All Forum Posts by: Ryan Monty

Great post. I'm personally in a similar phase where I'm ramping up to my first deal, and was trying to decide whether or not a house hack must be the first deal I make since I am BRRRR-focused and so will need to continue to make multiple purchases and need to preserve capital for that. I have found properties where the numbers work to accomplish "living for free", though I'd have to move to the more outer-lying areas of the northside to accomplish this. If I want to live where I prefer (which includes many of the areas you specifically mentioned), the numbers change quite a bit to the point where my goal would be to just match the current rent I'm paying (which is under $1400/month in a building I don't own).

So the goal from that perspective would be to just improve my situation where at least after a house hack that $1400 would be paying down my own mortgage instead of someone else's with a chance of some appreciation thrown in and tax benefits over time.  Though I am wary to buy at this exact moment as there is a glut of inventory expected to flood the market once covid is "over" which will put downward pressure on prices.  Depending on who you listen to there may also be a wave of foreclosures on the horizon, so I'm being wary of that too (on the opportunities side) 

@Alex Martinez - +1! I wanted to ask the same clarifying questions you posed, and my understanding was also the same in regards to "It seems legal nonconforming means a unit was established in accordance with zoning code effective at the time it was built but is not in accordance with the current zoning code (i.e. legal unit that was grandfathered in)", but I am not very confident in that assessment.  

@John Warren @Jonathan Klemm - I want to reframe Alex's question a little differently as well:  is the main difference between a non-conforming illegal vs. legal unit that one was created originally with the proper permits pulled and one was not?  

Scenario A:  a building was zoned in a such a way originally that allowed the conversion of an extra garden unit.  At that time in the past, the owner applied for the permits to finish a basement and use it for extra income (with separate utilities hookups, etc.).  Years later, the zoning was changed but since it was done legally to begin with, it's 'grandfathered in' and marked now as 'non-conforming' yet legal?

Scenario B:  same situation as above, but this time the owner did not pull permits.  Same building, same construction, same owner, same code changes, only difference was the owner was too lazy to get the permits.  Now I want to buy this building.  I must somehow find out if permits were originally pulled because if not, it's now non-conforming and illegal unit, no?

@Jonathan Klemm - you said everyone has illegal units and I have certainly seen that written elsewhere many places too.  So it's not really that risky for me to go into a property with an unfinished basement (within Chicago limits) and do the conversion without permits?  Also, how can you tell if a property's zoning may even just allow legally finishing the basement or not?  Better to do it the right way if you can, I'd think.  When I look at the zoning map at areas I know are littered with 2 and 3 flats, almost everything is RS-3

Specifically in Chicago, any advice on which types of rehab elements an investor in multi-family properties should focus on or give more weight to when deciding how to rehab a multi-family property?  For example, in some parts of the country you might simply focus on adding square footage wherever possible.  Should I be focusing on adding bedrooms for example?  Hardwood floors?  Premium kitchen upgrades?  

On a related note, I'm still trying to wrap my head around the whole garden unit topic, which as a newbie I find extraordinarily confusing, especially since it seems to have the power to make or break cash flow. Conforming/non-conforming, legal/illegal.... I believe I've heard non-conforming can't be used for appraisal value, so does that mean I should analyze a garden unit differently when doing my numbers? Since I am cash-flow/BRRRR-minded, spending the extra money to convert an unfinished basement into an extra rental unit seems like maximum value vs. dollars invested for cash flow purposes, yet it seems like I'd need to consider that as sunk costs for the BRRRR side of the equation since (if I'm understanding it correctly), performing that basement upgrade would not add any appraisal value. Am I correct in my thinking here?