All Forum Posts by: Shawn Q.

Hey @Minh Hoang - welcome! I'm an investor in Champaign with 4 SFR rentals. Distressed deals do come up quite frequently. I would recommend signing up for the homepath and HUD alerts for the county. That seems to scrape the most info.

As for your other question I don't have direct experience but most of the folks I've talked to have said the permitting and inspections are a hassle. I've looked at quite a few Urbana deals and most often the taxes are the deal killer. If you have the same property in Champaign and Urbana the taxes in Urbana can be 2X the Champaign bill. On lower-cost properties like I own that can be significant. I think you'll have better luck if you limit to Champaign or Champaign county outside of Urbana city limits.

One other note - duplexes seem to be relatively scarce in the area and don't hit MLS very often. There are a few, but the majority seem to move in off-market deals in packages between investors instead of selling retail. With covid and state-wide eviction moratoriums however I think we'll see more product on the market soon and there seems to be an uptick of 2-4 unit listings so I would (and am) keep an eye in that space. My personal preference is to avoid converted SFH stock, though, and there's a lot of that in town. Just FYI.

In any case, good luck!

Exploring helping my elderly mother refi her condo - she's in Pompano Beach. Condo in a 55+ community, comps roughly $70-$80K, remaining balance ~$33K and about 16 years left on her 30 year mortgage at 4.25%. I'd like to see about getting her refi'd into a 15 year at current prevailing rates, but unsure if I can find a lender for such a small amount. Haven't reached out to Wells yet, but that's on the list (given history with them they'll likely be a PITA to deal with). Wondering if anyone can recommend any small lenders or brokers in the area. Also interested in any insurance brokers that might write in the Pompano/ Deerfield Beach area - my mother and aunt and uncle could probably all benefit from someone seeing if they can get better than their current home insurance rates (through State Farm I believe). 

Any thoughts you have would be appreciated! 

That's great info - thanks! Yeah, wanting to move away from the big box stores though it's hard for anyone to compete with Menards on price. I'll give ABC a shout and see what they say. 

Anyone have recommendations on building suppliers in/near Champaign? Primarily looking for a window dealer I can develop a relationship with, but any other suggestions would be helpful. I'd like to step away from the big box stores if I can and start going better quality (related to the conversation with Jeff Thorman in podcast #399). 

The overbuilding is highrises in/around campus. High density, high cost, and high amenities. That was great when there was tons of foreign money coming in, but not so great now. Pretty sure there are still 1-2 new buildings opening now/soon as well. @Quentin McNew can tell us if I'm wrong, but it seems most of the new developed stock is out of town larger companies. Most of the older apartment stock is larger local long-time owners, and they're generally (in my opinion) lazier and don't run their portfolios well. I'm guessing the older players are going to get killed when the new stock starts dropping rents to get occupied.

As for what I'm investing in - SFR rentals. I think there are still opportunities, particularly off campus. The people still in town are going to want a little bit of yard to stare at when they're sick of staring at their WFH computer.

It's a complex question, so forgive me if I'm a bit wordy on this one (and lots of guesses, so I could be entirely wrong). Mostly it's a historical issue, but also partly the range of industries that are/were in town. I'm thinking Carle, Kraft, Busey, and the other larger employers (which is kind of a reflection of the historical issue). 

For the historical piece - the University is one of the earliest land grant Universities. Like the other land grants (I think) it was originally an Ag school so all the most prosperous farming families sent their kids to town for a time for multiple generations. The town also got more important as a waypoint on the City of New Orleans, and the intersection between I57 and I74. So, over 180+ years there's been a concentration of wealth in town - has to be the largest in the state outside of Chicago. That wealth, proximity to chicago and cross-continental transportation routes, and a cheap student work force brings industry to town which for the most part has stuck around throughout the years.

All of that raises the demographic economic base of the town, but the University is the biggest driver there by far. No other employer can hold a candle to their benefits. Salaries are crazy high too - take a scroll through the grey book sometime and look at the high-five through mid-six figure salaries (if they're faculty that's a 9 month salary - they get more for summers, research, publications, fellowships, and more). There are some ri-hi-hich folks in town and that's just the University. All the attendant industry also makes bucks. The University also provides some free-money incentives for housing - outright purchases or stipends. Students coming to town are also generally pretty rich - we have (had) the top three Chinese student population in the country. Undergrad population is 37K or so and out of state tuition is $30K or so, so those are some decent numbers in terms of welcoming rich folks to town, along with all the additional money injected into the community by rich kids. It's a public Ivy school with one of the best Engineering schools in the country - so it's a strong international draw.

That much money has historically increased property costs. We'll see if that trend reverses with Covid and the rampant overbuilding in town, but I think minor corrections in town it's still a secure market. Now, if you'll excuse me I need to go run the numbers on a run-down duplex I just looked at that I almost certainly will never buy. Ah, practice! 

So a few issues from the spreadsheet. Your expected is a bit high - $300/room is reasonable in Champaign/Urbana but $250/room isn't unheard of. Taxes are way low - you're going to lose the homeowner exemption and Urbana is higher tax than Champaign so I would look at at least $2400/year there. Vacancy is a huge question mark until COVID issues end and the University reopens (no way to know, but I would price in the uncertainty). Repairs I think are low unless you're adding your turns into CapEx as it's unlikely you'll have long-term tenants in that area near the campus, so you'll be doing paint (and maybe carpet) each year. CapEx is low - looking at the pics you'll need a roof in 1-5 years (most local landlords list their properties at the end of the effective lifespan of their roof so they can avoid the expense. If they sell great, if not they'll replace the roof and keep it for another 10-12 years) and this was built in 1927 so not new built. Sewer is owner-paid by law, and the local tenant union makes sure students know landlords can't pass that cost along. This is proportional to the water use, but I would assume $120/quarter until you have some actuals. List cost on that property is $154,000, so unless you're looking at a package your assumptions are going to be off.

That all being said, it was a solid first effort for an out of towner. If you're going to be investing in town let me know. 

I agree about contacting a local attorney. I use this language in my maintenance section:

"Tenant shall:

Remove snow from public walkways per City, County and State of Illinois codes and rules. Any and all liability resulting from removing snow, or failure to remove same, resides with tenant.

Maintain the yard in grounds subject to all City, County, and State of Illinois codes and rules. Any fines charged resulting from maintaining the grounds, or failure to do so, resides with tenant. On notice from City, County, or the State of Illinois, Landlord may, at their sole discretion, maintain yard at the rate listed in Appendix A."

Appendix A is a statement of common charges (wall repair, damaged blinds, garbage removal, etc) that the tenant gets with the lease. That way if I get the notice from the city I can do the work and charge back the tenant before the city does it and charges me a few hundred bucks. 

@Jiri B. and @DeShaun Sellers - how are you listing through MLS? I don't have access, but I believe I could get it if needed. Is there a rental listing tool in MLS that populates through the aggregators? Or are you doing some other kind of listing that feeds the property (not as a rental listing, but as something else) through?

I would also check out this article in conjunction with the one originally posted. If you combine the fact that last year was the biggest since 2007 (seems like a familiar year) and that 2020 is on pace to meet/exceed 2019 number in permits approved (also per City of Champaign's discussion of major funding needs here - see page 10 where they expect 20% growth in permit fees through 2023) I believer we're looking at a challenging few years/decades.