All Forum Posts by: Mike B.

@Daniel Guerra not only is it more risk to go to rehab, if you consider annualized returns the numbers can be outrageous for the quick mls sales.

I will note that I expect every property I close on to go to rehab. Make sure you have the ability to see it through and that you’re prepared for worst case scenarios.

@Daniel Guerra every property I purchase is immediately listed on the mls for a quick payday. If it doesn’t sell for the price I want, I pull it down, give it a light rehab and put it back out to the retail market. Feel free to reach out if you have any questions or need resources in this space.

@Boris Le my accountant and lawyer are in agreement that each property should be purchased in a different llc to separate the assets (from a liability perspective).

I’m not an accountant or lawyer.

@Bryan Stocklas

Wouldn’t it be easiest to ask the seller who his insurance company is and use them?

It sounds like everyone involved is making this more complicated than it needs to be.

double close it.

What size line is currently going to the property? In some cases you can install a booster pump to increase water pressure, but there are obviously variables on whether this specific property qualifies for that remedy. The cost of a booster pump is approx $1,400 so it's a pretty significant savings if you can make it work.

@Yash Kamaat I don't know if these are barriers to entry, but there can be some costly delays depending on your cost of money.

1- If you decide to do a rehab beyond a repair/replace permit, make sure to hire a self certified architect. They will typically get you permits within 30 days. Non-self certified architects can take 60-90+ days to acquire permits.

2- Try to project your inspection requests. Meaning, don't wait until your done with the work to call. It can take up to 30 days to get an inspector onsite right now so call when your trade is roughly 2-3 weeks from completion. This will also speed up your trades to get the work done quicker when they have a hard deadline.

3- DO NOT ARGUE WITH THE INSPECTORS. Even if they're wrong, smile and say no problem. It's a battle you will not win.

4- Zoning certs are taking a long time to get right now (30 days plus). If you decide to buy a multi unit, this will be necessary to close.This won't cost you anything to wait, but something you should be aware of.

If I think of anything else, I'll add to this thread.

Thanks for the tag @Samuel Pavlovcik

Chicago permitting is more of an art than science. The biggest factor is the motive in applying for repair/replace as opposed to plans/permits. 

I'll preface my thoughts by saying that you should always pull the correct permits for your job. The risk is not worth the reward. A lot of people pull repair/replace to save time and money knowing full well that they will be performing work outside of the permit requirements. Quite simply, it's a tactic to post a permit card in your window so if a neighbor calls or an inspector drives by they will see that the city has permitted work at the residence. If they decide to dig deeper and perform a site visit, it will become a costly mistake (time & money).

Previously, inspections for a repair/replace permits were unheard of. Now there are specific things that will trigger an inspection (i.e. electric/plumbing/HVAC). If you're trying to accomplish the scenario above, keep the application limited to windows/doors/cabinetry/trim/etc...the city doesn't have inspectors for those items.

What you don't want to do, is a bunch of work outside the permit and invite inspectors to the property to see what you've done. You either pull the correct permits or lie. There's no middle ground.

My last plumbing inspection was about a week or so ago. The inspector called my plumber, asked him if he did the work and then passed us without performing a site visit. We had pictures throughout the process as a precaution but we didn't end up needing them.

It never looks good when someone's first post is a reference...

Using HML takes careful planning. One thing that people don't consider and to piggyback off of @Tom Shallcross a bit is draw time and holding costs. How long does it take your hml to fund draws? I've seen up to two weeks between draw inspection and draw payout. If you're planning on 3-4 draws, that can be 6-8 weeks of unexpected holding costs. Further, you need to consider all of your monthly holding costs, not just servicing the loan (i.e... gas, electric, water, insurance, lawn care/snow removal, etc...).

Please note, If you plan to get full permits from the city, you'll have to stop work for their inspections as well and factor that time into your holding costs.

HML's are typically one year loans so $100k @ 10% = $10,000/12 = $833.33 monthly payments (interest only).

Also, if your contractor can not afford to carry the costs of the rehab and get reimbursed, then you will have to come out of pocket for the first draw as well.