All Forum Posts by: Ruthvik B.

@Wendell De Guzman Just go done reading through the entire thread.. lots of valuable information. Thanks for posting! And I hope to continue to follow your success in the future.

@Mike H. Thanks for your insight on strategy. For this particular example, I don't expect to gain too much immediate equity after doing the rehab. It's more so to get higher rents which I believe will offset the rehab costs. I can rent it as is but the rents would just be lower and so would the ROI. When you gain the equity in your homes, are you looking to do a HELOC or do you sell in short term?

I had never considered the appreciation rate too much as I know these areas are historically strong and there will always be renters. In the case that you mentioned I would probably be looking to do a flip on the property.

That being said I believe the value of the property will be rising in the next few years so that was the qualification for me.

I would be interested to hear from someone who purchased a condo in one of these areas recently and how the numbers looked on the deal.

@Crystal Smith Thanks! That is definitely the way I believe I should go about this.

@Wendell De Guzman Thanks for that analyzer, I threw in an additional 5% each for both reserves and expenses. I agree that they can occasionally come up. That took the ROI down to 7.5%.

So I guess the real question I should be asking is if other investors who are targeting these same areas are consistently finding deals that give higher returns than 7% or if this would be considered good?

Thanks everyone, I'll definitely read up as much as I can. In just the past week I've already picked up a ton of knowledge on how to approach real estate investing.

I've been reading through a few posts here and got mixed feedback about condo rentals.

I'm currently focusing on doing condo buy and holds in the most popular neighborhoods in Chicago (Gold Coast, Old Town, Lincoln Park, Lakeview). I'm willing to take the trade off of lower returns for the reduced risk where I know there will always be rental demand and typically the type of renter is better as well. Vacancy rates for the entire neighborhood are less than 5%. The condos themselves are high rises with full amenity (24hr security, gym, pool, etc).

I was wondering how much people adjust their ROI, Cap rate targets for these types of deals?

The current deal I'm looking at is as follows:

Sale price: ~$125k

Down Payment (25%): $30k

Closing Fees: ~$5k

Rehab: $20k

Rent: $1500/mo

P&I: ~$450/mo

Taxes/Ins/HOA/Vac: ~$550/mo

Monthly Cash Flow comes out to +$500/mo. ROI about 10-11% but the cap rate is a little on the lower side around 7-8%. This is with self management which I also think is a little easier with these types of condos.

For investors who go for this niche of the market, based on the cash flow alone would you go for this type of deal and how would you rate it? For buy and hold, is the cash flow more important than cap rate?

@Brie Schmidt You mentioned you do a open house.. in the case that the apartment is occupied by a tenant at the time, are you able to just get their permission to step out during the time? How much time in advance of the lease expiration do people usually first list their rentals?

I have normally been going with an agent just for convenience and it seems to indeed bring high quality and serious applicants.

@Steve B. Thanks! I'll have to check out the Chicago REIA.

@Jaime Frausto My goal is 10%. Currently, one is a little above and one is a little below. But I was only calculating based on my actual expense costs so it does not take into account things like 10% vacancy factor, 10% management, etc.. With those factored in though, I think it's very hard to achieve 10% from what I've seen, but I could be wrong.

@Sam Sav Welcome. Good to see other young members nearby on here endeavoring in real estate.

Thanks for the welcome everyone. @Brie Schmidt I'm actually not in town at the moment, but I'll definitely let you know when I can attend.

@Jennifer Kinzle Elgin is definitely a place I would look into doing flips.

Hello everyone! My name is Ruthvik. Just came across BP and imagine it's going to be very helpful being in the real estate business.

Just a quick background.. 25 years old, doing engineering in the corporate world, but want to eventually move full time into real estate investing. I currently have two rentals in the northside of Chicago which are doing pretty well and will hopefully be able to slowly expand that.

My goals is to now start getting into house flipping to gain some capital to buy more rentals to eventually replace my current income which will give me the confidence to move full time into real estate. This is going to be hard at the moment as I travel 100% for work all over the world so managing a rehab from China is not so easy.

Hopefully I can meet up with some of the local members whenever I'm in town.