All Forum Posts by: Sean McKee

Thanks for the replies. To clarify I provided three comps. Two of them had violations on them. The appraiser used all three of them.  

It is unfortunate that they always seem to be too conservative.

Hello Everyone!

I just received an appraisal back on a cash out refinance loan.The amount is 10k less than I would like.  The property is a Frame 4 unit building. It’s been remodeled and brought up to neighborhood standards.

During the actual appraisal I provided an appraisal packet detailing the rehab and comparable properties.  For the comps I knew would probably be used, I pulled Freedom of Information requests to get any code violations that might have been attached to the buildings. Two of the comps used sold with significant violations and had photos of the violations. This information was provided to the appraiser beforehand.  

When reviewing the appraisal however there was no mention of this information. One of the comps received a condition adjustment upwards based on “interior photos”. The other comp however received no adjustments, despite selling with numerous violations. 

From my point of view relevant information that likely impacted the sale price was either ignored or not factored into the valuation enough. I understand that cash out refinance appraisals are always conservative, especially for 4 unit buildings that don’t sell that often.  So I definitely accounted for that. However this one was kind of irritating. It seems like the information provided was completely dismissed, even though it came directly from the city. I could be missing something.

What has your experience been with appraisers overlooking relevant information ? Have you had success in getting the value adjusted upwards after appealing?

Thanks

Thanks for the replies! Luckily the tenant took the cash for keys offer. But definitely a lesson learned and I should have known this would happen. I’ve definitely tweaked my screening criteria!

Hello BP!

So I have a tough decision to make on whether or not I want to evict a tenant.

 Background:

Tenant is a single mom with 3 kids. She put down a 3 month security deposit. She has never been a good tenant. Has a sense of entitlement and an attitude. She's also not the best with maintaining unit.From beginning she's paid late. Served her a 5 day notice and then We agreed on biweekly payment agreement to make easier to pay.She Recently lost her full-time  job and is only working part 25  time. She does LYFT when she has can and other delivery type jobs. Needless to say we had to put about 400 on a past due payment plan. She was almost done with past due payment plan, when she alerted me she didn't get enough hours at job because boss was on vacation. She's 200 dollars short of funds needed for both her biweekly payment and past due payment. She tried paying me partially in cash but I refused.

Tiring of her payment issues and her default of the terms of her biweekly payment agreement I served her a 10 day notice to Quit.

A few days later she comes back saying her attorney (probably lying about attorney)says I can't evict her with a 10 day notice for non-payment. I've already cleared this with my attorney and I can for violating her payment terms.

So here's where I am:

I'm split 50:50 between actually evicting her and working out a way for her to stay.

I've already offered her cash for keys as it's worked well for me in past. Unfortunately she did not accept.

 In Cook County evictions are not the fastest (3 to 4 months best case according to attorney ). One reason the notice was served and money wasn't accepted was to make a point that I'm serious about the lease.  She seems to have gotten nervous and does seem sincere about paying.So I'm considering letting her stay on more restrictive terms and stating if she gets more than 500 behind I'll evict.

The other part of me doesn't particularly want to deal with her anymore. She's become a time and resource drain, worse she's not that great of a tenant. And I certainly will not allow her to get months behind. 

So there's the dilemma. I don't want to shoot myself in the foot and go to court to soon. Yet I don't her getting too far behind. 

Regardless of what happens, I'll never allow a similar tenant on any of my buildings again.

So what are your thoughts and stories on how you handled similar situations?

Thanks!

For evictions, Cook County has a ton each month and all the information is already public, so I'm not sure if a FOIA request will help. You can go downtown and grab the joint action and forcible Entry from computer terminals (might be available at other locations not sure).Definitely a pain, but I've been able to get a deal from that.

If you don't want to spend as much money, the delinquent list is published in Chicago Tribune(although I believe it was already printed). You can also grab prior years results from online if you are just looking to mail people behind on property taxes.

Thanks Everyone for the responses. I kind of figured it would lean towards the Sales Comparison as this is the most common approach for 2-4 unit buildings.

Just out of curiosity I’m interested in learning how others values small muti-family unit buildings (3 to 4 units). I know bank appraisals use the sales comparison approach. Depending on the market I like to do a hybrid approach of the sales comparison and gross rent mutiple.

These buildings are traditionally valued by banks appraisals using the sales comparison method. However I find that sole relying on this can often give misleading information because these buildings don't sell that  frequently (at least in my market). This makes it hard to get enough recent comparables.

Thoughts?

I'm in a class c area. The best credit score ever was like 640. 80%+ are below 600 and have had serious dings. So the most important things are adequate income, 3 times the rent amount. They must show a strong work history and at least two years of earning enough income to meet my criteria. I require bank statements and call all employers. Background checks. If addresses don't match with application.I drill them on it.No felonies, no evictions(includes dismissals as well). I also call each landlord. 500 is my minimum credit score.

If you can get away with it legally and market wise charge additional deposits. I automatically require an additional 500 for anyone with credit score below 600.  Some tenants are even as high as 2 or 3 times the monthly rent for deposits. I find that this is good bargaining tool if issues arise and helps reduce risk.

My personal preference never comes into play (at least as much as humanely possible). What I want has little impact  on what my market demands and is willing to pay for.  

I have lower income rentals in older neighborhoods( buildings older 100 years). I can get away with not having central ac, laundry, few outlets, and smaller bedrooms. I actually removed a dishwasher from a unit I bought because I didn't want to be responsible for servicing it. Would I be ok with that no, but it doesn't matter there. Units are gutted out and nice, but basic and attract the tenants I want. I do however have to have kitchens and living  rooms that can accommodate families. Average family size is 3.5.

Everything is market dependent.

Assuming I’ve gutted out everything and updated the major systems, Property Taxes represent the largest expense. But that’s probably common across Illinois.