All Forum Posts by: Account Closed

Thanks for the responses.

It might be a good idea to start cleaning it. The concern was just that if they decided to take a look at the place before we closed and we had it cleaned out then they might reneg on the credit.

As far as being the only opportunity, I've been looking for over a year for primary home. We've not been able to find anything we liked. This place would be perfect location wise and we really got it for a good price. I've started looking again and things seem to be getting even worse in terms of small OK looking places selling for 250 K.

Hi All,

I was about to close on what I thought was a great foreclosure for $246 K. This is in Illinois. 3200 square feet, 4 bed 2 bath, all brick. Missing a kitchen and needs about $75 K in work. However comparable houses are about 380 - 400 K.

The week of the closing the sump pump failed and the basement is now completely covered in 2-3 inches of water.

The basement is unfinished, concrete and tiled. The dry wall had been cut out before so that is not wet.

Now it has been a full week that the basement is covered in water because the bank is taking forever to come to a solution to this.

We offered to still purchase it with a $6K credit. They countered with $2K and then we countered with $4k on Thursday. Of course they did not respond on Friday.

We got a contractor out and he gave us an estimate of $2800 to clean the basement out and replace the wooden framing as well as the sump pump. We'll probably have to hire dryers and dehumidifiers thus why we think it's going to be about 4 K.

My questions:
1. How bad is it for water to sit in a basement for two weeks while the bank takes its sweet time?

2. I plan to install a new sump pump, clean out the water, put in a couple of dryers and dehumidifiers. Clean any mold/mildew and replace all the wooden framing that covers the bottom of the basement. Will this be sufficient to take care of the problem caused by the sitting water?

3. This is a great deal on a great property so I don't want to back out. Is there something I'm missing with this basement flood issue that might be a big expense later?

Thank you for any advice.

Tim,

These 60 K houses you speak of. What do they look like inside? I've seen a bunch of 50-60 K houses in Oak Lawn, Berwyn and Pilsen but they're in terrible shape inside. If I had the knowledge of how much it would cost to fix something up like this, I would surely buy.

I'm in the same boat as OP. I'm looking for profitable 2-4 flats where my wife and I can live and rent out the others. I'm also willing to go for a nice well priced single family home but cannot seem to get it.

We put an offer of 150 K on a home in LaGrange but someone already got it before us.

Hopefully I will find something in this Chicago market. I'm a newbie and a little afraid of getting a bad deal so that makes it harder. I have 200 K cash and good credit for a loan if needed but just don't know how to find the right deal.

What kind of CAP Rate should I be looking for that is reasonable in that case?

Hello,

I've reviewed the deal analysis page and read through the article shown here multiple times:
http://www.biggerpockets.com/renewsblog/2010/06/30/introduction-to-real-estate-analysis-investing/

1. It is known that 50% of the gross rents will go to expenses. Therefore NOI is usually about half of the gross income.
2. Cap Rate = NOI/Purchase Price and you want to aim for 10%.

Therefore, to get an idea of whether a place is priced right you can multiply the gross rent by 50 and that number should be in the range of the purchase price.

If all this is true, I'm having a very hard time finding properties that fit the above rules or even come close.

I'm looking in Chicago. I am looking to live in one unit and rent out the other/others, however, I'm looking at the price as if I was going to rent out the whole thing. As I'm looking at prices of properties I like, they are nowhere near making the above rules.

So my question is whether the above is realistic for Chicago and if it is am I just better off getting a single family home?

For example, a couple of places I saw that have rental income of $3500 are priced at $400,000. According to the rules mentioned above, this place would have to be in the region of $175,000 for a 10% cap rate to make sense. Is this correct or am I not understanding it?

Thank you for any help to my basic questions and apologies in advance as I'm new at this.

Uwe S. what is the address of this property?

How do you search for these listings? I've been using Zillow and Trulia and just look for the listings in the area. Is there a better way to do it?

Thanks for all your replies. I am no longer interested in this property based on the feedback. I'm going to keep looking and post when I find something with a better Cap Rate.

I am looking in Chicago though and a few select suburbs and haven't been seeing great deals.

Hi Everyone,

I have gotten a lot of great information from this site and am currently looking for a property in Chicago. My wife's parents have several properties and have suggested that we look into buying theirs. Now I trust them but I also know that they will try to sell it to us to get it off their plate too.

The property in question is 5 units. 4 are 2/1 and 1 is 1/1. The property is in Oak Lawn, IL.

Here are the numbers:

Purchase Price: $500,000. They bought it for $690,000 in 2005.
Rents: $1k for the two beds and $820 for the 1 bed = $4820 gross rents
Property tax in cook (crook) county - $13,851
I will manage it (no property manager)

I inputted the numbers into the SFH Rental Analysis spreadsheet that is provided in the deal analysis forum.

Assuming expenses will be 54% of the gross rent, the NOI is $26,300.
I will put 20% down for 30 years assuming a rate of 3.8% interest so the mortgage will be $1865 / month.

Total cash flow will be about $4000 per year. This is about 3.2% cash ROI.

This is no good correct? From what I've been reading people are finding much better deals. This building is in good shape and is currently fully rented out but is this a good deal?