All Forum Posts by: John Clark

@Nicole Heasley

"Have any areas removed rent control after realizing it was a stupid idea?"

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Massachusetts

"Often, the road to hell is paved with good intentions."

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Reminds me of an old New Yorker cartoon. A highway is being built in Hell (flames all around, devils overseeing the work crews) and at the side of the road is a sign that reads: "Your good intentions at work."

"I am about to sell my first rental property and I should walk away with about 125k ish after all taxes and fees. . . .

still leaving me a decent chunk of change to grab one or two more properties.. . . Or do I take that 125k and buy four or five properties in the 100k range?"

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The above is what the original poster posted. Note the term "all taxes and fees." Now it's been a while since I did a Starker exchange, but can he get a 1031 deal substituting a package of properties for a single rental property?  I don't know. I recognize tax issues, but I don't have tax answers. How many rental properties can earn an owner 12 percent or so for zero work AND secure one's primary home to boot? Given that the rental property has probably been held for a year or more, the OP is looking at long term capital gains, not short term;  a one-off fifteen percent hit.

So do the math, but we'll all agree it comes down to what you can sleep with at night.

What I stress, however, is that the return on investment for debt pay down is NOT zero. AND -- before anyone mentions depreciation deductions -- remember, there is no such thing as a non-cash deduction (non-cash credits, sure, but no non-cash deductions) on your income taxes. Depreciation is, IN THEORY, a determination of the cash reserves you should be setting aside for the restoration of your asset, and anyone who does not set aside those funds (most of us don't) will soon enough learn the meaning of the term "deferred maintenance." So unless asset appreciation outstrips depreciation (and is reduced on your balance sheet by the rate of depreciation), the depreciation deduction is not a reason to buy, or hold, an asset. I suppose one could argue that the deduction shelters income, but so would a loss on sale.

"They are traditionally for properties that just sit vacant for long periods of time (not for a 2-3 month vacancy) and then become a blight on the neighborhood and cause many more issues. . . . Something should be done about properties that just sit for years."

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If it causes a blight, I agree, but then there's usually a building code violation and you can prosecute the owner for that. But taxing a well-maintained house simply because it is vacant? That's stupid. Landlords warehouse units because the numbers don't work.

"A title company is necessary when wholesaling in Chicago."

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A title company is necessary when doing real estate transactions, period. "Wholesaling" is irrelevant. What the poster is looking for is "Which title companies provide bulk discounts?" -- which is a different question entirely.

@Thomas Rutkowski

  Your ROI on cash used to pay down a mortgage is ZERO. Compare zero to whatever you can do with all that money.
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Not true at all, and particularly so in original poster's situation.  First, the OP stated that he was paying PMI, so the elimination of the PMI is a return on his "investment" -- mortgage pay down -- and that's before we consider what the rate is that he saves by paying down the mortgage. Let's say he paying 5 percent interest and is in a 20 percent tax bracket, and alternative minimum tax is not applicable. His effective interest payment is 4 percent. He has to find a 5 percent return investment (and pay one percent of that in taxes (1/5 of 5%)) just to make it a wash. And that's not considering the PMI savings he gets.

So paying down the mortgage is not a zero ROI: It's mortgage rate plus whatever rate the PMI savings works out to be.

The sale proceeds is not a loan. It's simply an asset. Where is his greatest return? It depends, but he's got to use a proper analysis first.

@Michael Norris

"Calculate the property taxes out to the monthly number then submit another offer at $101 over asking price and put in the comments..."Your property taxes cost you $XXX over the last 30 days are you ready to sell yet?""

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Asinine statement and I'd tell you that you just revealed your ignorance of economics as well, making me all the more not willing to sell to you. Reason: Taxes get pro-rated, so by paying the taxes, the sellers just re-set the pro-ration clock and saved money. Remember, you're going to pro-rate at 5 to 10 percent above last year's level in most cases, so if I re-set the clock by paying taxes, I saved myself a 5 to 10 percent surcharge.

"Is there a city program that encourages new-build affordable housing?"

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The mayor is pushing for affordable housing even though Chicago does not have an affordable housing  problem. People seem to think that gentrification is evil and poor people have a right to live in expensive neighborhoods simply because they could afford those neighborhoods before. I guess that upping sticks and moving as a result of market forces is a violation of human rights.

So there should be an increase in supply, but you will be better off for it if the new supply and new people coming in begin the gentrification process in your area.

"Hello All! I want to jump on this thread but go in a different direction regarding wholesaling in Chicago. Are there any recommendations for the best title companies for wholesaling in Chicago?"

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Your question makes no sense. Title companies sell title insurance, and their goal is to not pay out by means of discovering and disclosing all of the flaws in your potential title so they can except them from coverage. You get the exceptions waived, eliminating the flaw, by new recorded documentation, better information, etc., thereby giving you clear and marketable title. 

Wholesaling has nothing to do with it.

"In everyone's opinion, what are the best up and coming neighborhoods in Chicago to invest in real estate, whether they be single families, multi families, apartment complexes, etc."

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Define "best" persuant to your own criteria and let us know. Otherwise your question is hopelessly vague.