All Forum Posts by: Lucien Perreault

 Zion, IL

 That is what I am seeing based off the numbers over the past 3 years. I haven't broken into the auction market but I'll have to give that a look.

Good evening BP,

I just got done reading a forum on the increase in foreclosures and there was plenty of data points being discussed and debated. But while reading through, I didn’t see anyone discuss what they are doing with all the data. Is this a time to buy? Is this a time to sell? Or are we just holding on for dear life?

There are definitely some inflated markets right now but if the national housing market crashes, it should be felt differently depending on location. I know in my market North East Illinois and South East Wisconsin, the numbers aren’t really that high. I just purchased a duplex for 155k that just needs some cosmetic help. How far can that fall? Definitely not to zero.

Is there such thing as a market crash proof market? Maybe not but there has to be a strategy to prepare.

First conference and it definitely will not be the last. Had a great time and got to meet and network with some awesome people. Denver is a cool place... might move there.

Good morning BP,

Chicago has a new ordinance out allowing owners to convert basement and attics to another unit or add a coachhouse. I wanted to see if anyone else has experimented with this program and what your thoughts are on it. And if anyone knows the potential costs that will come with the addition of a coach house and if that is a wise choice.

Thank you-

Lucien

@Jonathan Klemm

I wouldn’t necessarily say I’m leaning towards selling. I’m more exploring options at this point. My property is class A asset and if I doubled my doors with the potential equity from the sale, I would downgrade to a lower asset class which I’m not sure that’s what I’d like to do.

@John Warren

Thanks for the feedback. I have considered refinancing in order to use my VA loan again. I was hoping the NOI would be considered for the valuation but since the property is residential, I figured comparable sales would be the key. The only issue with that is there are so few comps to use and none really match my property. Maybe I could get an offer in and use that to justify a refinance price? Also, I don't live near the property but management does a great job taking care of it.

Good Evening BP,

I'm looking for some input on the situation I'm in.

I currently own a 4 unit building in Roscoe Village, Chicago, IL. I bought it last year for 985k with a no money down VA loan. The loan amount ended up being 1,020,460 after the VA funding fee was rolled into the loan and the rate is at 2.5%. I now have the building fully rented at a gross monthly rent of 7950. After all expenses(management, taxes, insurance, maintenance, etc.), the NOI for the last 3 months has been 5705/ month. After paying the loan and saving for CAPex and vacancy, there is $500 of pure cash flow. Using a conservative cap rate of 5.5%(the average rate in the neighborhood is roughly 5%), the building has a potential value of 1.24 million.

If my estimation and math is off please correct me. My question though, is if someone came along and offered me the 1.24mil or greater, should I accept and move the money to another property? I guess it all depends on the next property but before I get to crazy with finding a deal for the 1031 exchange, I wanted to see what others may think.

My main reasons for considering selling is the potential in other states, for example Wisconsin(since its so close to where I am stationed and other factors). Also, the property taxes in Cook County are insane which takes away cash flow. If I used the money correctly, I could snag an investment property and buy another big purchase with my VA loan, therefore potentially doubling my units in year 2.

My main reasons for not selling is the 2.5% rate, the cash flow already created, and the significant tax benefits(of course these can be found with any other property).

Additional information for the already complicated equation. I have a duplex lined up that is currently listed for 139k. It has plenty of work that needs to be done but the building functions. It seems to have potential for a 220-250K ARV. I am already preapproved for a loan for 135k at 5% down but I am not sure of the interest rate yet. This property does not require me to sell the 4 unit building.

If you were in my shoes, what would you do?

If you read this far, thank you very much for taking time out of your day to do so.

Very Respectfully,

Lucien

@Stephen Dougherty

I bought a quadplex at 985k no money down with my VA loan so I've stretched that to the point I can't use it until I can refinance out of a VA loan. In order to do this, there needs to be at least 20% equity n the property which according to the proper cap rate I'm at but not according to most lenders.

As for credit, when I say I have plenty of credit, I’m talking about over 100k in available credit card spending for improvements or whatever.