All Forum Posts by: Mark Kappelman

@Account Closed thanks for the feedback. This one won't be made available online, but good feedback for future events. Thanks for your interest!

@Neal Bawa coincidentally, my business partner sent me an article about opportunity zones yesterday, and we have a call set up with our attorney to learn more. I suppose we will push that call to a later date and just listen to your free webinar :) 

Thank you!

@PJ Kolnik I will be complying with any and all rules in the city of Chicago. The rules are a complex and nuanced, but they are becoming more clear to me as I continue to do my research. I actually called the city and asked one of their representatives to come speak at my meetup event next week (TBD if they actually come) to explain all the details. $500/unit isn't ideal but shouldn't have an issue covering that. And this is not my personal residence, but since it's an 8 unit building, it doesn't need to be my primary residence to be legally allowed to STR.

Investment Info:

Large multi-family (5+ units) buy & hold investment in Chicago.

6 flat in Logan that is zoned RM5, which allowed for two additional units based on lot size and current above grade square footage. After rezoned, 8 units allows for 2 STR units. These two factors were the value adds in this deal that made us pull the trigger.

What made you interested in investing in this type of deal?

Proximity to other investments and market knowledge, under-market rents, as well as ability to potentially add more units at a competitive price based on the property's zoning.

How did you find this deal and how did you negotiate it?

On the MLS. Negotiated without agent, which made us look more attractive.

How did you finance this deal?

Small balance non-recourse Freddie Mac loan (7 year term/30 year am/YM).

How did you add value to the deal?

Adding in-unit laundry, adding two units to the basement, and converting two units from LT to STR units (e.g. AirBnB).

What was the outcome?

TBD. We just bought it a month ago. But the two additional units were formally approved by the city, so we are moving in the right direction.

Lessons learned? Challenges?

See what others don't see. ALWAYS check zoning and think creatively.

Investment Info:

Large multi-family (5+ units) buy & hold investment in Chicago.

BRRR to a 'T'.
Bought a 6 flat, full gut ($700k rehab), rented it out, refinanced, and rolled proceeds into another project.

What made you interested in investing in this type of deal?

The power of commercial financing.

How did you find this deal and how did you negotiate it?

Short-sale, on the MLS, let the agent double-end the deal.

How did you finance this deal?

Construction loan through community bank, and then refinanced via a non-recourse small-balance Fannie Mae loan (10 year term/30 year am/3 year IO).

How did you add value to the deal?

Eviciting non-paying tenants, full-gut rehab, found new tenants that are college grads with great jobs.

What was the outcome?

Fantastic cash flowing building in a prime Logan Square location.

Lessons learned? Challenges?

Too many to cite. Reach out to me if curious :)

@PJ Kolnik thanks for the note. Where are your units? I am launching my two units in Logan Square near the Logan blue line (on Diversey). One unit will be a studio and the other a 2 bed / 1 bath. If you're interested, we are hosting an STR/AirBnB meet-up two weeks from today in Bucktown at the Compass Real Estate office. Here are the meetup links (https://www.biggerpockets.com/forums/521/topics/62...

You should come join us to share your experience and learnings!

@Christian Nachtrieb I can't speak for other hosts, but I can tell that the clearning fee we charge is a 100% pass through cost. We charge $95 for a 1,300 square foot 3 bed/2 bath unit. Our unit is cleaned professionally, but we have two cleaners for 2 hours (4 man hours). At $15/hr, that would be ~$60, plus supplies, so call it close to $65 or so. And then the cleaning company layers in their profit margin. Long story short, now that I have seen it from the host side, it makes sense to me. 

P.S. We don't ask our guests to make beds/do laundry. I agree that doesn't make sense if there is also a cleaning fee! :)

@Account Closed I can't speak to the validity of Joe's post, but I can tell you that we are running STR units in Tampa and are earning signifcantly more that we would be earning on a LT basis, after netting out all the expenses. Yes, guests leave towels on the floor, but that is why you hire a professional cleaning crew to 'turn' the unit after each stay (which the guests pay for by the). We've had a great experience with STR and will be launching two additional units in Chicago in Q1'19. Happy to answer any and all questions you may have!

sounds great @Juan Juan we will see you in a couple weeks!