All Forum Posts by: Montoya Lashley

Hello BP, it's been a while since I posted, but I assure you I am still in this for the long haul. I was initially seeking opportunities of low and no money down, but realized that is just not my style as I prefer to be responsible for my own success so I've been focusing on paying down my debts to further enable me to save up for a down payment and so far I've paid off nearly $20K in one year!! I'm super excited to have gotten this far and will be able to begin saving for a down payment after my car is paid off this year. I'm on track to being able to purchase my first property in January 2018. 

Furthermore, I have also decided on my market area, Cicero, IL, a suburb just west of Chicago, which meets my criteria in regards to location, price, and low crime rates as I plan to house hack the 3+ multi-family property I plan to purchase. My question to you all is what do I need to know about my area and where can I conduct my research in the next year to be able to buy with absolute confidence in Jan. 2018? I want to use the time I have now to learn everything I need to learn and prepare as best as possible before taking the plunge. Please also feel free to provide any other commentary regarding my plans.

@Danielle Cage I've been focusing mainly in the city near the lower west side and just south and southwest of the Loop. I've also been looking in the nearby west suburbs Cicero, Berwyn, Forest Park, River Forest, etc.

@Brie Schmidt yeah I figured you wouldn't have any dealings in any neighborhoods that meet my criteria as your area is higher priced. I have been looking at the Suburbs, but not finding much luck there. I never thought to try Indiana, however, thanks!

Thanks for your response as well @Ramon Jenkins. I will look into Jerry's marketing program as well.

@Logan Allec that should help. Thanks again!

Hi @Logan Allec, I appreciate the response. I figured I might discover similar results as you did in LA with marketing, I'm glad I took to BP to here other stories before going out and spending the $2000 or more. I am interested in going the FHA route, however. My struggle here in Chicago is finding the multi-family in a fairly decent neighborhood in my price point. In the nicer areas all properties are $200K+ and anything within my price range is in a D neighborhood with high crime rates.

Hello BP,

I'm a new investor currently trying to get that first deal under my belt. However, I've been having trouble finding what I'm looking for on the MLS. Does anyone know how probable it would be to find an updated small multi-family (preferably a 3-unit or 4-unit) that is fully tenanted through yellow letter marketing in Chicago or surrounding suburbs for $180K or less? I've recently considered trying yellow letters but I'm not too sure I'd have much luck there with motivated sellers as it seems a great majority of motivated sellers own distressed properties and the thought of trying a fix and hold on my first deal scares me a bit. How and where did some of you all find your first deals without putting in any rehab or renovation work? I appreciate any feedback.

Thanks!

@Benjamin Morris Sorry for the very late reply. I haven't had any luck finding lenders in Chicago that will finance with a seller backed note. Also, I do have the funds for a small down payment (up to 4-5%), just no proof so I'm still trying to figure out how I can obtain the pre approval letter to start making some offers, although the loan officer has indicated that he would be able to include rents from the property. Finally, I would be open to an owner occupied property, however, my location preferences have not been coordinating with the properties in my price range.

Thanks everyone for your comments. All of the input is greatly appreciated and any little tips or things to think about helps. @Matthew Vitlin I have asked my realtor to check on the current occupancy of the property and will definitely look further into the historic occupancy rates. Thanks.

@Anita Fofie I do plan to self manage as my step-dad, who's been in real estate for years, has a team of handymen and whatever else you can think of for extremely discounted flat fees which I will be able to utilize for little or nothing. Also, the legal costs you bring up are a good point. I have seen many investors calculate repairs and maintenance for a combined 5% so I purposely allocated a separate 5% for maintenance and misc. to account for any legal/eviction costs. I figure my step-dad's team of handymen will help in this area as well taking care of random maintenance calls, snow removal, lawn care, etc. However, please let me know if you would still allocate more for legal costs outside of this.

@Wayne Brooks I used an average of $700/mo. for the 1/1's, $625/mo. for the studios and $850/mo. for the 2/1 from rentometer.com. After double checking rents on craigslist, zillow, etc. I found that the average for the studios is a little on the higher end and the 1/1 average is very much on the low end for the area so I figure that would balance out. Let me know what you think. 

Hi BP,

I'm a Chicago area newbie currently seeking my first deal. I do not have a completely established criteria yet, but I was considering going the route of purchasing a small multi-family (2-4 units) with owner financing. However, I came across a Court Order Sale: Value-Add 8 Unit Apartment Bldg (4- 1/1, 3 studios, 1 2/1) for $150K in the Austin neighborhood, for the Chicago natives who might have an idea of the location. I am considering getting an inspection done, doing a walk through with a contractor to estimate the repair costs, then placing an offer to purchase it to buy and hold for cash flow through a hard money lender (Purchase Price + Repairs) then refinance after about 6 months. Anyhow, I figured why not try to go big and look more into this since that's the ultimate goal anyway. I'm waiting to hear back from my realtor in regards to how the court order sale came about (death, divorce, foreclosure, etc.) so I'm not sure of all the details yet, but I'd like to get some sort of feedback as to whether some more experienced investors think I'm in over my head with this as a potential first deal. If you all do think it could work out, please share any suggestions on things I should be aware of and plan for.

I consider the following a conservative analysis of estimates:

Purchase Price $150K

Repair Costs $50K

ARV $300K (realistically could be $350K+)

Rental Income (median rents of area) $66,300

Taxes $7,100

Insurance $2,000

Water $3,600 

Electric $3,840 (all units are individually metered but just to be even more conservative i added paying electric)

Vacancies(8%) 5,304

Maintenance & Misc(5%) $3,315

Additional Repairs(5%) $3,315

Cap Ex (10%) $6,630 

NOI $31,196

HM Debt Service (14%)  $28,436.88 P & I

From what I can see it looks like I would still cash flow paying full monthly principal and interest payments on the HML. The only thing that I feel would make or break the deal is the repair costs as the $50K is a completely random figure until I can get an inspection and speak with a contractor.

Hi @Benjamin Morristhanks for your response. The lender did indicate that I could be pre approved for more as they could include the rents in my income. However, the issue I came across there was not being able to provide proof of funds for the down payment on the higher purchase price. Furthermore, are you indicating that I would need the pre approval to make an offer even if I am seeking owner financing?