All Forum Posts by: Jonathan Klemm

What's up @Joseph Turano - Ton's of really great questions - I am personally a HUGE van of the FHA 203k, hometyle, and choice renovation loans all of which are federally insured renovation loans.

If you have the ability, (i.e, pay 1.5% more down payment) I'd suggest the homestyle renovation loan. You will likely have to put down 5% instead of 3.5%, but it is more flexible than the FHA 203k.

With any of these renovation loans, you want to make sure EVERYONE (Agent (two great agents above in @paul de and @Eudith Vacio), lender, contractor, and HUD consultant) on your team has done a couple before.

With the FHA 203k specifically, you will have more "REQUIRED" work that is required by HUD (hence my suggestion above to go with the homestyle) when your HUD consultant comes and walks the property to develop the SOR (Schedule of repairs), then they will give you blank BORs (Bid of repairs) for your contractors to submit their bids. There are 35 different categories on the BOR, and each category needs to be separated into labor and material (i.e, Sidng = Labor $3,500 and material = $2,000).

Happy to link up again and walk through the process in more detail if that would be helpfu.  Also, connect yourself with a good lender like @Zack Karp or @Jose Valdovinos!

Hey @Samantha Bartlett - Can you clarify exactly what you mean by buy a property for your child?  Is your child an adult?

We work with a ton of clients on 203k renovation loans.  I personally love them and think they are a golden ticket to get into real estate investing with some significant equity right out of the gate!  The bank literally allows you to pay for your renovation OVER 30 YEARS!  That leverage is amazing and I don't understand why more people don't use it.

Most importantly, find people who have done 203k loans before, specifically your realtor, lender, contractor, and hud consultant.  These loans are tough because they require more paper and cause cash flow issues for contractors without good financial status.  

If you are looking for a solid lender connect with @Jose Valdovinos!  He may be able to help answer the questions about buying in your child's name as well.

Hey @Nik Farooqui - Can you share more details on the properties...  

Where are they in Chicago?  

What's the condition?  

How much are they asking?

What's the expected ARVs?

Also, where are you at and how'd you find the seller (mainly just curious on my end)?

Hey there @Asim Purses - What is your LONG TERM plan with the building?  

If it's holding it indefinitely, then the best option, if you have the cash, is to legalize the basement. You would first have to verify if this allowed based on your current zoning, if not then check to see if you are in a pilot ADU area. If neither is an option then you would either have to get a zoning change or duplex down to LEGALLY use the space.  In the Long term, this will be the highest and best use and will generate the most appreciation (what area of the city is your property in?)

Maybe more importantly, you need to understand the difference between ILLEGAL & NON-CONFORMING.  Illegal is if there are violations or the city has deemed the area uninhabitable.  Non-confirming means that the space does not comply to current zoning/building code but there is no active violations.  MOST Chicago garden units are non-conforming and rented out to generate cashflow.

Welcome Welcome@Joscelyn Johnson!  

Highly suggest you check out this post that @Marcus Auerbach rencenty made about out-of-state investing. https://www.biggerpockets.com/forums/963/topics/1234351-out-...  I love Chicago, but you might have an easier start investing in AZ.  Are you able to househack a 2-4 unit property?

There are likely some in person real estate networking events in Tucson please go check them out and talk to as many people as possible...particularly make friends with the host.  Then from those events, ask to have 1:1 coffee or lunch with some of the top movers and shakers.  Here is a list of meetups from BP:  https://www.biggerpockets.com/forums/521-real-estate-events-...

Also, find those same movers and shakers here on BP in your area.

What's going on @Marcus Auerbach !!!  Really really great post!  You aren't just saying that so Chicago investors stop invesitng in Milwaukee are you lol jk

Will you work with out of state investors or only local MKE investors?

I would agree that MOST people's largest advantage is that they have their own boots on the ground and check up on things and meet people face to face.  

 Out of state investing is OF COURSE possible, but if you are trying to do it as your first deal I just 100% agree it's going to be harder all the way around the board and unless you have that economical delta, you are better of investing where you live.

David Greene made it look easy on BiggerPockets but he also had the BP podcast as leverage and could build a ridiculous team remotely.  He also flew to the area he was investing and met people face to face.  He also got many properties stolen because of some crazy title insurance scam.

Hey @Kristi Barron - Where is your property located, how much work does it need, and how much equity does it currently have?  Lastly, what would it be worth after the renovation?

I would second the idea from @Ken M., you can actually refinance into a FHA 203k loan so if the house has a large amount of equity that is a great option. There is also a company called Renofi, and they will do HELOC or refi to renovate!

If you are looking for a mortgage lender, consider connecting with @Jose Valdovinos!  He is here in Chicago but can originate around the country and is the best lender I know in the renovation space.

Hey @Arif K. - I will DM you cost seg kevin's number.  He is the Chicago Native that Mark and JW mentioned above.  

Where is the property and how many units?

What's up @Aahil B. - You are are doing all the right things and off to a great start!

I think the thing you nailed was expanding your real estate network.  Check out some of the local chicago events posted on BP:  https://www.biggerpockets.com/forums/521-real-estate-events-...

I personally, knew I wanted to go more into real estate so took a third of my high paying W2 to join a tech focused real estate startup and it was the best thing ever did!

Follow your fire and what excites you...

We stopped sharing the Chicago lease as well @Lee Burns.  If you have an agent (who is a member of CAR) that you are working with regularly they should be able to share it with you though.