All Forum Posts by: Andrew P.

Thanks everyone for all your responses. Great information and it helped me make more sense of what I need to do going forward. I am leaning towards a refi into a conventional and then a HELOC/HEL because I think I won't be able to get an appraisal from 95% LTV to 70% LTV in 1.5 year.

@Brie Schmidt

, thanks for the calculator, it's been helpful. I attended one of the Chicago meetups at Dino's about a year ago and enjoyed all the info. 

But would this mean I would still keep the FHA? I am really trying to drop the FHA on my current property so I can save on PMI and also be able to utilize FHA on another owner-occupied multi-unit.

Hey BP,

I've searched the forums and am still trying to figure a few things out regarding refinancing. I bought a multi-unit in Chicago, IL that I have lived in & rented out for what will be 2 years in April 2017. I put quite a bit of sweat equity and the neighborhood has seen a huge increase in property value. Because of this, I'd like to do the following:

1) Refinance out of my original, 5% down FHA loan into a conventional loan in order to drop PMI and be able to use FHA again for another multi-unit

2) Get an appraisal and (hopefully) pull out equity out of anything that passes the 80% LTV ratio (so I do not have to pay PMI).. Example, say I have 5% equity (based on original down payment) now...Pull only enough equity that will keep me at 80% LTV

3) Use said equity to purchase another property with FHA

A few questions I have are as follows...If I do a refinance and pull some cash out, can I "lock in" a rate and hold on to the equity I intend to pull and only pull the cash when I have a property lined up or do I have to pull the money right away, meaning I will be paying interest on that right away. So say I pull out 20k, can I tell the bank to hold onto it and only really pull it out when I am ready to buy a new place. Also, if I have 1.5 years, will a mortgage broker be able to use my rental income to help me out. Finally, anyone know a mortgage broker here in the Chicago area willing to do this. 

Thanks all

Thanks everyone for the advice! Going on into the 2nd month and everything has been going smooth. Probably put in a total of $1,500 after paint and some superficial fixups. Congrats @DavidReal for the deal. I'm not sure how that works out with insurance claims but it's a good question. The only thing I know is that I am not allowed to legally rent out my apartment because it doesn't meet the code for the city ceiling height. I think it'd be too expensive to dig it up and meet that requirement so I was thinking of possibly duplexing down from the 1st floor, depending on total cost and how much it would raise rent. For now, I'm happy to be living rent free, making close to $700 in cash after mortgage, taxes, and insurance, and build equity. Hoping to contest the city this year on taxes and knock out 1k a year off because of some mistakes in their assessments. 

Also, I plan to contest my taxes because the valuation was too high for my closing/comps in the neighborhood. That will reduce it by hopefully $100/month.

@NickPatterson Thanks for the advice Nick. I was wondering if I tell them I am not the owner, are they able to find any information online that shows otherwise?

@MichaelWorley I'm hoping to reduce vacancies by maintain the property. I was thinking of raising rent $25 a year but offering an improvement (new fridge, oven, etc...they are old and need to be replaced anyways so may as well use it as an incentive)

@EricHDScmitt This unit is "technically" an illegal unit so I could not legally rent it out when I move, although I've tossed around the idea of duplexing down from 1st floor OR meeting minimum ceiling an making it its own unit, but all that depends on cost benefit. It's tough to find a go CAP rate/returns in Chicago but I'm glad I have a property in a neighborhood where housing values/rental prices are appreciating faster than the rest of the city. I'm hoping to refinance in 2 years from FHA to conventional so I can drop the $`130/month PMI.

Out of curiosity, what is considered low/average/good cash flow per unit?

Hello all,

Long time reader 1st time poster. This site has helped me immensely. After a year of looking, I closed on a 2 unit (2 bed, 1 bath each) property on 4/16 and just finished slight rehab and I now have both units rented starting on 5/1. I really feel I got a great deal and I am in an up and coming neighborhood of Chicago (Western area of Logan Square). On top of the cashflow from the 2 units, there is a finished, 3 bedroom basement I will be living in so free rent, just utilities! For the sake of this analysis, however, I only included the 2 units. FYI, there is potential to make another $100 a month in parking if I rent them out. Critique my deal (or lack of one). I look forward to hearing from everyone. Please disregard the ARV, as I put that in there think of the value in a few years when I'm done rehabbing.