All Forum Posts by: Kavan Kucko

Great, thank you both. Staggering the end dates is a good idea to prevent overlapping vacancies, I'll do that!

Hi all,

I purchased a 2 unit rental property late last year that was already fully leased. At least one of the units plans on re-signing. Their lease is up at the end of September. I'm happy to have them re-sign but my question is: should I set the lease end date of their next lease so it lines up in a better month than October for future tenants? Do people have a sense if it is easier to fill vacancies in Chicago in May/June thank say Sept/Oct? I know more people move in May/June, but I bet there are also more units that need to be filled around then, so maybe its a wash?

I am considering writing something like a 9 month lease, letting them know they'll have a chance to re-sign then but just setting up a better vacancy timing should they not want to re-sign next year. Does anyone have experience writing leases for something other that 12 months? 

Thanks,
Kavan

Hi all,

    For a rental property I own, I have utilities separated out for the common space that I pay for as the landlord. The common space utilities are basically a few lightbulbs and a washer/dryer. The dryer is a gas dryer, and I believe it is the only thing in the common space that uses gas. As a result, the tenants use very little gas in the common areas, on the order of a few dollars a month. However, the way the gas company bills is that there is something like ~$50/mo fee just to be hooked up to the gas, and then you pay for your usage on top of that. So in effect, I'm paying more like $60/mo to use very little gas.

I was thinking of purchasing an electric dryer when I buy a new one, having an electrician set up the 220 outlet or whatever the dryer takes, and then shutting off the gas to the common space. Does anyone think this is a bad idea for any reason?

Thanks in advance!

I reached an accepted offer to purchase a 2 unit. I'm trying to decide if it's a horrible idea to go through with it given the current state of everything, or if its just fine. I'm supposed to in less than a month, I could back out in the next few days and eat $5,000 in earnest money. 

Here are the numbers:

Mortgage+Taxes+Insurance = $2,680/mo

Other expenses: Other than vacancy, should be low in the short term. The place was gut rehabbed in 2017. To be conservative, I've assumed about $650/mo.

Rents: In a normal world I think rent should total $4,000/mo. Plus maybe $200/mo for garage usage.

One unit is currently rented at $2,100/mo but their lease is a few weeks after I close (I'm going to see if they'll stay, but I think they are planning on moving). The other unit is the owners unit, but its probably 150 sq/ft smaller, so I figure about $1,900/mo in a normal world.

That leaves cash flow at about $650-700/mo, not including the garage potential.

What I worry about is taking possession at a time when no one is really leaving their house to look at new apartments. If it blows over in by Mid-may or so, I'll be fine, if it sits vacant for 6 months, I'll be in trouble.

Curious what people think, thanks.

Hi, I am looking at purchasing a multi-family 3-flat in Chicago. The house sits on a lot that is currently zoned as B3-1 ("Shopping centers, large stores, and retail storefronts, often along major streets. Allows more types of businesses than B1 and B2 districts. Apartments permitted above the ground floor.")

The current seller says that the house is grandfathered as a three flat and is a legal non-conforming property. Public tax records support this, but I haven't seen the zoning certificate yet. Let's assume for now that they are right, and this is a legal non-conforming multi-family sitting on a commercial lot.

My question is, is there anything I need to consider in purchasing a legal non-conforming multi-family that sits on a commercially zoned lot? 

I am aware that I would not be able to do any construction that would increase the square footage, but I assume I'd be able to pull permits to maintain the property, say if I needed to rebuild a deck or work on the electrical. 

Does anyone have experience with something like this? Do people think that this could be an advantage, if say, a developer became interested in purchasing the property to build a storefront years down the road?

Thanks Jon. Yeah the numbers work alright without any basement income, but they'd be better with some basement income. My lender knows some people that can take a look at the basement and the zoning and let me know if they think they can (a) get the building zoned as a legal 3 and (b) do the construction to make the basement legal. I think I'll look into that down the road. 

In the end I'm going to make an offer contingent on the basement being vacant at the time of closing. If we settle on a price, I'll get someone in there to see if its possible to make it a legal third, if not, it'll be storage.

Thanks all. I think what I might do is put in an offer contingent on a vacant basement at the time of sale. I might add a clause that transfers some money to the basement tenants to help them on their way. Then I could take a look at options for the basement:

1. Leave it vacant/storage

2. Duplex down?

3. Air bnb? (I don't think I can in Chicago if it is not my primary residence and there are fewer than 4 units.)

I am looking at a property that is a legal 2-unit apartment with an illegal basement in Chicago. I ran the numbers and it looks like a good deal, even without including the income from the basement (~$500/mo positive cash flow when trying to overestimate costs). So I don't need the income from the basement, and I'm not really interested in renting an illegal basement, but I'd much prefer not to evict the basement tenants. The two guys living down there have been living there a long time; they might have even previously owned the house. 

I am not concerned about the city finding out and having to pay a fine, and then having to evict under those circumstances since there's cash flow without the basement rent. My concern is that of larger liability - think fire or something like that. I'm not sure exactly what makes the apartment illegal, it has a legal exit (and is small enough that I think it only needs one), the windows might be too small and the ceiling might be too low.  

I think I may purchase the building, rent to the two guys in the basement as long as they'd like to stay, and if/when they leave, either look into making the unit legal, or quit renting it. But I worry even that may be exposing me to too much risk.

Just wondering what people's thoughts are on the liability vs kicking out long term tenants.

Thanks