All Forum Posts by: Jonathan Satizabal

@Juan Castro, I don't know if that's the best advice. I had my first CHA tenant in 2012, I noticed just from the properties I had the the rents that CHA was approving were all around 1500 a month for 3 bed apartments in the area. So when I was purchasing and rehabbing properties I was keeping in mind. There are tables that have the rent amounts they're based off of the HUD AMI charts. Here's a link from the city of Chicago's website.

2020 rent tables.xlsx (chicago.gov)

@Kevin Coleman If it's new it should have a warranty, you can ask to see if they have one.

I think the installation itself should have warranty of at least one year and the actual panels and other components should have a longer warranty, but that's just a guess. The builder should have that info.

I worry more about how those are installed on the roof and if it changes the integrity of the roofing shingles. Did you check to see if solar panels affect the cost of homeowners insurance? I've never run into this, it's an interesting situation.

You might need to go directly to a solar contractor that does installations and maintenance. Try to get a maintenance report as you would do for your HVAC system.

Does the system have Batteries? I would imagine this would be the only thing that will need to be checked or replaced as long as the Inverter is working correctly.

I would go directly to an installation company. Does the homeowner know the company that installed it? You can try giving them a call.

@Juan Castro, I just look at the comps on the MLS to see what the properties rented for in the area to come up with my rent price. Any realtor or leasing agent can give you this information. It's probably on Zillow also. I am also a REALTOR so I just look them up on the MLS.

I used a leasing agent to list my last property and we both came up with the same price range, that market rent was 1450 -1500 for a 3 bed 1 bath house in the area. We submitted the initial HAP contract to CHA at 1500 and they approved the rent at 1478. I think their valuation was really accurate. Truthfully 1500 in my opinion was too high for the property but it's better to go high with your initial offer and have then give you there approved amount. I also don't ask for rent increases every year. I try to do $50 every other year.

You don't need to submit comps to section 8 when you are requesting an increase. I just submit a rent request on line most of the time they accept it some times they don't. I don't really worry about it. I have and have had multiple section 8 properties. I think the best strategy is, try to max out the rent that they give you for each property and let it average it self out overtime.  

They value properties a little different, I know square footage doesn't matter. So 1,000 sqft 3 bed home would have the same rent as a 2,000 sqft 3 bed home.

Basically it goes off of number of bedrooms. They give you a little bit more for the appliances that you provided and if you pay any utilities. So the best section 8 houses are small 3 beds with lots of appliances, one floor no garage and no basement... 

I think you only need the comps if you want to contest the price but I've never done that. 

I was going to guess 25k. I Had a porch for a 3 flat quoted about 12 years ago. They told me 17k, they just drove by and gave me a price. I am assuming it's more expensive now.

They look for a construction budget. Try to be descriptive as to what you are doing. Below is a construction budget from a small project I did  a few years ago. This is a common practice for construction loans so it's good to get into the habit of laying out a budget. It's just an Excel file. The budget items say complete because they used the budget for my draw schedule. The costs are low because I did a lot of the work myself.

Some common requirements that lenders have.

1. 1. Purchase the property in an LLC so I had to set that up.
2. 2. Construction Budget.
3. 3. Some lenders have minimum loan amounts. This particular lender is no longer loaning if the property purchase price is less than 100k.
4. 4. Down payment is based off of the purchase price and the construction cost, example, 50k purchase + 50k rehab at 20% down would be 20k.

Your best bet is to call different lenders and find out their requirements. I believe the Construction Budget and LLC requirements are very common so be ready for that.

Side note: you will be financing this property twice once for the rehab loan and then you will need to refinance out of it to a conventional loan. Just plan on a lot of closing cost hitting your bottom line. I try to avoid hard money but sometimes it's the only option.

@Sam P. That seems about right. It takes about a 4-6 weeks to here back from them and then another 4 weeks to actually show up in the statement.

I would think you should here something in the next couple of weeks, but they might be even slower now due to COVID.

The Chicago Housing Authority owner portal, has a rent increase tracker It's not always up to date but at least you can see if it was received. I would send the case worker and email just to make sure they got the request.

Check out this pod cast. @straightupchicagoinvestorpodcast. They should be having a section 8 episode in about a week or two. 

@Michael Warneke, 

Do you know if that cost includes a new concrete pad or do they use the existing pad?

@Sam P. Were you able to get a response on your rent increase?

Thank you @Bob Floss II, that is very insightful. I just noticed the sanitation department was on a lien for an auction property in Burbank. I had no idea they were the ones writing the violations. You're the man! Thanks