All Forum Posts by: Keerthi A.

No rehab required. It is move in ready. Rental allowed by HOA. Lot of cheap complexes nearby. This townhome is a neatly maintained neighbourhood so should not have any problem in renting out.

I am stuck between playing appreciation card and the cash flow rental game. Zillow Zestimates show it closer to 80K. I though if it its 90K in the next year or so, list it out and get out with a small profit. Rent to pay for holding costs and mortgage closing costs.

I will have to reconsider my decision as I also feel the numbers are tight if I have to hold on. Just put in the offer, bank will look at it only on Friday.

The unit is 17 miles from my place.
I agree the numbers do not look very attractive. But I see comps for this places at higher numbers.

Chicago is a very high tax market. HOAs are also very high, most crappy rental units have $350 HOA with heat. Only some places have under $200 HOA without heat. I am sure heat for a small 2 bed unit is not more than 50$/month or 600$/yr (4-5 months of winter). For me the high HOAs mean some big repairs included.

So hard to find a decent cash flows here with low rent &high tax/high HOA units.

Couple of investors I know just buy old units with high HOAs very cheaply - sub $50K and then rent out for $100-$150 cash flow. I feel it is too much work and the fact that it is hard to finance properties under $60-$70K.

Here is a rental townhome in NW suburbs I am looking at.
Size - 1200sqft

2 Bed 1.5 Bath

1 car Garage + 2 floors above it.

Age - 40 Years old

Hardwood Floors

Purchase Price $73,500

Loan Amount $58,800

Tax $283

HOA $182

Insurance $17

Mortgage (3.5%/15Yr) $415

Total Payment $897



Rent Value $1,200

TAX+HOA $465

Mortgage $415

Vacancy $100

Maintanance $50

Net Return $170

Rents could be 1250, but I want to keep it conservative at 1200.
Does these numbers look good. Please advice.

Yes, thanks for the links they are helpful. I will go through them.
I have been reading and collecting info last few years, it is time I dip in to test waters.

I am not trying to go into a big deals as is. No hard money - just cheap capital. And also I am trying to be conservative in my numbers, try to keep 20% margin for any emergency.

I have three properties I am looking at. Suggestions welcome.

Option 1 - Single family - crappy school dist/hispanic neighbourhood - 3B/1BT - auction around 60-75K - small rehab cost 20K max - ARV 120-130K.

Option 2 - New Townhome - new community - 200K list - might get for 175K - Kitchen/Bath Ripped off everything else minor - small rehab cost 25K - ARV 225-240K. Bit hard to sell as town is low key.

Option 3 - Single family old house - good area/schools - 150-155K - gut rehab could cost 65-90K - ARV 325K - very high taxes/carrying cost but should be easy sell if priced properly.

First two projects are pretty easy in terms of effort. First one I might be able to fund it myself. dress up kitchen, cheap/used appliances, redo bath, new carpet, landscape, minor fixes could cost 20K. Big variable is what the purchase price will be. It would be a great deal if I can get the place for 50K or so. Roping in a co-worker to a 50-50 split. Sell it at end or keep as cash flow rental.

Second one is even easier quick one, just buy kitchen and bath fixtures. Two to three weeks might be enough. But cannot put cheap stuff in here as this is a new home. Hardwood floors, carpets, windows/doors,etc are new. Selling it however might not be easy. One unit sold for 230K and another listed for 260K in that community. It is prob most expensive townhome in the area, same town as first one. Also funding is possible through 203K. Can be rented easily though but might be just barely cash flow.

Third one is the biggest. Watching it for many months. No financing available. I have to rope in investors. Too big of a project for newbie like me. But massive profit possible. Selling on MLS is not very hard as there are no 3bed SFH under 350K in this area. My 325K number is very conservative. Taxes are crazy at 9-10K/yr.

I am leaning towards first one, but provided I get the winning bid. If it goes above my max price I am not getting in. The third property might be gone in the next week. The second one might not move fast so I can still go for it later especially if they reduce list price.

Just talked with few lenders, it seems I need to go with smaller banks or credit unions. I heard 3.5% for 10yrs might be possible on a cash out refinance.

Is there a minimum period that I need to own the property before I do a refi. I do not want to tie up my capital which I can use it for financing another property on a downpayment.

TCF bank told me there might be a 1yr minimum holding period requirement.

Have you guys did cashout refi soon after you bought the property.

Any pointers.

Thanks, Guys. There is a lot of info here going to take me a couple of days to sift through.

Nice to hear from you, Paul.

Thanks, @Jon Goldman for your advice.

I will post in Marketplace.
I will also go to few credit unions and smaller banks in my area on Monday and talk to them.

Hi guys,

I came across this forum few months ago, but I did finally join as I started looking for RE. Lot of info posted here, there are very few financial forums that cover the amount of info here. I have been reading/following a lot about RE but I have not jumped in yet. Looking to buy some rentals with decent cashflow.

Do not want to make landlording/flipping as a job, but I am interested in owing 3-4 rentals. May be down the road a rehab too once I gather enough courage.