All Forum Posts by: John Clark

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

-----------------------------------------------------------

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. "
-----------------------------------------
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?  

------------------------------------------------

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. 

Keep in mind that the luxury end of the Chicago market, particularly condos, is waaaaaay overbuilt, so you will have zero appreciation and possibly a capital loss for a long time.

Also, given Chicago's finances, property taxes are going to soar.

Further, the Illinois legislature just reported out of committee (so it will go to the floor and get voted on) a repeal of the current ban on rent control. Of course the bill will pass, and Chicago will immediately pass a rent control law.

Finally, how well do you know Chicago? Even if you are going to be here for several years, it might make sense to rent for a year, find some hidden gems of neighborhoods and invest there. Places like Lincoln Park, Gold Coast, Lake View, and such (Bucktown) are fully priced, so your appreciation will be limited.

I second the idea of giving your first lender a chance to match. Also check the Quicken offer for pre-payment penalties or (I'm dating myself here) computing interest according to the Rule of 78s or the Rule of 88s.

Rule of thumb: Your new payment should save you your origination and closing costs (fees, title, survey, points, etc., etc.) in three years.

Originally posted by @Travis C.:

I think the concerns of the author are missing one key ingredient for a massive bubble to burst - there is no exotic debt out there as in the mid-2000's.

----------------------------

Collateralized Loan Obligations (CLOs) are the CDOs of the early 2000s.

I agree with the people who say that it all depends on what you do with the money -- to a point. People pay rent out of income, so a wrecked economy -- CLOs blowing up, etc. -- that hurts your tenant's income hurts you, too.

How about making a thorough virtual tour with a detailed floor plan available? That way you can pre-screen and if they pass that, let them have the virtual tour (they can go to the library and use the internet there if they don't have internet at home). If they are still interested, schedule a real tour. Then they can apply.

The virtual tour does NOT have to be professional, just informative. You give them the internet address for the tour post and be done with it.

Is your goal to avoid paying private mortgage insurance (PMI) on the first mortgage? You need to look at the fact that the lender(s) will look at the property as 100 percent leveraged, and will adjust both mortgages' interest rates up accordingly. There is a difference between having 20 percent cash equity in the house and having -- as far as the first mortgage holder is concerned -- 20 percent equity in the form of a subordinate note.

And the second mortgage holder is going to charge a really high interest rate because he's not going to have any cushion whatsoever.

Will the increased interest rates be less expensive than simply paying PMI on one mortgage at 100 percent of value?