All Forum Posts by: Nick Klomstad

One thing that helped me early was building my own spreadsheet/model to understand what my IRR/NPV/Cash-on-Cash/and cash flow were projected to be. It's one thing to use a calculator and another to build one.

On that note, accounting for your alternative (renting out a 1-br apt) in these projections would give you a truer ROI. In the corridor you are considering you will find those for anywhere from $1000-$1800 depending on exact location, quality, and size.

I just purchased my first property (a 4-plex). What did I learn, you ask? Don't let the list price deter you. Get a great agent who knows the neighborhood and what things are worth therein. I am doing far better than I thought was possible in Chicago from an ROI perspective.

"You Miss 100% Of the Shots You Don't Take. -Wayne Gretzky'' -Michael Scott

One of the tenants I inherited who is on a MTM lease is delinquent for the first month. I was made aware of the same tenant not having paid during the month prior to closing as well.

After receiving no rent for June, I served the 5-day notice to pay or quit and the 30 day notice (4 days ago). 

I was told by the tenant today that I would not see a dime from them for this month or next but that they are looking at places and 'trying to find a place to move to.'

I offered to extend the deadline to file for eviction from 6/10 to 6/14 under two conditions: that they pay in full on the new date and that they move out at the end of June.

The eviction process will take much longer than remains on the MTM lease though from what I understand it will cost about as much as I am set to lose in rent. 

Through inaction (waiting til term)I am guaranteeing a loss of 2-months rent ($1900). Is this a situation where cash for keys makes sense?  I don't know the risk of the tenants trying to squat at that point, either.

Any wisdom would be appreciated - this is my first rodeo!

@Brie Schmidt @Caleb Heimsoth It closed yesterday - It's the real deal. I was told he has yet run into any issues; all went smoothly for me.

If you want to hear in more detail how I got to the final CTC below PM me. Here's the high-level on how it shook out.

Purchase Price: 405k

Financing: Home Possible (5% DP)

Closing Credits: 8k

CTC: 8.5k

Feeling pretty fortunate right now!

@Caleb Heimsoth Thank You!

@Caleb Heimsoth I was told they are able to offer such attractive terms because of something called a community reinvestment credit that Chicago reimburses them for. Otherwise, they lose money on the transaction.

I figured for a company as big as Huntington I would be able to find some reference to this particular offering but I'm not able to find anything.

I've requested a loan estimate or something more formal but haven't received anything yet.

Hi All,

In the process of closing on my first MFH and up to this point planned on using a Freddie Mac Home Possible 5% DP which locked at 4.25% 30 yr Fixed.

I was approached by a mortgage broker about a program through Huntington Bank where they cover the closing costs for the buyer. For me this would be north of $6k. I would still be on the hook for the remaining attorney's fees, Chicago Transfer Stamps, and other miscellaneous expenses. Additionally, the rate was better: sub 4%.

I was able to dig up a reference to this program from 2015 which is a bit dated and that concerns me. There is also a reference to Huntington in one of the BP threads about 8 months back whereby the buyer felt bait-and-switched when it came to close on the property.

I don't want to jump ship from a smooth process with GR but I'm not sure how to verify the authenticity of the offer and my good-standing to qualify.

Help would be appreciated!

I am selling my first investment property and I am curious what the tax implications are in this scenario.

The buyers are attempting to complete $30k worth of work that will pursuantly be added to the purchase price of the property. I am told that this is a selling cost and that I shouldn't have to pay capital gains on the additional amount ($4700).

How is it that the new 'purchase price' (175k vs. 207k) won't have an impact on equity/taxes?

Nick

@Thomas S.

Does this analysis look correct and if so, does it change any of your opinion(s) on how I should proceed? 1% CoC doesn't seem worthwhile based on what I see below? This has been such a great learning opportunity for me - many thanks!

@Thomas S. - Does it matter at all that the expenses I've incurred over the term of the rental have a monthly average far less than $650? I've read that it's best to look at that number as long term in the event that something significant happens.

For example thus far, being self-managed I am averaging only $60/month in expenses...which changes the projected cash flow significantly. Is it unwise to use that math?

Thanks for pointing that out...hadn't thought to use that rationale.

@Shawn Ackerman - As I'm fairly new in educating myself; is 75% under market simply 75% of would we would consider FMV for a property? I will have to dig into looking at HELOC as an option - it seems wise to redeploy with leverage when money is still cheap.