All Forum Posts by: Sean McKee

@Julie Batt- I paid total 1700, however the case was dismissed when the tenant moved out.

I think your property manager is referring to a forcible entry and detainer. You are going for straight possession of unit and not seeking money. I think it’s faster if you can’t locate the tenant to serve them. I could be wrong on that though. You should ask them what they mean.

If you have the tenants full name, Date of birth, and address (pretty sure you can use your property), you can report them more than likely. The social security number only helps further identify them. I’ve done it without a social.

I hope your current occupants decide to jump ship as well, now that the eviction ban has ended.

@Brian Walters- I only use methods like this when I want to make an offer quickly and don't have the time to do a full breakdown. I verify these numbers during the inspection phase to make sure they are accurate. I will also use them if I am just browsing through properties and want to make high level estimates. There are too many variables to rely on quick forms of estimating.

I would read a few books on estimating repair costs. Also hire a general contractor to give you an estimate when you do find a property you are interested in. It is very easy to underestimate repair costs. 

@Henry Lazerow- I certainly hope this goes nowhere. It seems to be more an anti-gauging legislation than anything else.  However if you increase rents 20% or more, the legislation wants you to pay relocation assistance.  I'm not a lawyer but  I think the fact that it doesn't prevent you from charging whatever you want is the way they are trying to get around rent control. Portland did a similar thing before the state passed rent stabilization laws.

@Connor O'Brien- I didn't read the document in detail, I actually didn't see the pre-qualification part. They are definitely trying to make it harder to screen out people.

@Jason DeVelvis- I currently use NestEgg and just recently signed up for their premium version that includes a dedicated property manager. It's 29 a month per unit. I had been using virtual assistants before, but once I saw they had property management feature, I switched over. 

The free version is pretty good. There's a portal that tenants can directly request maintenance. You have the option to use their contractors or your own(they will still coordinate with them). They will coordinate with tenant. They also offer leasing services, insurances, rent collection, and a few other things. Essentially they are working to become a one-stop shop.

The property management feature assigns you a rental manager. They can take calls, text messages, emails, etc. They can handle lease generation, attorney referral, etc. They however are not a traditional property manager. They are 100% virtual and do not actually sign anything in your name. There is no commitment, you can cancel at anytime. They are virtual assistant that specializes in property management. I have a good lockbox system in place, so building access it not an issue.

Companies like NestEgg definitely have the potential to put some of the lower caliber property managers that serve small landlords out of business. NestEgg has some areas it needs to develop more. The app itself is very glitchy, so I prefer to use the site. The rent collection feature makes it hard to track when rent will be deposited (ACHs take 5 to 8 days) and the accounting/reporting system is not very useful. Despite all of this, they have been a very helpful tool to have. They are a growing tech company and I suspect they will continue to improve.

Hello BP,

This post is mainly for my fellow Chicago investors.  I've heard about a just cause ordinance that is being proposed.  I took a very high level look at it and the proposal is quite ridiculous. For example, the landlord would have to pay up to 5 times the median rent if terminating without a just cause. The median rent would be set by the city. Yet the landlord can still increase rents up to 19% a year and not pay anything. So I'm not sure what this ordinance would accomplish, other than slowing down the inevitable and causing more headaches for landlords.

Has anyone heard any updates about this?  Is this likely to pass? With all the recent changes to the housing laws in Cook County, it would not shock me.

@Cristal A.- Everyone pretty much summed it up. 60 AMPs is not adequate for modern homes. From the photo you sent you have some old wiring. I've dealt with outdated electric a decent number of times.  All it takes is one outlet to go bad and then all the lights on that circuit start to flicker. You will go to try and replace the outlet and the cloth is all burned. At that point, you need to just rewire the unit. The problem with the outdated electric is it can be fine for years without any problems and then suddenly it goes bad.

 If you do have to do a full blown rewire/remodel, that will be hard to do with a tenant in there. It can be a very messy job and will probably upset your tenant. If you are legitimately going to bring everything up to current code and possibly do other remodel work, you might have a case for nonrenewal to make the required repairs. I'd contact a lawyer and make sure you actually do all the required work. If you just end the lease and rent it again without doing repairs, then it will more than likely be considered retaliatory.  

@Rob Hayes

Please see link.

https://www.illinois.gov/gover...

“Executive Order 2021-13 (Residential eviction moratorium):

Sections 1, 4, 5, 7, and 8 Executive Order 2021-13, as amended by Executive Order 2021-14 and Executive Order 2021-19, are re-issued and extended through October 3, 2021, whereafter Executive Order 2021-13 shall be rescinded.”

It probably hasn’t fed through the media yet. Hopefully it really is the last extension.

@Wesley Rugg- I wouldn't go over 80% ARV- Total rehab costs(repairs, holding, etc) if you are doing rehab to rent project. If it needs as much work as you say it does, paying 95K will mean your essentially buying it a full value when factoring in the repairs. Your initial offer price was not a bad starting place. They don't seem motivated enough and 95k is too much to pay in my opinion.

@Trevor Bond- It depends on the situation. If they are month to month, you probably don't want the entire building to go vacant at once (loss rents, increased security cost). If they have yearly leases, yes I would let them know ahead of time.

Stuff can get very dicey when buying distressed properties with tenants living there. I actually had a near disaster. One of the tenants had a "gas leak" a few days after closing and got "sick", so they weren't going to pay. Then another on the same building refused entry and refused to pay rent. This was during COVID moratorium, so with advice/help from my lawyer, I ended up paying a total of 5k for them to leave in two weeks. I budgeted around 2,200, so this was definitely not ideal, but that's the risk you take with these kinds of buildings sometimes. I doubt you will have pay this much, if anything, as you are in a landlord friendly state and the moratorium has ended. 

If they still have 6 months left on leases when you take over a building, that is plenty of notice. The best way in my opinion is to be real with them and let them know the building needs a lot of work to bring it back to standard. They likely already know this and will likely accept it and move off. 

If you plan on buying a distressed building with tenants on it, I would just make sure you factor in the potential for issues in your purchase price. With good interpersonal skills and the preparedness to take action should stuff go wrong (cash for keys/eviction), you should avoid any kind major disaster.

@Trevor Bond I have done this a couple times. I think it will be unlikely you'll have perfect tenants if it is a serious rehab. Usually there is always one bad one if the properties weren't maintained. 

If you were truly to get perfect tenants and they were fine with paying market rents with improvements done, a lot would depend on what kinds of improvements you are making. If you are having to do serious electric , plumbing, HVAC, or layout changes, it probably won't work out well.  If it it's more surface work, like painting, light fixtures, new cabinets, etc, you could likely accomplish it.

The more likely scenario is that you have one really bad unit that you can start on either through terminating the lease or offering the tenants some kind of move off incentive. You can then fix this unit and any exterior/common area work. You can let the remaining tenants know you plan on increasing rents and offer one of them the updated unit for higher rent. If they accept it, you can rotate them into the updated unit, and fix their old unit.

I've never had this happen, once you mention all the repairs you have to do and the rent increase, they will likely move out on their own within a few months. I've only had one person stay.  They were already paying market rent and had a year lease. I had to re-pipe their bathroom as part of broader building update. They were a constant headache despite complaining their bathroom never worked.

Lastly, a lot will depend on if they have formal year leases or just verbal month to month. If they are month to month, then you can proceed with terminating the leases if you wish. If they have year leases, you'll have to abide by the terms.