All Forum Posts by: Sam Kwak

@Jay Hinrichs yup! I'm not very confrontational and aggressive to be able to yell and scream at people. Only when I turn angry and green.. maybe I will. I wouldn't mind sacrificing 8-10% of my gross rent and a month of gross rent when turning over a unit because I can usually spend the time that I would have managing at either doing more deals and expanding my business based on what I'm good at. Not fussing over the skills I lack. 

@Costin I., Yup! 100% Agreed. I follow a relatively the same model. I usually lump capital improvements and repairs into one category and call it 10-15%. But I think we're on the same boat here.

@Jeff Schechter Awesome, thanks for clarifying your position. I've seen ALOT of TK firms charge a greater amount. Don't get me wrong here. As far as value, TKs do add value in that way that I don't have to jump through those hoops and expense my own time and money to do all those things. Not all TK firms have the same level of operations as you do. 

@John Clark Nicely said! Thanks for your input!

@Andrew Frowiss, are you sure we aren't twins? You nailed it! haha

Last month or so, the conversation for Rent Control has been on the table for the State Government. I believe I signed an opposition statement voting against the Rent Control Ban Lift. My brother and I seen a news article on WTTW about this again. 

What do you guys think of this? Anything that you guys know specifically about this?

I personally think that Rent Control will literally kill the city's rental market as well as force investors to look elsewhere thanks to the fact that Chicago is already a challenging place to be a landlord. 

@Steve Vaughan, Understanding that you're in a Deed of Trust/Non-judiciary state, this may be different and as you know, attorneys would prescribe different methods of doing this.

But the whole reason why a Warranty Deed was not given by the seller is due to the fact that doing this way will defer the taxes that the seller had to pay. Such as Capital Gains. The seller would have had a huge capital gains bill. After consulting with an Accountant and our attorney, the best thing for the seller to do was the keep the Warrany Deed on an escrow until we (a) pay off the seller completely or early (b) financing the remaining balance out through a bank. If the deed was transferred, the seller may had to pay the capital gains all up front. Plus, it gave security to the seller knowing that if and when we default, the seller wouldn't have to "pull a tooth" to get the deed back. 

The contract stipulates basically everything as far as keeping the title clean or otherwise we can sue for performance. It also stipulates code violations, the terms for early payments, what constitutes default, etc. I can send you a copy of our contract template if you'd like to see what's on there. 

When we do go get financing on this from a bank or another formal institution, it's actually considered a purchase loan but... by the time we do this, we may only need to do 45-55% LTV since we paid the majority off through the installments. As you can imagine, banks would see this as a less risk profile in terms of underwriting.

@Jeff Schechter, Not many individuals getting started have the Economy of Scale as you do Jeff nor are they going to have the experience and the business system to absorb the cost . But you just proved my point... You told us that you give a warranty on your property and had  to get it inspected by a 3rd party inspector which I imagine there's a cost involved in that. "All Work is done to high standards" also sounds like a cost to time and money no matter how you look at it. So it sounds like you have built in the cost of doing all the upfront work for the Turn-Key investors buyers and impeded the cost. otherwise how are you making your margins? Let's say you didn't do all that and you didn't hire an inspector, the high-end rehab, etc... Are you gonna price it the same as you would to your Turn Key properties? 

Hey @Brandon Sturgill, we're going to go back and fill in the details but to answer your question. We did Contract-For-Deed acquisition on this (installment contract) for $170,000 down, 20 year amortization, 4% interest with a 10 year balloon but the seller has the option to continue riding on the payment instead of ballooning it. We actually found this because it was listed and there were other offers on it but we showed the seller how owner financing can help them with deferring their capital gains taxes.

Investment Info:

Large multi-family (5+ units) buy & hold investment in Aurora.

Purchase price: $1,500,000
Cash invested: $170,000

24 Unit Apartment Complex using Owner Financing Acquisitions.