All Forum Posts by: Jimmy Clark

Although I haven’t worked with them, I did spend a few hours at one of their completed projects. It was a new constitution single family home in Logan Square. The finishes and quality of work that I could see was definitely in line with what you would want from a GC. 
My experience with contractors has been you should have a list of 7-10 that you talk to about every project, with 4-6 walking through the job and giving you a quote. It’s definitely worth your time to talk to them about your project.

Paul, 

The Straight Up Chicago Investor podcast has a comprehensive list of local meetups on their website. I’d also highly recommend you listen to their podcast, it’s a great resource to help understand the Chicago market.
https://www.straightupchicagoi...

A typical CPA will tell you you have to have owned it for 2 years and considers an investment property 2 years of tax returns showing the property was a rental.

If you bought it as a personal residence, that means you lived in the property for at least 1 year. As you know, living at the property for any 2 years in a 5 year period allows you the $250k/$500k capital gains exemption.

The QI you reached out to is likely to say you would have to change the title of your wife's property to your LLC prior to sale in order to be eligible for a 1031 exchange. Definitely work with a CPA as well, since this property had a step up in cost basis when she inherited it they should determine if you need to do a 1031 exchange.

The biggest challenge in your target community areas is going to be HOA associations barring or being able to bar LTR and STR. If you find a building that allows STR/Airbnb then that could be well worth it.

If a 20-minute commute by bike or the L is not an option for you, then you should certainly explore partnering with others in your target area to purchase an entire building.

I was in a similar situation as you, for 10 years I had to live within a 15-minute walk of my office. I ended up buying a 4-unit in Lincoln Park and accepting a 25-minute commute. For me, going from 700 sq ft to 1700 sq ft and having my Principal, Interest, Taxes, and Insurance paid by rents was worth the move.

In order to short stocks or trade options you just need to open up a brokerage account with margin. It’s very easy to open at any brokerage firm. The difficult part is figuring out what part of the industry will be hit the hardest, and when. These are a few of the past bear markets that have had different effects on Real Estate in recent history:

The Saving and Loan Crisis of the late 1980s was caused by outright fraud in the Saving and Loan industry. Friends were buying and selling the same property 10 times raising the value from $500k to $10m on condos or office buildings that were never meant to be occupied. The land where the Denver Airport would end up traded over 30 times by a group of the very politicians that had a say in the location. Because the Savings and Loan firms weren’t public traded over 1/3 just closed and the US absorbed the bad debt. Their wasn’t too much opportunity to short the market here. 

I’m sure you’ve seen the big short to see what happened in 2008. Michael Burry would have made more money had he shorted the companies taking on all the bad debt than he did by shorting the bad RE debt.

In 2020 panic hit the hotel industry. I heard reports that occupancy dipped from 80% to near zero in less than a week. Hotels my firm owned had laid off nearly 50% of their staff within 2 weeks. Stock prices of most publicly traded hotel REITs fell around 80% in a few weeks. 

Leslie,

The investment you are looking to go into very likely already has leverage on it. 

It sounds like you are talking to a REIT company that is offering a Delaware Statutory Trust. These offerings use varying amounts of leverage. You would not have to kick in addition money with this type of leverage.

You have the correct idea that with those numbers your replacement property will need to cost at least $533k, but you would only have to invest roughly $388k. 

It sounds like you would need to get an SBA 504 Loan which you can use to buy Real Estate that is at least 51% for the use of a business. You can only use the SBA 504 loan proceeds for the buildout of the portion that will be used for your business, as well as FF&E. The SBA 504 loan doesn’t provide working capital for the business, inventory, or the construction of the non business side of the property.

The loans take much longer to close, and you will need to be mindful of your 180-day  deadline. It’s definitely a scenario where you will want to have back-ups identified as a lot could go wrong here.