Scott's book on flipping homes. 

@John Warren Some good responses throughout here, but am I missing something? Sounds like rent was due on the 15th and you received it on the 15th, correct?

In regards to the late fee penalty, there is a max in the city, but not sure if it's a state rule. I typically give tenants a couple days as a grace period and then send an email on the 3rd day. Most of the times people forgot or it arrives the day in the mail. I've tried to get all tenants on electronic payments to help expedite this as well. 

Before you renew leases, you should review the existing tenant applications and ensure they fit your criteria, especially if you're planning any rent increases.

Congrats on the first rental and good luck. 

@Brie Schmidt Congratulations! It's been great watching you from afar. You're an inspiration!

@Adam Amero Welcome to BP! Using an FHA loan is a great way to start and it's exactly how I acquired my first investment property. Run two scenarios for cash flow - one with you living in a unit and one for when you move out. You can actually use an FHA loan multiple times, but only once a year and only one active FHA loan at a time. So if you like this strategy have a plan to drive equity and refi the first FHA so you can use it again.

There are a few challenges with FHA loans however. They have strict property rules and will not loan against any non-compliant property (e.g. chipped paint, missing handrails, asbestos, etc.). This limits the types of properties you can go after and negotiations with sellers. Also, they will go through your finances thoroughly so be prepared to explain that Grandma gave you a $100 check for your birthday.  

Last, have the FHA appraisal before your own personal inspection. I did it the other way around and when my inspector found asbestos in the basement, he told me it wouldn't pass the FHA appraisal. The seller pulled out at that point, but I could have saved the $450 on my personal inspection if I knew it wouldn't pass the appraisal. J Scott wrote an FHA checklist for BP about 5 years ago that I've linked below. I've also included a more recent checklist from Investopedia in case things have changed in that time. 

http://www.biggerpockets.com/renewsblog/2010/04/25...

http://www.investopedia.com/articles/mortgages-rea...

@Brett S. 

I actually live in North Center right now. It's a bit of a quiet neighborhood by Chicago standards, but many are drawn to it for the excellent elementary schools (Bell and Coonley), which are consistently ranked amongst the highest in the area.

If your friend is open to suburbs, they may also want to look at an area like Park Ridge.

I lived in Birmingham, MI for a couple years so have a sense of what your friend's seeking. Does your friend have kids? If so, I'd suggest North Center or Roscoe Village. Other areas to consider would be Lincoln Park, Gold Coast or Hyde Park.