All Forum Posts by: John Scully

Last year I bought a 17 unit deal in a rough part of town. I was in a 1031 exchange period and pulled the trigger bit fast, lets just say.

When you visit the area, it doesn't look bad. The streets are fine, although if you pay attention to parked cars you'll notice lots of beat up/broken down vehicles (1st sign). An uninitiated person might not notice this tale tale sign of a rough area. 

The other issue is that the area consists of many small multifamily buildings next to each other owned by different owners; there's an alley in the back and everyone's trash dumpsters are there. Since buildings are next to each other there is lots of dumping is going on, resulting in a messy back alley and high fees/fines from city and trash company.

The third and the most important issue is the area has a bad stigma. Shootings, gang activity, drug deals are a frequent occurrence there. Again, it's difficult to see these things when you first tour the area; things seem to be fine.

I knew that the area is not the best one, even my broker warned me about it, but I thought how bad can it get. Trust me it can get very bad, very fast.

During this year there has been 4 evictions, I am still dealing with one, criminal activity in the property, building back door repeatedly being broken for easy access, unauthorized occupants in units, pet poop all over the place (pets are not allowed any more).

Because the area has a bad stigma, attracting market rate tenants is impossible. The market rate ones ended up being evicted for rent delinquency. The only stabile rent source has been from Section 8 and other assistance programs.

Due to vacancies and evictions I lost several thousands in income. People say that rough areas produce high cash flow; it hasn't been the case so far. 

This deal has been nothing but a headache: tenants destroying units, criminal activity, legal fees, headaches and nerves...

Did I learn a lot? You bet. I was speaking to the owner of next door building, who had his property for 20 + years; he told me if you can run a deal in this neighborhood you can run it anywhere.

Would I do it again? Absolutely not.

I am, however, grateful for the experience and learning opportunity.

Just wanted to vent and share my 2 cents.

For your first deal, I would say you’re on the right track. There are other fha products, like for example you find a four unit that is a foreclosed property, fha may require as little as $100 for a down payment and will fund repairs to get the property in a position to rent. Just something to think about.

@John Scully I think you are on the right track here in deciding to house hack. Whether or not you cap out the FHA loan should not be the goal in my opinion. I think you should focus instead on finding a good deal that can break even while you live there, and cash flow a bit after you reposition it and move out. The FHA loan is very challenging to use right now as a house hacker, so you have to have laser sharp goals to make sense of using it. I think you are on the right track here personally though.

Hi there vesties, real Estate agents and much moreee!!!! I’m excited for my recent account on bp and even more excited to see what I’ve been missing!! It’s a whole tons to learn on here and new vesties to meet. Im taking on the world of wholesaling at the moment and I’d love to interact with you all and hopefully we can learn from each other !! It took me a while to realize that I want more than just a job I want a career and what’s better than doing what you love and making a living with it!! If anyone would like to speak about all things real estate I’m open can’t wait to chat 💬!!

-Kami W

(Located in the west suburbs Illinois)

The reason why this industry brings some of the best and brightest is that is so dynamic, no changes in the market are in a vacuum.  Clients that are expecting rates to slip, a sentiment that I agree with, are missing the point.  When rates drop demand will increase and that means more competition.  I always feel as investor or first time buyer that there is value in buying in the off season, since you arent selling a house.

Be wary of be focused too much on rate and not enough on VALUE

Welcome to the Chicago BP family @John Scully!   Love you aspirations at such a young age and I have ZERO doubts you will achieve financial freedom.  

If you are out in the NW suburbs you should connect with @Mark F., @Chris Davis, and @Joe Mueller.

My advice for people is always the same:

3.  Learn & Educate (Podcast & books, forums, blogs)

2. Network (BP & meetups & building a team is the most important part of making things easier)

1.  Take action and be decsive

 Wow! 18 and already thinking about financial freedom and real estate. Good for you! You’ve gotten some great advice already but I would say, get into your first househack as soon as possible. This is what I would’ve done if I could go back to my college years. I started househacking 5 years ago when I was 32 years old and I acquired 10 units this way. Imagine how many I would have if I started at your age! Good luck to you and feel free to reach out if you need anything! 

@John Scully welcome to the forums! I love that you are starting a business early, and that you are saving and investing. That is the main thing it takes to be successful in this world or real estate. 

The first advice I would give you is to continue growing your business and saving. Having a high cash flow business and access to capital will make real estate much simpler and more profitable for you. 

The second piece of advice would be to find synergy between your business and real estate. Maybe you will eventually have employees and need a space? Pick up an industrial multi-tenant building using an SBA loan to house your business so you can get passive income and a spot for your business! Look for opportunities for business and RE to collide and you will be successful. 

 Keep learning- listen to podcasts, attend meet ups, stay active on BP. That's honestly the best way to formulate your plan.