All Forum Posts by: Tj Floros

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Chicago.

Purchase price: $300,000
Cash invested: $150,000

Bridgeport, Chicago off market BRRRR and house hack!

What made you interested in investing in this type of deal?

My 2nd deal, but my 1st. BRRRR.

Off-market legal 3 unit in the Bridgeport neighborhood of Chicago, comprising of a brick 2 flat with (2) 3 bed 1 bath units, and rear frame coach house with 3 bed 2 bath.

How did you find this deal and how did you negotiate it?

This was off-market deal that a family member of mine owned.

How did you finance this deal?

I used the 5% home-style loan to fund the purchase and rehab and then refinanced into a conventional loan. Would have loved to refi into a FHA loan but the building could not pass the self-efficiency test due to high property taxes, which is very common here in Chicago. Purchase price $300k with an initial bank ARV of $640k Estimated rehab budget $260K with a $30K reserve fund with an estimated 7-month rehab timeline.

How did you add value to the deal?

Each unit needed all new plumbing, electrical, duct work and HVAC, 4 new bathrooms, 1 new kitchen, paint, finishes, flooring, etc.
The coach house was a complete gut down to the studs, while the 2 front brick building units I was able to save both kitchens and reuse them.

What was the outcome?

Actual numbers: Rehab budget $320k, actual timeline of 11 months, mainly due to permitting and city issues. Final ARV $893k.

Cash-out refi i was able to pull just about 65% of my total cash invested (ie purchase price, holding cost, extra funding needed) while still cashing flowing $300 a month post-move-out with about $230k in equity.

Lessons learned? Challenges?

A ton! Especially when it comes to underwriting deals, holding cost, construction cost, permit issues, all in Chicago which can be a challenge all by itself.

I plan to refi again when rates drop further, but I think for my 2nd deal in my first 18 months and my first BRRRR in a high interest rate market, it was definitely a win in my beginners book

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

My lender and contractor who I'm happy to provide on request.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Chicago.

Purchase price: $300,000
Cash invested: $150,000

My 2nd deal, but my 1st. BRRRR.

Off-market legal 3 unit in the Bridgeport neighborhood of Chicago, comprising of a brick 2 flat with (2) 3 bed 1 bath units, and rear frame coach house with 3 bed 2 bath.
Each unit needed all new plumbing, electrical, duct work and HVAC, 4 new bathrooms, 1 new kitchen, paint, finishes, flooring, etc.

The coach house was a complete gut down to the studs, while the 2 front brick building units I was able to save both kitchens and reuse them.

Purchase price $300k with an initial bank ARV of $640k Estimated rehab budget $260K with a $30K reserve fund with an estimated 7-month rehab timeline.

Actual numbers: Rehab budget $320k, actual timeline of 11 months, mainly due to permitting and city issues. Final ARV $893k.

Cash out refi i was able to pull just about 65% of my total cash invested while still cashing flowing $300 a month post move-out. I plan to refi again when rates drop further but I think for my 2nd deal in 18 months and first BRRRR in a high interest rate market, it was definitely a win in my book. Maybe not a text book "home run" but still a good deal.

What made you interested in investing in this type of deal?

Had an opportunity to try my hand at the BRRRR process

How did you find this deal and how did you negotiate it?

This was off-market deal that a family member of mine owned.

How did you finance this deal?

I used the 5% home-style loan to fund the purchase and rehab and then refinanced into a conventional loan. Would have loved to refi into a FHA loan but the building could not pass the self-efficiency test due to high property taxes, which is very common here in Chicago.

How did you add value to the deal?

Since this was a BRRRR everything is the property is brand new

What was the outcome?

65% cash out of total money invested, (ie purchase price, holding cost, exta funding needed) with $300 a month cash flow and about $230k in equity.

Lessons learned? Challenges?

A ton! Especially when it comes to underwriting deals, holding cost, construction cost, permit issues, all in Chicago which can be a challenge all by itself.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

My lender and contractor who I'm happy to provide on request.

Hey Tim!

Bigger pockets is a great place to get started, but I would also suggest going to some local meetups and meeting other investors. I know there are plenty here in the city, @Sarita Scherpereel hosts a monthly meet-up, April 8th! Another suggestion are the guys over at the straight up Chicago investor have a page that has a list of all the local meet-ups. 

 I just finished up a big remodel project, new electrical, plumbing, HVAC, kitchen, bath, the works, and I would say it could be anywhere between $80-$100k per unit. Now, when you meet with a contractor, they can give you a better number or give you a by sq ft price, but if i would just use a very rough rounded number, the $80-100k. I'm sure some contractors will post on here and give you better insight. 

I know of some people who have done this here in Chicago, and I think a big factor outside of price, ARV, etc was zoning, depending if you can do it out right or if you are in an ADU zone. I would personally think thats half the battle getting the approval to actually do that because you will definitely need to pull permits on a project like this.

I can only speak for Chicago here, but Chicago is a very neighborhood-based city. One neighborhood you can buy a 6 flat for $400k and then go 20 minutes north, with no traffic, and you are buying a 3 flat that needs a complete gut for $800k before you even demo a wall. There are more parts of Chicago that are nice, safe, and where people want to live rather than rough parts. Like all real estate, it is very local. I just wish the taxes weren't so high here. 

 As everyone has pointed out about looking for local meetups, but I would also reach out to a local realtor/lender who work with investors I'm sure they know of local meet-ups or other networking events. 

 Not really, I just use the standard RLTO here in Chicago. I don't really add any specific like student items the main thing is just having the parents attached to the lease for me at least. 

I have a rental unit with 3 tenants, one of the tenants' fathers was the co-signer/guarantor of the lease. Like you said the students did not have any rental history or high credit scores so it was nice to have a parent attached to the lease. If there are any issues I can deal with the students but if that does not work I can always reach out to the parent(s). I would suggest talking with an attorney or a property manager if you plan on renting to students, I'm either of those probably have leases and items in place just to deal with students. 

Quote from @Blake Alan Quarrie:

Has anyone else noticed a significant increase in their Chicago water bill recently? Since acquiring a four-unit property on the Northwest side, my bi-monthly bill has typically been around $500. However, after participating in the City's lead water replacement program, I was informed that I had been underbilled. Following the installation of a new water meter, I received a true-up for the previous underbilling.

Since the meter replacement, my water usage has increased by approximately 20%, and I am now receiving monthly bills instead of the previous bi-monthly statements. As a result, my bill has effectively risen from $500 bi-monthly to $700 monthly since the pipe replacement. I've had my GC run through the property and he did not discover any leaks, so I'm purely confused why I'm seeing this massive increase.

 I saw something on WGN, about this happening to people on the north side, the owner complained to the city enough till they looked into it and "corrected" the bill. I think the city sent someone out to replace the meter reader that they just installed with a new one. Not sure what the issue is, but I would call the city nonstop till you are on their radar. My 3 unit in Logan has been about the same every time, but I dont have a reader on my water main.