All Forum Posts by: Sean Taylor

Thanks both for the feedback and guidance.  

Josh- interestingly our first duplex rental my wife and I purchased is in Logan Square as well.  We're also learning these are VERY different management experiences.  We've been trying to avoid section 8 and currently have all market rate tenants, however if we're not able to get a decent stable base have been considering whether section 8 is a path that should be considered.  What has led you to stick to market rate?  Do you utilize a property management company or do all the vetting yourself?  

Any tips for how you handle your south shore application vetting, or improve your odds at lower risk tenants?  What can of yearly turnover or vacancy are you experiencing?  I was target 10% vacancy, perhaps I should plan for higher vacancy and more turnovers.    

Jay/Josh- I like the thought around ignoring the credit score itself and perhaps focusing more on specific types of late payments.  Any thoughts on how you vet job security/income?  For example is someone who has been employed for 6 months and makes 2x rent to income a "good candidate" or someone who has been employeed for 2 years with 2.5x rent to income.

I suppose I'll get a feel for things over time, but always value advice and input from those that have already learned such lessons.  Thanks again!

My wife and I have purchased our second rental property and this time are working in a lower income area of Chicago (South Shore).  The average household income is around $25k/year and we have our 1-units and studios aggressively priced at $650 / $550 (tenant pays heat) respectively.  

We're currently dealing with a lot of turnover and are trying to better understand how to better qualify Lower Income applicants.  Normally we'd shoot for 600+ credit, 3x rent to income, solid job stability, and no criminal/eviction issues.  I'm starting to wonder if these are reasonable expectations given the demographic of the neighborhood.  In the case they aren't, how do I best set reasonable standards to ensure we're at least targeting the best candidates given the demographic.

Any experienced veterans have some newbie tips on balancing high qualification standards in more challenging economic demographics?  

Eddie, thanks for the response. I'll have to use some of you verbiage as it hits the major concerns.

In regards to the IP address being traced a couple techie comments. My understanding is that if you're using a Linksys type wireless router that it actually only has one "True" IP address. Meaning your provider assigns a single IP address to you. The router uses what is called NAT (network address translating) to assign sub address to each user. (192.168.1.x) These addresses are dynamic and change everytime someone turns there computer on and off.

Long story short. If you are living in your unit and renting one of the other units, it's very likely the FEDS would not be able to distinguish whether you or your tenant were using the internet for illegal uses without doing a datamine on your HD. Very slim chance, and I haven't seen many cases like this, but nonetheless an interesting thought to keep in mind.

Great topic. I've been thinking about this as well for a two flat I'm purchasing. Couple questions. What do you guys put into your leases? Do you have a clause stating you are not responsible for service outages? The comcast internet in Chicago is horrible, and mine goes out a couple times a month. I don't want tenates not paying rent because they're internet isn't working.

Also, something to think about. How is liabiity handled. For example if the account is in your name, and one of the tenants is looking at child pornography or downloading bootleg bittorrent programs. Are you liable?

Everyone needs internet, and sharing it makes sense. Seems to be a great way to entice tenants by lowering their monthly expenses.

FYI- I'm looking into the new 4G Clearwire solution. You can get a two device package for around $60. One device is fixed, and would support the units. The other device is a laptop modem, which the landlord can use. Pretty sweet!

Getting ready to close on a 2 flat brick building in Chicago. I've cranked away on the numbers and they look good enough for the property to just barely float using the 50% rule. (Assuming I only receive income from the two legal units) Profit would be minimal, but since I'm planning on living in the first floor and I love the neighborhood I'm willing to take minimal gains.

To the root of my question. Like nearly every rental unit in Chicago, this property has what at one point was a rented basement. Agents throw around terms like English Basement, In-Law Suite, Garden Unit, but the most fitting name is Illegal Unit. 2-Flats are zoned for occupancy of 2 units, and the basement is not a legal unit. So this poses the question to you Pro's about what to do with the space. I've identified the following ideas:

1) Duplex the first floor unit downstairs
PRO's
-would add two more bedrooms and another full bath, and probably $400-$500/mon rental income.
-would be completely legal, and zero liability solution
CON's
-Would probably cost around $50K-$70k, major permits, time, city zoning/inspectors, headaches
-May be much cheaper and easier ways to earn $400/mon more.

2) Rent space to local artists (remove kitchen)
PRO's
-Unit would not need occupancy permit with no functioning kitchen
-Would be relatively easy to bring in $200-$300/mon for the 1,400sqr ft of space

CON's
-Could still be some city issues if they consider it business space, although much less liability opposed to renting as housing unit
-Collecting rent could be iffy, contracts?, enforcement?

3) Do as 80% of Chicago landlords do and rent the unit
PRO's
-Could earn $700/mon or more
-Little to no renovations needed

CON's
-VERY RISKY
-Major exposure if fire occurs in unit, as insurance would likely not cover property or personal protection
-Enforcement of contract on illegal unit and unpaid rent

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Anyone have any other ideas. Can anyone speak from experience on this? There has to be something I can do with all the great space down in the basement. I checked City code and there is really no way possible to get it rezoned as a legal 3unit. Any ideas would be awesome!