All Forum Posts by: Raymond Yeung

Agreed with Mike D'Arrigo. Bay Area prices are high and per the thread name, a 'turn-key' concept in the Bay Area approach is not likely (I could be wrong) viable at the present moment. 

Ray's my name, drug dealing's (legally) my game

Hello BP Family,

A few partners and I are planning on buying several cash-flowing units in Chicago (we are going to start with 4 together), but we currently reside in California and New York. Under our cursory research, we've determined that different states come with greatly varying degrees of cost, as well as provide differing levels of asset protection. Does anyone have advice on how to form an LLC (we've currently ruled out the idea of an S-Corp run LLC as we are more passive than active investors at this time) if we want to invest in Chicago? Should we hold the LLC in Chicago or pay expensive out-of-state states to hold the LLC elsewhere with greater levels of protection? Referrals to an expert tax advisor who may be helpful will be greatly appreciated as well. Thanks in advance!

@John Casmon

Thanks to everyone for weighing in with your experience and expertise!

None of the work is guaranteed...There are also no before/after work descriptions (although I was able to acquire some before and after pictures-- from what I can see, the rehabbed property does look good though).

The e-mail was sent from the primary point of contact of the turn-key property and I agree, he's a little rough around the edges and isn't the most pleasant to deal with... But admittedly, I've been asking him numerous question after question. I've been told by a friend who has plenty of experience with this company (and he's been doing well making positive cash-flow) that it's a seller's market for the turn-key companies and they basically have a low level of tolerance for hand holding...

@Gautam Venkatesan

Although they are making no warranties of anything, they do have an in-house property management company overseeing the property for me. I haven't seen the property myself except in pictures from the appraiser, and provided from the seller, so I'm hoping the property inspector will help me be my set of eyes and help me perform my due diligence. Because I am an out-of-state investor, I haven't actually met anyone on the seller side..

@Account Closed

What would you suggest to ensure seller follow-through and that they stand by their product?

@George P.

Just curious-- How much does it cost for permits to be pulled?

Hey Mike! Thanks for your prompt and detailed response. Love the BP community and how everyone looks out for each other! The work on my prospective property has already been completed, and I've already gotten lender approval, and the appraisal has been done. The next step for me is to perform a property inspection. After contacting some property inspectors, one of them mentioned to me that the permits/plans were not available for the renovations which made me a little uneasy, but then again this is my very very first investment property and I have little knowledge about how turn-key's work in regards to permitting...

Here's another e-mail from the seller about this topic:

"We don’t always pull permits or plans if there are no City Violations otherwise it drags out the project for 4 months, with inspections etc. if the property has previous code violations or failed inspections or conservatory complaints then we pull them. Otherwise, it takes a long long time and if we did that for every project we wouldn’t be able to complete our rehabs for 8 months. The work is done correctly and up to City of Chicago Code."

Also, here's what I found on the public records via the City of Chicago site:

http://webapps.cityofchicago.org/buildingpermit/search/extendedapplicationstatus.htm?permitNumber=100506218

and

http://webapps.cityofchicago.org/buildingpermit/search/extendedapplicationstatus.htm?permitNumber=100507071

Would you buy an investment property with this information, knowing it might not be properly permitted?

Thanks!!!

I'm looking into purchasing my very first turn-key investment property in Chicago with a company called Profit From Rentals. Does anyone here have any prior experience buying investment properties from this company?

I was looking into hiring a property inspector and one of the inspectors mentioned that my property doesn't have plans/permits for the rehab work that they did on the flip.... Here's the seller's response when I asked about permits and plans:

"It takes two days pull a repair and replace permit. I have rehabbed hundreds or buildings and we don't always pull them for every job. I hope you understand this. There is no way for the city to determine if the work is done by us or someone 10 years ago, etc.... The only thing you will need To worry about is if the property is stopped by a city inspector during the rehab process and issues a stop work order because we didn't pull permits. It is VERY common for 70% or more of rehabs to be done without permits. If you aren't comfortable then let's not proceed forward. Every email you sends indicates fear or uncertainty as well as sprinkles of skepticism, you have asked more questions than any other buyer we have had. I say this genuinely, so don't take this the wrong way, but I would rather not take you on as a client if this how the process is going to be once we close escrow. If you do not trust us as the operator I don't want to proceed forward.

I would rather save us both the trouble and kill the deal now. I already feel like the inspection process is going to make you feel uncomfortable when the results come back and there will be a lot of items we simply won't fix unless you want to pay for them. I will fix the items we feel are important to your long-term success and ensuring the building can last through the duration of your investment life. We know what we are doing, I will leave it at that."

For those who have purchased turn-key properties before, is it normal to have no plans/permits? Would this also put me at risk in case the tenant finds me in a lawsuit and then it's revealed that the work done on my property isn't permitted? I would greatly appreciate any and all input on the company (Profit From Rentals) and the necessity of plans/permits. Thanks in advance for your help!

Depending on the time and date, I might be interested in tagging along :)