All Forum Posts by: Michael Taylor

I am not sure if this post is me just venting, or use it as a warning to other landlords. I had a tenant whose business was shut down by the city of Chicago for unlawful activity in my commercial unit, to dispute the rent she paid me over the last two months and got her money back. I have my rents processed through Apartments.com (they purchased Cozy). After the city shut her down, she called her bank (BMO Harris) and disputed the charges of rent stating that it was fraud, they deducted August and September rents from my account. I went to management at my bank, and at BMO Harris (which is the bank of the tenant) and the bottom line is there is nothing I can do other than to take her to court. I am so pissed! Makes me want to stop using Apartments.com as anyone can dispute the charge and they get their money back, the banks will be on the side of the consumer not the merchant.

Are there any recommendations of other companies that I can use that will better protect me as the merchant? How are other landlords handing this issue of charge backs?

Thanks in Advance.

Purchasing 5 unit for $260K in Chicago on the southside.  The building is in great shape, particularly the common areas, basement, boiler, roof, exterior, electrical, and 3 car garage.  I was disappointed that the interior of the units are the original 1930's flooring and sinks.  The stuff maybe old, but everything works.  The improvements needed are simple cosmetic, sand floor, some new vinyl flooring here and there, paint, kitchen and bathroom upgrades, and new appliances.  I have a good team, so I should be able to upgrade the interior on a migratory plan as tenants move out for about $8,000 each.  So I need about $40,000 for rehab.  

The question is; do I take the loan with the rehab money that is interest only for one year then refinance after rehab, or take the purchase only loan at 30 years fix rate and rehab out of pocket?  The fees, points, higher interest, etc.  will cost me thousands of dollars.  It is much cheaper to go to a loan shark (plenty of companies offering me money) that would be much cheaper.  This way I don't have to refinance (pay twice for fees, closing points, appraisal, etc.), so I have to go for the purchase only.  If the building was vacant and I needed to perform the rehab all at once, that would be one thing, but I can upgrade each unit as tenants move out.  What are your thoughts?

Here is the question of the day, do I spend my $70k from my solo 401K and purchase a house at auction or do I leverage that money and purchase say a 4 unit with a mortgage?  If I can buy the house at auction with no mortgage, my profit might be about $1,500 a month from a rental house.  If I finance a 4 unit at about $300k, then my profit might be about $2000 after you deduct the mortgage payment.  So I would lose about $500 a month in possible profit, but I would gain in the security that no matter what I would not be stressed to have to make a mortgage payment  Thought?

Thanks for all the replies.  I went with this lender as they are giving me a 4% 30 year term, others would have given rehab money but at twice the rate.  They do have a 5 year prepayment penalty, so this is why I am not interested in refinancing after I close. 

I am purchasing an eight unit building that needs some minor cosmetic repairs, nothing major but I need to bring the building up to code and make repairs to the roof.  My estimate is about $30,000 for the repairs.  The bank I am purchasing the building with is providing a great rate and terms for the purchase, but not the repairs.  I had other companies that I considered that offered the money for purchase and rehab, but the rates were high and terms were not that good.  Now I have to either find a company that can extend a loan for the rehab or use my credit cards.  Is there a company out there that can provide only rehab funds?  I am not looking to refinance as I am closing within the next 3 weeks or so and there are harsh penalties for early payoff of the loan.  Suggestions?

Jonathan thank you for the link, I had never seen that before.  The building is located in an area designated as "business", so I guess it would be fine for me to make storage units available.  I will check with the alderman before I move forward.

I have a contract on a 8 unit building in the City of Chicago on the south side that also comes with two lots next door, those lots are fenced off as part of the main building.  The building is one commercial and 7 apartments, I am not sure what the zoning is.  Currently, the tenants park their cars there and the owner built a nice patio for tenants to use.  I am looking to maximize the land, so I am thinking of purchasing a couple of steel storage shipping containers and offer them up for either tenants or outside customers to rent.  These units are 20 feet by 8 feet.  Do you think there is a market for this?  I hear that self storage rentals are very popular and profitable.  I am also thinking of offering storage for recreational vehicles or something like that.  I am not interested now in building on it, don't have the money for that.

Any thoughts on how to make more money from using the land, feedback?  

I am a newbie, so take this with a grain of salt.  I have invested only in the city of Chicago and not the suburbs because of the taxes.  In my analysis of properties, the city is more profitable per door compared to similar buildings in the burbs.  Even in the "hood", the rents are strong and section 8 is even better.  I started investing with my first building (a duplex) in May of 2019, I have 10 units now and I just signed a contract for a 8 unit all on the southside.  Although I am from the city myself, I now live in the burbs.  So as I drive around and I look at some of the rough areas of town, I ask myself "who would want to live here"?  The answer is, "people who already live there".   So regardless of how the area looks, people have to live someplace so never under estimate the potential of what property could bring you.  As long as you provide a clean and modern building, without bugs and mice, tenants will live there.  For me, the "hood" is gold.  I am making great cash on cash returns compared to the suburbs or the northside.  My two cents.

You cannot rely only on the background and credit check offered by some of these real estate management websites, you also need to check the local county clerks office to see what evictions were filed against an applicant.  Some services might show you what convictions are on a record, but not filings.  Lesson learned for me.

Thanks everyone, here is the link:  

http://www.cookcountyclerkofcourt.org/CourtCaseSearch/

I found the tenant that I have to evict on here, wow she has a long rap sheet of prior evictions.  I wish I had known about this before.  Never again.