All Forum Posts by: John Clark

What kind of economic neighborhood are you willing to live in? What areas of Chicago are you looking at for those neighborhoods? 

Based on your budget, you need a place that would cash flow if you were not living there and had two renters. So you're probably looking at a pace where you'd be living in it "at a reduced rent," not one where the tenant is paying the full mortgage, all expenses, etc.

So in looking at Zillow, what are your search parameters? Are you looking solely on the North side?

It's important to start, it's not important to get big quickly.

Keep in mind that some aldermen do not permit AirBnB in their wards, and there are also precinct limitations in some wards that do permit them.

"making sure we have the most financially secure tenant as this has been my personal home for 7 years, not some random apartment building I own"

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Wrong. You're renting it out, therefore, it is a random building unless you plan on returning to it. Emotional attachment will kill you. We all do it, but it kills us.

Local governments will find that out when all the mom and pop landlords are gone and they're dealing with unreachable corporations and wondering why they can't abuse landlords like they did before.

Tenant estoppel letters are a must in every situation. First, the tenant has to admit that he has no claims against the landlord, known or unknown, accrued or incohate. Second, he admits that his deposit for the apartment is $X dollars. Third, he admits that the apartment is in good shape (see #1 above, this is specific). Fourth, he admits he's on an oral month-to-month lease. Fifth, he provides a catch-all release.

The idea is to get a blank slate with the tenants. Now you turn to the owner: Who is doing the rehabbing? talk to the rehabbers. Are they being paid? Are they doing things to code? Do they have permits for the job? Last thing you need is the town coming after you for no-permit work that isn't up to code. Next-to-last thing you need are mechanics liens recorded against the property. Use the tenant to estoppel letters to find out how much should be set aside for their escrows. Use the contracts and your conversations with the contractors to find out how much to set aside for rehab work in progress.

"Ended up raising his rent $75 at renewal and let him know that $72 was my increase in costs."
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Sounds like you squeezed your own return on investment. Are rental prices in your area that keenly set?

"It should be an equal playing field. If the landlord has a lawyer the renter should be provided one."

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The landlord has to pay for his lawyer, so who is "providing" the lawyer to the tenant?

Also, you overlook the fact that legal aid societies help tenants, as do law school legal clinics.

Finally, you overlook the cases -- legion -- where the tenant simply refuses to pay anything simply because he cannot be evicted.

We may pass over in silence the fact that government partial payment programs require the landlords to release the unpaid portion of the rent. The economic model of rentals doesn't work that way.

"She's not playing fair game b/c she doesn't want to be here. "
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If she's following the letter of the contract, she's playing fair. May not be courteous, might even be against "industry standards," but she's being fair.

Put yourself in her position. Would you take the extra money if you could? Would you close on the property and then immediately flip? Suddenly "wholesale" the contract? Of course you would.

Whining is forbidden in commerce. This is commerce.

I strongly  advise you not to text. Recipients pay for receiving your garbage/spam, so you have already irritated them. The message is too short, so it looks like a scam. I wouldn't text/e-mail until AFTER an owner has contacted you AND the owner has consented to texts/e-mails.

Originally posted by @Phil Davies:

I've been considering property investment for a couple of years now.  I was ready to pull the trigger a year ago but then Covid hit and I feel like I've dodged a bit of a bullet with the ludicrous eviction moratoriums in place.  Does it make sense to move forward now, or should I wait to see how the eviction bans (Fed & States) pan out moving into the summer?  

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Wait, for longer than this Summer, for two reasons: First, as you say, you need to see how the eviction moratoria play out, and; Second, you want to see how the foreclosure moritoria play out.

The eviction front will put a lot of inventory on the market and rents will go down. That will give you a better idea of what you can charge for apartments and therefore what you can pay for a building. The foreclosure front will put inventory on the market as banks foreclosure. The two combined will put more inventory on the market as small scale landlords quit the business because they are fed up with being abused.

Use this time to investigate the areas and neighborhoods you want to be in, and to develop your policies and criteria for those neighborhoods. You will read a lot about people here insisting on WRITTEN screening criteria. That's nice, but investigate credit score cut offs, employment screens, pet/prison/income criteria, how to recognize necessity moves (probably stiffed the old landlord), etc. etc., and work up your own criteria, consistent with local laws. Work also on your financial models -- those will change depending on the neighborhoods you want to be in. Find examples of failed financial models and figure out why they failed. Find good models and figure out what made them good. That way, when inventory starts coming on the market you'll be able to buy at a good price properties that you know will work for you.

Finally, start small. It's important to start, not to get big quickly. Grow with experience.

I think the solution for CDC overreach is to allow evictions in states that don't have mask mandates or limits on business capacity or such.

The idea of not allowing evictions (note that I did not say the CDC moratorium) came at a time when eviction was seen as a major vector for spreading the disease. As others have said here, people are lining up, maskless, for all and sundry things. Evictions are therefore not a major vector for Covid in states without mask and capacity mandates. Have the CDC rescind the eviction moratorium for those states that refuse to have disease mandates. That will force the people, and politicians, to chose: Moratorium (popular with tenants) or mandates with compliance.