All Forum Posts by: Mike B.

I'd stabalize the building, refi out and add the basement apartment later. If you don't secure your refi, you can be stuck in a high interest loan indefinitely...assuming your hml will even extend. That is a nightmare scenario.

There are various other potential issues... are you zoned for 7 units? Did you pull permits for the work performed thus far? If the answer to one or both of those questions is no, you are really opening yourself up to unnecessary risk.

Most of the brick multi properties in Chicago are 100+ years old. Once you understand your construction pricing per sq ft, they're easier to navigate. The problem properties for me are the frame structures that weren't maintained. Every wall that opens up seems to be another expensive surprise. Bricks don't lie. Most of the problems are visible from the exterior of the property so you're prepared when the plaster comes down.

@Luke Sass while I can appreciate the outside of the box thinking, there's no "might" about it, that will definitely be considered harassment. You can certainly make a bad situation worse using that tactic.

I wouldn't flip anything with an ARV above FHA loan limits right now. Comp the ARV rents and make sure the property can cover itself as a rental in case things go bad.

I've worked in both markets. Atlanta was a far better option for low income/sec 8 flips and rentals. Chicago was superior in everything else (value add buy/holds, appreciation, higher end flips, etc...). 

I live in Chicago so that's the convenient market for me. The returns in Atlanta weren't so much better that the travel could be justified. All things being equal, Atlanta's low income neighborhoods felt safer, construction was easier (Chicago can be difficult during the rehab process), the rental laws are more favorable and financially, Geotgia is in better shape.

As for Chicago, there are several neighborhoods that are D+ to C- that can jump to B to B+ within the next 5 years. They are higher price points to get into, but once you get past the headaches of dealing with Chicago, the appreciation is more than worth it.

If you have any specific questions or if you need contacts in either market, feel free to pm me.

Anyone weighing in on Florida please @ me.

@Samuel Pavlovcik for me it all comes down to price to purchase. For the most part, you can flip anything, anywhere as long as you buy right. I try to keep my ARV at or below fha loan limits. I make sure that the property has the ability to cover itself via rent in case of a market downturn during rehab. Keep in mind that time is just as important as your profit. Spending too much time in a project using hard money can and will break the project.

Also, for what it's worth, I wouldn't get involved with anything more than a cosmetic rehab for your first flip. 

Good luck and if you have any questions along the way, feel free to pm me.

As a general statement I'd say not to buy your first property site unseen. If your team can show you that they can execute on purchase, rehab and exit... only then will they have built the trust to make a move like that.

One other thing to consider is that when lenders loan on the construction, they are reimbursing the money you pay out. It's rare that a lender will give you the funds upfront. Given the area and budget, I'm assuming your contractor will need a sizable deposit to get started so you would need that plus your down payment. Make sure that you're on the same page with your contractor.

@Tom Shallcross is spot on. If you're investing in Austin, it's for cashflow not appreciation. Make sure you have a great PM BEFORE you close.