All Forum Posts by: John Warren

@Galvin Mendoza we manage a lot of larger buildings now that have a mixture of galvanized and copper pipes. Many of these buildings have anywhere from 6 to 24 units, and when you do work on one section it will clog some of the fixtures downstream. You can easily unclog a faucet, and even showers can be unclogged using an air compressor. Changing whole buildings over isn't always practical (or prudent) and we will be running buildings profitably with galvanized pipes in the walls for the rest of my career. 

With that said, if you have the opportunity to upgrade pipes you do it. I would honestly focus more on drain lines than just the supply lines. Those old drum traps in particular are pretty awesome to get cut out and replaced with pvc. 

@Hares Najand I have been on both sides of this one as both the owner and the manager, and I can tell you that turn over is a lot of work to manage at scale. I also can tell you that a good PM will make a bit of profit in the turn over. There is no doubt that on a one off basis you can do it cheaper, but having the infrastructure to turn 5, 10, 25 or 50 units in any given month is not simple and requires a real commitment. This costs money, and you are paying for the ability to have a unit turned at any time. 

A lot of Chicago proper housing providers only do move in fees. We still do security deposits in the suburbs, but not in Chicago proper. This is pretty common. One nice thing for you is that move in fees are income, whereas security deposits are not (unless you can claim damages). 

For delayed advertising, I cannot imagine trying to premarket a section 8 rental.... properties in C or D areas do not show well when the tenants are there. This would be even more true of a house where the tenants really live in the property and spread-out big time. We sometimes premarket, but it is on a case-by-case basis as it can be a huge time waste too. Many PM companies will not do so at all as it requires a high level of internal coordination and sometimes the tenant just makes your life a nightmare. 

If you are making money with this PM, I would not advise you to try to self-manage. I did this about 10 years ago and it was a huge mistake trying to manage remotely. These areas will require a good amount of on the ground knowledge that you probably don't want to spend the time getting. 

@Andrew Katz all investors run into this problem eventually, and house hacking is a strategy that only lasts so long. I would continue house hacking as long as you can get a loan for it. You will need to really start playing the long game though and focus on securing assets that have good underlying fundamentals as you will need to get more creative with the financing if you want to keep moving quickly. The alternative is to save up 20-25% down and do more traditional investing. That is really not that bad of an option to be honest as it forces you to be more conservative and to build your portfolio strategically. 

If you want to invest without partners and do value add deals, the path forward is private, bridge, hard money or DSCR (which are all sort of the same thing). I have been in the commercial investing scene since I started as an agent since I didn't want to buy in the same arena as my clients, so I have never had the luxury of 30-year fixed debt. Once you start thinking about how properties will perform in year 5 or 6, you can start thinking of your initial financing as more of a bridge to secure the asset, which allows you keep growing.

Too much of the initial advice here on BP is all about year one. That is good for a first-time investor, but actual investing is long term and is more about year 5 or 10 than year 1. As you referenced, you shouldn't need the money back for a while.

@Henry Lazerow I am part of the NBOA, and they are already working on this. There are a lot of ways to potentially roll this back that are being explored as this ordinance was rushed through with very little feedback from stakeholders. It is definitely a rough ordinance though. I think anyone who is looking to sell needs to move with caution for the next few months as there is very little information on how to proceed. We have a few sellers we are working with in these areas and we are working with our attorney on how to handle this. 

@Michael Pienkowski have you connected with @Mark Ainley? I believe GC Realty would manage Belmont Cragin well for you. 

@Alex Tokmazeyskiy is the deal something you want to hold for the long run? Maybe it is time to sell and trade up? If you have 200k in equity and you are cash flowing 14k per year, that is a 7% return on equity. Not terrible, but not amazing either. The question I would be asking is do you think there is more upside in the rents or the value on this deal that make it worth holding? Are there any looming CapEx things coming where you could dodge a bullet by selling?

@Gary Stark do you have a deal under contract? There are tons of great banks here in Chicago that lend on the north side. Very easy to find. What type of deal is it and where? I can send you a few. 

@Toure Smith finding a private lender isn't that hard, but most of the time the private money is pretty expensive. Is that the issue you are running into? If you dig in on the south or west side, you should be getting deals that are distressed enough to just use regular hard/bridge/private money that is expensive. 

@Dumitru Cobza I would definitely talk to @Mark Ainley. Their office is in the NW suburbs, and they manage well over 1000 units. A 5-20 unit building would be pretty simple for them to do for you. 

@Yusuke Koike do you have rental income to offset one of the mortgages? I ran into this early on when I was buying a deal in Berwyn. My lender at the time caught it when I switched to him. A previous lender wasn't using the income from my rentals, but was using the debt.... Once we added back in the income, it has been easy to get a loan ever since!