All Forum Posts by: John Westbrook

Hi @Stephen Taylor! BRRRR is not tied down to any single neighborhood or price point. Think of it like this, if there is enough "meat on the bone" when you buy it, and then create even more value after the rehab to have 20-25% equity in the deal, it's probably a deal you should consider. Doesn't matter on the exact neighborhood, it's far more important that you understand what the value(rent or sale comps) will be after the rehab.

-JW

Hi @Rich Sutherland! I would highly suggest placing all properties in their own individual LLCs, it's a fantastic barrier of protection. I would close on the deal, and then reach out to your lender to let them know you will be placing in a LLC for protection purposes. That was the path I took with my 3 unit house hack with a partner and the lender didn't blink an eye.

Hi @James Piercy!  Here's a thought...  Let's say this $2.2M property has room for value add, and to bring the asset to its highest and best use it would take another $500k for rehab costs(new kitchens, baths, light fixtures, etc).  

You could get an acquisition loan for $1.76M(assuming 80% LTV)

A construction loan for $400k(assuming 80% LTV)

You would need to come up with $540k for the duration of the rehab via private money, equity partners, etc.

If you created enough value to get the value at $3.375M when you refinance, you could recapture the borrowed capital AND  your own capital.  A big part of this is finding a lender that will refinance 100% of cost at new lease signing.

Lets say the duration of the rehab and rent up is 12 months and you are paying 8% interest on 320k that you are borrowing you would owe $25,600 in interest.  If you could put together this home run deal, you would have created $675,000 of equity in one year and be into a ~$5,000-6,000/mo cash flowing property for only $25k.  

Hope that's helpful and you take down a big boy, cheers!

Hi @Logan Merrick, check out my summary of my fourth deal from the top on my investment section.  I dealt with a substantial foundation repair on a 7-unit here in Chicago.   If you can wrap your head around it and the numbers work, go for it!  But it certainly is easier to start with a straight and solid building :) Cheers!

Hi @Justin Triplett!  Congrats on looking ahead and seeing your path.  I live in Chicago and have a similar background as you, I worked for a big mgmt company in Chicago leasing/managing buildings.  When I was 24 when I started investing in multis.  I would suggest you soak in as much knowledge of your current company and start asking questions to your bosses beyond your scope of work.  You have to think...the owners of the company you work for probably are currently at or around the 50mil/50yrs old goal you set for yourself.  Real estate in Chicago will be pretty much the same as Real Estate in Texas so learn as much as you can in your current role and leverage that knowledge to show lenders/future investors/partners why you are a good operator.  When you go 5+ unit commercial lending, they care more about your ability to manage a asset then your yearly income or age.  If you ever want to pick my brain/see projects, I live and invest in Ukrainian Village/East Humboldt Park here in Chicago.  Cheers!

-JW

Hi @Blake LaRussa! I live/invest in Chicago, and 99% of the properties were built from 1890-1930.   Don't let the sure age of the property deter you, it is far more important to understand if it is a well built structure(health of foundation).  Here in Chicago, I prefer a well built brick building from the early 1900's than the new split face construction built around 2006-2008.  Always account for plumbing and electric, as if it's original, it's probably time for a copper/PVC upgrade that will last another 100 years.  You know what they say...they don't build em' like that anymore.

-JW

@Conor M.

Hi Conor! 

That's quite exciting.  I just house hacked a 3flat in east humboldt park/UK Village and have been quite happy with the results.  I live in the top unit, rent the middle unit, and AirBnB the first floor.  Financing got significantly harder in the last 7 months as @Jake Fugman mentioned the HomePossible program going away, but I have found great luck financing through Huntington Bank in these "low to moderate income tracts" where they can give you back roughly $5,000 at closing, including FHA deals. I just helped my good friends FHA house hack a 2flat in the heart of Logan Square. I work as a broker for @properties out of the Logan Square office and always am a resource if you and your wife have any questions. I hope these past 7 months since you posted this have excited you for the next step.

-JW

@properties

Hi Colin!  It certainly depends on your investment strategy.  I've been loving East Humboldt for multis (west of western, east of california, north of grand).  You can get into properties for a relatively low cost to surrounding areas with rents that are not much less than Logan Square and UK Village.  Your best friend is doing a kitchen and bath rehab to bring the units to their current highest and best use.  If you can squeeze in a in-unit W/D it could make a $200 per month rent difference.  I know lots of people investing heavily in Avondale(east of expressway) right now, and the nook of Irving park just above it.  Feel free to let me know of any Q's, this is my passion.

JW

@properties

Great deal Christopher!  I love that corner of the city.