All Forum Posts by: Daniel Baker

Hey Henry!  You should get on @jasonwagner's distribution list for his Wagner report (google it).  We manage on the North side of the city and yes we have also seen large increases in the past few years.  For my company Lincoln Square has seen some of the largest increases.  I have had multiple showings in Lincoln park where people scheduled a showing just to show up and ask me if we had anything else in the area that was open because they had lost out on so many other apartments.  

I have a great person that does countertops, DM me.  Thanks!

Are they 3 bed 1 bath or 3 bed 2 bath?  If they are 3/1's I would 100% add another bathroom in each unit.  We usually just build the bathroom on the other side of the current bathroom, then the plumbing is relativity simple assuming there is room.  If the space is big enough you could even add washer/ dryer. 

Hey @Ran Fridman!  Just to add on to what @John Warren and @Sarita Scherpereel said security deposit rules in Chicago are very very strict. If you do decide to take security deposits make sure you know what you are doing.  I don't know all the rules but last I checked the funds have to be held in a separate interest bearing account and interest must be paid out each year.  Here is a link to the Chicago rates/ rules https://www.chicago.gov/city/en/depts/doh/provdrs/landlords/...   There is a whole industry around going after bad operators.  Google "Chicago security deposit attorney" and you will understand what I am talking about.  When I go through a closing I make the seller return all security deposits to current tenants prior to closing then have the sellers attorney give me a letter that states they were returned.  We have moved to a non refundable move in fee.

This is a dynamic situation in Chicago.  If I were you I would contact a good real estate attorney in Chicago.  If you want a recommendation message me.  

Give this guy a call, I use him all the time.  He will give you an honest quote.

https://www.callairkings.com

Hey David, I was in your same situation a few years ago, here is my advice.

- How does this strategy sound to you experts?

I think this is a great strategy especially if you can partner with your parents.  One thing to consider is how big of a 3-4 unit you will need.  If your parents want a 4 bed two bath and you want a 3 bed 2 bath plus one or two rentals make sure you budget correctly.  Real estate is like anything else, you can talk about it and read about it all day but you really don't truly understand it until you do it.  I see a lot of people doing all these crazy calculations on 3 and 4 flat deals (When I started i did it too, ha).  If you can't do a your first 3 or 4 flat deal on the back of a napkin, it is probably not the deal for you.

- Will this strategy impact my long home buying abilities 2-3 years from now when I am looking for my long term residence, and if so how?

If the deal is in your parents name it will not hurt you at all in the future.  Just make sure it is completely in their name and it does not show up on your credit report.  To the bank you basically just live in your parents home. 

- With the property I intend to purchase 2-3 years from now I would hope to get a 15 or 30 yr conventional loan, but what should I consider for the investment property (hoping to put down as little as possible).

I would look at the new 5% down program from Fanie Mae. FHA is 3.5% down but anything over a 2 unit requires a cash flow test, with rates where they are I hardly ever see anything in Chicago that would work. The max for a 4 unit right now is 1,396,800. With rates where they are you will likely have a hard time cash flowing unless it is a big value add deal. I got close to using the 5% down program about a month ago on a Bucktown 3 flat. There was a job change at the last second and I had to go a different route, but it is a great program.

Hope this helps.  Let me know if I can answer anything else for you.

Hey Dylan!  I had a friend go though this in 2020 and this is what I learned.  To add on to what @Sarita Scherpereel and @John Warren you should be able to ask your team! A few things to add here if you go the FHA route.

- Assuming you can pass the FHA self sufficiency test (very hard now with rates where they are, the new 5% down programs are probably a better option) you would have send a letter to your lender stating you would live in one of the units that makes up the zoning certification (legal units) for the building.

-Your FHA inspector is going to have to walk into all available spaces in the property and your loan will not be approved if there is an additional living space (non conforming unit) on the property. However, the space is considered non habitable if the oven/ stove is removed and the gas line is capped. Everything else in the non conforming unit can stay, but the oven must me removed and the gas line must be capped. The unit is now considered non habitable and will pass a FHA appraisal. I would verify this, but this was the rule in 2020.

- To add on to what @Sarita Scherpereel said you are still taking a risk with the city on the nonconforming unit even if you get the loan