All Forum Posts by: Roseann Koefoed

I'm an experienced workforce housing owner and operator. I'm under LOI to acquire my first LIHTC property (107 units in semi-rural south Chicago suburb) and am moving fast and furious to get up to speed on all things LIHTC. I have 17 years of corporate RE and compliance experience, so the LIHTC reporting and annual financial audit does not scare me. Not understanding how and when I can raise rents and other operational restrictions is what scares me.

This property is in the Extended Use Period though mid-2026.  With a 3-year decontrol period, I could transition the property to full market rate by mid-2029. It has IHDA soft loans in place that I may assume at acquisition.

I'd love to talk to anyone with LIHTC experience in Illinois.  I need to find and engage both a lawyer and LIHTC financial consultant in the couple weeks.

Specific questions I need help with right now:

1.  If I assume the IHDA soft loans, am I subject to the additional "HOME" compliance requirements?

2. Can IHDA ever stop me from raising rents to the LIHTC or HUD maximums? Does Illinois have % increase limitations?

3.  Should I assume the in-place IHDA loan at acquisition or close with a conventional loan and try to get IHDA loans/grants/credits later if/when I decide to keep affordable?  I'm still trying to figure out the best strategy - keep affordable or transition to market rate.  It's amazing as a market rate deal but I also want to explore the affordable opportunity.  I just don't know enough to underwrite that option.

Appreciate any advice!!  This community has been so helpful in helping me grow my portfolio.

I'm very interested in buying an independent senior-living LIHTC property next to a 24-unit investment I already own.  I want to assume the in-place LIHTC loans, but I need either Mezz Debt or Preferred Equity to cover the cap between the in-place loans and the equity I can invest.  The property will graduate from the LIHTC program by mid-2027, at which time I can take the deal to market and refinance the whole thing.

Help me make this happen!

Thanks for that feedback.  The GC fee is 5% of hard costs.  I underwrote multiple scenarios and am comfortable with the economics since he's doing all the day-to-day.  I'm the money on the deal and have approval rights (including ability to remove GC if things don't go well).  I also control the bank account so I see every check that gets cut and every debit card purchase.  

I should add that I have a history with this GC.  I own a couple Chicago MF that he did gut-rehabs on and his team still manages them for me. So I've known him for years and have a high amount trust in him.  I also believe things will go best if he's economically aligned with me.  When I was looking for more MF, he pitched the ground-up construction idea because I couldn't find any MF that I liked.  In short, I wouldn't be doing this without him.

However, your comment did register with me as I should have researched more about what is industry standard before getting started.

Thank you all for your responses.  The more I think about it, the more I realize that a Solo 401k is probably not an option for me because I will not have self-employment income.  I don't pay myself an investment management or property management fee from my properties because I wholly own them.  All my money comes from the properties' cash flow.  And my intention is to make one larger investment each year, do a cost-seg, and thereby reduce my income and tax for the year to zero.

Based on this, I would qualify for a SEP IRA or SDIRA (are they the same thing?), but not a Solo 401k, correct? I already act as a lender for a friend who flips properties (I've bought a couple deals from him). So I'm thinking that I can create a SEP IRA and use it to loan to my friend instead of using my personal equity. I would like to roll both regular and ROTH 401k money into this account. But to keep it cleaner, I'd prefer that it's 100% ROTH. So if I convert the regular 401k money to ROTH at the conversion and "pay taxes now" on that converted amount - is it possible that the taxed owed is zero if I'm converting in a future year when I have no corporate income (and my RE income is zero net of depreciation)? Or is there some level of penalty or minimum tax paid when you convert from regular 401k/IRA to ROTH?

I always use leverage when I invest, so it sounds like investing directly in RE with the SEP IRA would not work for me because of the UBIT.

I realize I'm really getting in the weeds here but appreciate the help!  If you sent me a PM, I will try to call you!

I have a cash flowing MF portfolio (about 80 units) and I will be leaving my corporate job soon to 1) be a better Mom to my kids and 2) focus on growing my RE portfolio.  My husband and I each have about $500k in retirement savings (401ks, IRÁ, ROTH).  

Since I will be leaving my corporate job and effectively self-employed as I manage most of my MF portfolio, can I roll my retirement savings into a Solo 401k and invest in RE with the money?

I understand that any RE earnings would have to stay in the account until I retire.  But I wanted to buy 1-2 short term rentals with the money.  STRs that I could use for personal use (family vacations) once or twice a year.  Can I do that without violating any rules?

If my husband (who has a brokers license on the side of his day job) were to broker the RE transaction my Solo 401k purchases, can he take that commission without violating any rules?

So many questions.  Help me!

Thanks everyone for the feedback!  My GC is my partner on the deal, he gets 25% of the upside plus his GC fee and I'm 75% of upside.  GC will also co-guarantee the loan with me so he's invested and financially at risk.

We have a couple hard money quotes at this point, but are really focused on using a local bank for better terms.  I've contacted LakeSide Bank and Wintrust so far.  Will also contact CIC.  Wish me luck!

I'm building a 3-flat in East Garfield Park, west side neighborhood of Chicago.  I own about 80 MF units, but this is my first ground up construction.  I have a partner who is the GC.  I've paid for the land, architect/permit fees, excavation and foundation out of pocket.  But I'm looking for a $500k loan to finish the project.

This will likely be the first of many.  About to go under contact on a second lot in the same area.  So looking for a lending partner that will help me grow as efficiently as possible.

Also would love to connect with anyone doing something similar or with any development wisdom to share.  Thank you!

I bought three 8-unit buildings in November.  Inspection revealed that one building had a cockroach problem that seemed fairly isolated to one unit where the tenant was really dirty.  Other tenants complained about seeing one here and there, but their units looked clean and they blamed the one dirty unit tenant.

I negotiated a credit from Seller and closed.  Immediately paid the dirty tenant to leave.  We gutted the unit and are doing a full cosmetic update.  But not going to lease it until cockroach issue is fully resolved.

 I've paid for a couple rounds of treatments from a specialist that owns his own company.  We cleared the building for six hours and fogged all units, put poison in every unit including inside walls and left all tenants with a do-it-yourself insecticide purchased off Amazon.

The specialist brought to my attention another unit that was pretty dirty.  They weren't the source of the problem, but he's a bit of a hoarder and there are too many places for the roaches to hide in his unit.  I'm also paying him to leave (he'll be out by 1/31).

I'm going to gut his unit as well and continue with the specialty treatments every 3 weeks or so.  

I should note this is a value-add project for me so I'm ok to spend money on cosmetic updates because it should merit a significant rent spread.

One positive is that the other six tenants have been very patient and have expressed gratitude that I'm trying to fix the problem.  But I don't think they will be so patient when I notice them in February of a rent increase effective 5/1!

Is there anything else that I should be doing that I'm not?  I'm pretty exhausted by all this and am looking for some assurance that I will be able to achieve resolution.  Have any of you successfully eradicated cockroaches?

I recommend Yardi Breeze.  It's a solid accounting system and can do the rent collection piece.  Unlike Appfolio that requires 100 units, you can roll out Yardi Breeze for $100/month or $1200/year with under 100 units.  They charge about $1 for each ACH rent payment as well, so later that cost in.  It can process applications (and you set the price so it can be a profit center) but we found that tenants prefer Zillow and it's faster, so we use Zillow for listing apartments and the application piece.  Sometimes I use FB Marketplace to list as well.  But Yardi can do the listing and application as well if you want it.

I like that I can also "publish" documents like the monthly tenant statement and lease to the tenant portal "Rent Cafe" as well.  Tenants can submit maintenance requests through Rent Cafe also.  This basic portal is included in the $1200 base price.

Yardi Voyager is the industry standard for commercial property.  So their Yardi Breeze product has a strong financial backing and they are always making improvements.

The dollar amounts I quoted above are based on my contract originated in Q4 2021.  Unsure if prices have changed since then.

I just purchased 24 units (three identical 8-unit buildings) that share a parking lot.  I've been at the property a lot in the last couple of weeks, and tenants are telling me that a group of teenagers will bust through the common entry doors and steal bikes and things in the hallway.  The evidence is there because the door frames and jambs are all busted.

I'd like to setup security cameras at the entry doors and also covering the parking lot.  I plan to get wi-fi in each building.  And I would also pay for the cameras to be wired in.

Let me know what security cameras or systems you recommend.  I want something that would make facial recognition easy.  I've heard Simply Safe advertise a lot on BP.  Would be curious to hear what people think of them.