All Forum Posts by: Nnabuenyi Anigbogu

I agree with John. If you look at it as recovering all the cash that you put in then i have yet to turn a profit this year. I started with buy and hold rentals and put 20% down so it will take some time to recover that. however the cashflow has been great and the building has appreciated. If i sold today i would realize a profit even after realtor costs. 

Next year i will recover all my invested cash plus more because i have 3 flips that will sell in springtime. So it all depends on your strategy.

@Mark Creason It is a block to block deal in Albany park but with a lot of gentrification going on. The closer to the brown line the better also. A lot of the prospective tenants that i am getting in my current building are coming from lincoln square. They are getting priced out due to the rents craziness there. It works great for me.

The prospective building is brick. I prefer that to frame although i will buy frame if the deal is good.

By the way i went to Gordon tech for a semester before my family moved to Oak Park. That area is growing a lot. I wish i owned some buildings in that area.

@Frank S.

I actually toured 3229 Berteau yesterday. It is actually not a bad deal for Albany park. I looked at the rent comps and the average rent for a 2 bed for that area is between $1200 and $1300. The previous owner has owned it for 20+ years and hasn't pushed rent up. It is already hardwood and does not need much updating. Roof is 2.5 yrs old and water heater is 2 years old.  The only caveat is that basement unit issue. The basement unit is pretty nice and can get 900 (2bd) which puts you at 3300 - 3700 a month. For an owner occupant it is actually not a bad deal especially if you live in the basement. For Albany park it is definitely worth considering given the gentrification. And you get a good chance at appreciation. 

I usually try to do value add scenarios and not go with what the current owner is getting in terms of rents. I use what the rent averages and comps are for the area.

I.E when i bought my four unit the rents were 600, 720, 800, ownr for a 1bd, 1bd, 2bd, 4bd respectively. It would have been a horrible deal if i used those numbers for a 495K purchase. However 2 months after buying my rents are 900, 1200, ownr, 1950 (i rented out the owner unit and moved into a smaller unit) in that same order. Now i make 4050 a month before expenses of 2500 (PITI) which gives me 1550 extra that goes towards vacancy, reserves and maintenance. I can tell you that i do not spend all 1550 every month on the building. however i just leave it in the bank as reserves. So i live for free and have some cashflow. When i move out i can get 900-1000 for the unit i live in and then cash flow goes up considerably.

So dont dismiss it out of hand. If you look to value add and push rents to market via small updates you can make a deal out of places like Berteau. especially for owner occupants.

I have to say after reading the thread I am coming away with a more negative opinion of the company in question. Now i dont think they are a bad company, on the contrary they seems to be prety good based on the opinions of others on here, but the way this client was treated and responded to on here did leave a bad taste in my mouth.

 @Ryan Mullin I have private investors who are brand new to real estate that are investing in my flips. One of the investors on a flip only invested about $4000 to start with`(started small) which represents about 1% of the the entire flip. However, he has the most questions and is the most nitpicky about everything. He actually has no say in how the flip goes but he bothers me asking for info all the time. It is probably more trouble than its worth to placate him giving how small his investment is. But i answer every question because small investors turn into bigger ones. Clients/investors refer others and talk about your business. There are times you should divorce yourself from a client/investor but it must be done in a more diplomatic way. 

Also first time client/investors tend to be more neurotic and nitpicky because they are dealing with a product they dont fully understand. I was that way when i first started and you probably were too. I guarantee you that this is not the last time you will deal with this given the turnkey type of business you operate and the cheaper asset class. The OP might or might not be wrong but as the business owner i would expect better handling of the situation especially since it seems you/your contractor had a hand in escalating the situation both in actuality and also here in the forums.

This is just my opinion and im sure your company will go on doing well. I hope this is just a faux pas that will pass.

@Frank S. Thank you. I haven't closed on the deal yet and there are plenty of steps till then.

I will find out more about the potential capex once i can conduct a thorough inspection with my inspector.

As for taxes i will have a homeowners exemption so that will help. however i forgot to account for the upcoming chicago tax increases which could reduce the projected cash flows. For insurance, it can vary quite a bit. However the rate i am using is based on having a multipolicy discount. For my current 4 unit i was quoted 2300 initially but was able to get 1200 from the same company by switching my car insurance to them.

Horner park is quite a bit east of where i operate and is closer to ravenswood which is a higher cost area. Its crazy the difference in price a half mile can make when it comes to real estate.

The illegal basement is definitely a potential issue. However there prevalence in the city is so high that i not really worried about it and i plan to increase my reserve in case anything ever happens. For the first year i would be living in it myself so chances are slim of having issues.

I would love to talk sometime about the area. feel free to contact me anytime, maybe we can meet up if you live in the area. 

@May Aunaetitrakul Yeah it is move in ready. When i toured the place everything looked pretty good. Not muuh updating to be done. Obviously once i get a proper inspection i will know more in terms of age of the mechanicals and how good the roof is and other things. That could make the deal better or worse depending on how it pans out.

Hi All,

I have another 2flat + garden deal that i wanted to get some input on. I will be financing it with FHA and plan to live in it for the first year. I would like to refinance in about 6 months once i sell a couple of my flips to remove the annual MIP. I factored in management even though i plan to self manage for the next 3-5 years. It is in what i would call a A/A- area of Chicago in quickly gentrifying albany park. About a 5-10 min walk to the train line and 1 min walk to major street buses. Kicker is i own a 4 unit (current residence) directly behind it across the alley so i know the area well and it helps with self managing. All cash from the building stays in it as i dont currently need it to live. Me and my fiance both work full time and right now live on only half of my salary as it is (rest goes to house flips lol).

Let me know your thoughts/Critiques.Looking at it it is not a huge cashflow deal. I am essentially getting less than $100 a unit for a prime area where appreciation is rapidly happening and there is a chance i can sell in 5-10 years for a good amount. I am also pocketing the PM money for this time period so cashflow is higher. However when i refinance that takes off the approximately $280 in monthly PMI that will increase cashflow a good amount. Plus i do all of that with only 14K down with a 24% COC return after i move out.

Thank you

@Curt Davis As i understood it they are partnering 50/50 but he would be putting up all of the 20% down payment. He is looking for a way to charge her for her half of the DP.

@Benjamin Cowles One potential way you could do it is to write in the contract that you will take out your entire down payment first at the end prior to the both of you splitting the profits.

Since this is your first partnership, i would advice you pay an attorney to write up a contract based on the split amount you agree on. That will help control those potential situations you mentioned. I.E if one of you decide to back out you can have it set where they have to buy the other person out in some shape or form. 

there are countless ways to structure it and you just have to talk and come to an agreement.

If your father and friend are interested in investing then you can start there. If the purchase price of the deal is low enough it is possible that they can lend you enough to buy the whole deal. Since you can do the work yourself you dont need to worry as much about the rehab aspect. You can fund that yourself as you go since you have a longer term horizon. You can also do a combination of seller financing and private investment if the seller is motivated enough. You can use your dad and friends money for the downpayment.

However please ensure that the deal numbers make sense before even going down any financing road.

More specific information would help with providing advice.

Unfortunately they cannot. Anything that is 5 units or more falls into commercial category and requires a commercial loan. FHA or any conventional fannie or freddie backed loan will not give you money for those.