All Forum Posts by: N/A N/A

is breakeven that bad? i feel like break even would be fine for me.

i'm about to close on a condo for 157k. it's a 2BR 2 BA. multiple comps in the past have come out 180k, but those units were in really good condition. i got it appraised and it came out at 165k. i have a friend who says he can help me do most of the rehab for 5k so i just assumed it will cost closer to 10k.

so i'm assuming after making repairs of 10k on top of me 157k, my net profits would be 180k-167k = 13k.

I thought that was a good deal but you guys are suggesting I need 25% return but that would mean I need 40-45k profit.

So I make my 13k sweat equity, and I saw a studio apt in the building go for 750/mo so I figured that if my mortgage payments are 750/mo and my assessments are 500/mo, I would need 1250/mo to break even.

If I get a roommate and charge 600-700/mo I would only have to come up with 550-650/mo which is already cheaper than the 800-900/mo I was previously paying. On top of which my "rent" is now going toward principal.

So in my mind, I feel that this was a pretty good deal for me but still no where near the 25% returns some of you had suggested.

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juza, is it really as simple as that though? rent x 100 = max value? I can imagine that would be really tough to find in most major metros. some condos dtown chicago go for 950 a month for a studio and I'm pretty sure I can't find a seller that will sell it to me for 95k.

But at the same time, just because I'm not in an area where SFH cost 50k, and you can easily apply that rental rule of 100 to, doesn't mean I shouldn't be allowed to play the RE game.

There has to be a model in which people from big cities run their analysis through that has to differ with people from smaller cities. Just because purchase price and rent will vary accordingly.

I am not sure how you are making your calculations. rent, let's say = 1400. value = 162000. if you did rent/value = something very close to 0.

the only way you can get rent/value > 1 is if the rent is = value or rent > value. and assuming value is 162k, your rent will never be 162k.

Hi all,

I was wondering if there is any generic formula you plug in your investments to see whether they are worth the return? I am assuming you would compare everything to a risk-free type investment like a CD or Savings Account and additionally maybe something like a mutual index fund for your analysis.

For me, I believe I would normally pay somewhere between 700-900 on rent not including utilities. I mention this because cost of living varies from city to city.

Given that, on a property that was purchased for 157k, how much cash flow do I need to make it a good investment? I also plan to spend approximately 5k in repairs so I guess the total cost to me is 162k.

I didn't get into the specifics of the property detail because I'm not sure if it matters what type of property it is. The analysis should be purely based on hard numbers right?

well nobody represented Chicago so I mind as well do the honors.

For under 250k you can get a small 500-700 sqft studio or convertible in dtown chicago. There are a bunch of new construction condos starting in mostly the 300s but there are also some that start in the 200s but not really midtown.

250k will also get you a 2-3 flat in the south side that probably needs work done on it.

200-250k can find you a nicer 2-3 flat west of chicago but it'll be a super rough neighborhood.

for 150k-250k you can easily find a condo along the lake as long as you aren't in downtown but either slightly north or south.

When I said having yout credit line increase, I didn't mean that since you pay some of your debt off, your credit would increase. That's too straight forward. I meant maybe your normal line of credit is 3k but if you get a condo, your normal line of credit for credit cards would increase. Is that true? So now if those credit cards offering you 1-3k credit lines, they would now be offering maybe 5k+.

Hey all,

Just wanted to let you know I'm about to close on my first Condo. It's about 10 mins south of downtown chicago. I'm about to close at 157k but the appraisal came back at 165k so I guess that's good.

Recent comps have come back at 180k for similar units (renovated) in the past 4 months, so since I only put 10% down and I'm doing a 80/10/10, I'm planning on refinancing after I make some renovations to capture that last 10% so I can lower my mortgage. Right now its 6.5 on 80% and 10 on 10%.

(1) Does a 6.0 on 80% seem reasonable?

Also, one thing that somewhat concerns me is that I'm trying to find average rental price for the building but I can't seem to find much except this one ad for a studio that shows up everywhere (on all the rental sites). It's the only high rise in the area so you would expect there to be plenty of data.

So I'm wondering...

(2) Does this mean it's good that there are so few rentals available? Meaning most people are homeowners and not investors? How do I check this?

(3) Maybe you are not allowed to rent? (I'm pretty sure this isn't true because I've met people in the building who rent, but maybe they are doing it illegally?)

Also, once this is done, I'm almost already looking forward to my next investment.

(4) Is it true once you start paying mortgage, generally your credit card line of credit increases? Because I will need that to pay for materials for renovations and have started to apply for those 12 month 0% apr cards...

(5) If you get a decent fixed rate 5.9-6.2 for 30 yr fixed, do you still try to slam every nickle into the mortgage or should you be content with being able to cover the mortgage and/or make slightly positive cash flow, and instead of pre-paying the mortgage, save your money for a new investment?

I just don't understand how you can even get financing for a second property if you are still paying mortgage on the 1st.

Does anyone know what are some concerns that I should take into consideration before making an offer on a property that has been, according to the agent, vacant for many years? meaning there has been no heat in the winter? do these types of properties tend to have foundation issues? plumbing issues?

or should I be jumping at the opportunity if all these issues can be solved pretty straight forwardly? (pay someone to fix it one time without it reoccuring)

I'm thinking about buying this property but it has been completely gutted. It is a two flat but the second floor does not exist and so I would have to build out a staircase, put in the floors on both the main and second level, and obviously erect walls to divide up the rooms..etc..

I'm new to rehabbing so I asked my manager if she ever had to put in completely new floors and she said she made an addition to her 2 lvl house by extending one side of her home, and it costs around 200k, at around $100/sqft. That sounded ridiculously out of my reach in terms of money.

Then I asked me realtor on his advice, and even though he is not a rehabber, he estimated the costs to repair to be at least in the 100k ballpark, and materials alone would be at least 30k.

So here comes the interesting wrinkle, I talked to my friend who is currently the super in my apartment and he swears he has his own crew who can build out everything I need from this complete gut rehab for a fraction of the costs. He thinks he can do both floors for under 10k and maybe another 10k to to add the kitchens and bathrooms. He says 20k should do it.

Am I to believe my manager and my realtor who gave me these high estimates? or my friend rehabber? I just want to know is this even possible if you took out labor costs and only factored in materials.

For this example we'll use 1500 sqft each level, assuming 5 rooms each floor, 2 brs each, 1 kitchen and 1 bath on each floor.

Emdvee,

What are the details of the Home Improvement Loan? Like APR etc...? And what exactly is a community credit union and how is it different from a bank or some other financial institution?