All Forum Posts by: Tj Floros

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. 

Quote from @Anthony Stahurski:

I recently attended the "How a Newbie Can Start Building Wealth Through Real Estate" Webinar. I am currently wanting to buy my first investment property/ first property in general. What is some advice you wish you would have known before investing into your first property and or advice you wish you would have known to set your self up for a lucrative real estate business. I currently plan on using the VA Home Loan or the VA Home Renovation Loan. If anybody has better knowledge with financing deals or more knowledge with the VA Home Loan feel free to in-form me.

 Hey Anthony! 

Like you, my first deal I used a VA loan to buy a 3 flat here in Chicago. Without a doubt, the VA loan with 0% down is an AMAZING loan product. If I could go back in time, I would have used the VA renovation loan to buy and fund my first deal, mainly because you could put 0% down on the purchase price and rehab. I would recommend you use your VA loan to buy your first deal and then use an FHA loan to fund your 2nd deal. It also helps to work with a lender and an agent that have experience getting VA loans and offers to the closing table, it can be tricky at times getting sellers to accept a VA offer from a buyer because of the appraisal/ VA inspection process.

When it comes to using the VA loan there are some tips and tricks you can use to save money on the front end and even help you qualify you for a bigger loan that I learned over the years that I did not know when I used my VA loan.

DM me and I'm glad to talk about it offline. 

Quote from @Toure Smith:

Hi team!

How are you all evaluating whether or not a rehab is cosmetic (updating beds, bathrooms, and kitchens) vs a full gut besides obvoius signs (plumbing/electrical issues, structural issues, subfloor issues, etc.)?

Many lenders aren’t comfortable with me taking on a heavy rehab and suggest small rehabs to start. I’m not trying to cut any corners or put lipstick on a pig. Thanks!

I just finished up a gut rehab on a 3-flat. The building like most in Chicago was about 120 years old. When you do a walk-through or an inspection you can see if you need to do a full gut based on what you are seeing in person. Galvanized steel water lines probably means everything behind those walls has not been touched/updated in 50-70 years and will need to be updated $$$$. Also sometimes what you want to do with a project will determine your level of rehab. Lets say you want to add HVAC and rip out the old radiators, unless the electrical has been updated, you are probably going to need to add a 200 AMP service, so your plan of putting in central air now means you have to update all the electrical if you are pulling permits.

Quote from @Shaheen Ahmed:

Quote from @Tj Floros:

Investment Info:

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

Purchase price: $922,000
Cash invested: $40,000

This was my first house hack back in 2022 in Logan Square. I was able to use my VA loan and bring 0% down on almost a million-dollar property, not even closing costs!

The building is large on an oversized lot here in Chicago. 1st and 2nd floor are roughly 1500 sqft, while the garden is smaller but with great ceiling height. This being my first deal, I ran into some problems after closing. About 2 months after closing, I got hit with a property tax bill that doubled, from about $12k a year to $23k a year. Like many things in real estate and in life, you get presented with a problem and have to figure out a solution.

The problem: I pay more in expenses than I make in income and my property is negative cash flow.

Solution:
Step 1: Hire a tax attorney and start the process of arguing the taxes to bring them back down to something more manageable.
Step 2: remodel the unit I occupy, unit 2, in time for the Chicago rental season and increase the rent by $500 a month for the remodeled unit
Step 3: Move out of the remodeled unit 2 and move into non-remodeled unit 1 and repeat the process. Increasing the rent $700 a month post remodel and post move out.
Step 4. Move out of the building entirely and into another deal.

Although it seemed very easy on paper, this solution definitely had its drawbacks and setbacks. For starters, to save money, I decided to do all the work myself, all while working a full-time 40-hour-a-week job. I spent about 2 years remodeling the 2 units. I was able to turn a half bathroom into a full bathroom in one unit and I was able to wall off a dining room and turn into another bedroom in another unit.

I turned a negative cash flow deal into a positive cash flow deal and was able to force appreciation. Everything I learned from this deal I was able to put into my second deal which was an off-market BRRRR deal!

Although investing in Chicago can have it challenges at times, Chicago is a great market to invest in when you're either familiar with the market or you work with someone who is familiar with the area you want to invest in.

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

I wanted to get my investing journey started ASAP after spending years sitting on the sidelines, educating myself, analyzing deals, and being over afraid to jump into the game

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

I found this deal on market with and agent

How did you finance this deal?

I used a VA loan which has its own challenges in a very hot market, especially like Chicago. Before I closed on this property I had probably been to over 20+ showings, submitted 4-5 offers, and fell out of contract 1 time before hand.

How did you add value to the deal?

I remodeled 2 units by turning a half bath into a full bathroom, updating 3 other bathrooms, building a bedroom, new paint, fixtures, etc.

What was the outcome?

I turned a negative cash flow deal into a cash flowing deal post-move-out and started to build wealth by force appreciation.

Lessons learned? Challenges?

In Chicago also have a good property tax attorney underwrite your deals at the current property tax bill and at YOUR purchase price. If the deal looks good after running your numbers you should probably pull the trigger!

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

Yes! I worked with my agent Sarita Scherpereel who is now my Team lead on the Sarita Sells Team!

Great job man, two most important things that worked in your were the 1) VA loans (most will not qualify) 2) being able to do all of the work by yourself. And of course the last but not the least was your tenacity and perseverance. I envy you. 

 Thank you! I definitely have an appreciation for contractors and the amount of work that can go into a project especially after opening up walls and seeing how much actually needs to be fixed before you can really even start. 

Investment Info:

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

Purchase price: $922,000
Cash invested: $40,000

The building is large on an oversized lot here in Chicago. 1st and 2nd floor are roughly 1500 sqft, while the garden is smaller but with great ceiling height. This being my first deal, I ran into some problems after closing. About 2 months after closing, I got hit with a property tax bill that doubled, from about $12k a year to $23k a year. Like many things in real estate and in life, you get presented with a problem and have to figure out a solution.

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

I wanted to get my investing journey started ASAP after spending years sitting on the sidelines, educating myself, analyzing deals, and being over afraid to jump into the game

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

I found this deal on market with an agent and trusted my agent, Sarita during the process!

How did you finance this deal?

This was my first house hack back in 2022 in Logan Square. I was able to use my VA loan and bring 0% down on almost a million-dollar property, not even closing costs! Using a VA loan, especially in a competitive market, has its own challenges.

How did you add value to the deal?

The problem: I pay more in expenses than I make in rental income.

Solution
Step 1: Hire a tax attorney and argue the taxes.
Step 2: remodel the unit I occupy, unit 2, and increase the rent by $500 a month for the remodeled unit
Step 3: Move out of the remodeled unit 2 and move into non-remodeled unit 1 and repeat the process. Increasing the rent $700 a month post remodel and post move out.
Step 4. Move out of the building entirely and into another deal.

What was the outcome?

Although it seemed very easy on paper, this solution definitely had its drawbacks and setbacks. For starters, to save money, I decided to do all the work myself, all while working a full-time 40-hour-a-week job. I spent about 2 years remodeling the 2 units. I was able to turn a half bathroom into a full bathroom in one unit and I was able to wall off a dining room and turn into another bedroom in another unit. Along with updating a total of 4 bathrooms, new paint, new fixtures, etc.

Lessons learned? Challenges?

I turned a negative cash flow deal into a positive cash flow deal and was able to force appreciation. Everything I learned from this deal I was able to put into my second deal which was an off-market BRRRR deal!

In Chicago also have a good property tax attorney underwrite your deals at the current property tax bill and at YOUR purchase price. If the deal looks good after running your numbers you should probably pull the trigger!

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

Yes! I worked with my agent Sarita Scherpereel who is now my Team lead on the Sarita Sells Team! Although investing in Chicago can have it challenges at times, Chicago is a great market to invest in when you're either familiar with the market or you work with someone who is familiar with the area you want to invest in.

Investment Info:

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

Purchase price: $922,000
Cash invested: $40,000

This was my first house hack back in 2022 in Logan Square. I was able to use my VA loan and bring 0% down on almost a million-dollar property, not even closing costs!

The building is large on an oversized lot here in Chicago. 1st and 2nd floor are roughly 1500 sqft, while the garden is smaller but with great ceiling height. This being my first deal, I ran into some problems after closing. About 2 months after closing, I got hit with a property tax bill that doubled, from about $12k a year to $23k a year. Like many things in real estate and in life, you get presented with a problem and have to figure out a solution.

The problem: I pay more in expenses than I make in income and my property is negative cash flow.

Solution:
Step 1: Hire a tax attorney and start the process of arguing the taxes to bring them back down to something more manageable.
Step 2: remodel the unit I occupy, unit 2, in time for the Chicago rental season and increase the rent by $500 a month for the remodeled unit
Step 3: Move out of the remodeled unit 2 and move into non-remodeled unit 1 and repeat the process. Increasing the rent $700 a month post remodel and post move out.
Step 4. Move out of the building entirely and into another deal.

Although it seemed very easy on paper, this solution definitely had its drawbacks and setbacks. For starters, to save money, I decided to do all the work myself, all while working a full-time 40-hour-a-week job. I spent about 2 years remodeling the 2 units. I was able to turn a half bathroom into a full bathroom in one unit and I was able to wall off a dining room and turn into another bedroom in another unit.

I turned a negative cash flow deal into a positive cash flow deal and was able to force appreciation. Everything I learned from this deal I was able to put into my second deal which was an off-market BRRRR deal!

Although investing in Chicago can have it challenges at times, Chicago is a great market to invest in when you're either familiar with the market or you work with someone who is familiar with the area you want to invest in.

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

I wanted to get my investing journey started ASAP after spending years sitting on the sidelines, educating myself, analyzing deals, and being over afraid to jump into the game

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

I found this deal on market with and agent

How did you finance this deal?

I used a VA loan which has its own challenges in a very hot market, especially like Chicago. Before I closed on this property I had probably been to over 20+ showings, submitted 4-5 offers, and fell out of contract 1 time before hand.

How did you add value to the deal?

I remodeled 2 units by turning a half bath into a full bathroom, updating 3 other bathrooms, building a bedroom, new paint, fixtures, etc.

What was the outcome?

I turned a negative cash flow deal into a cash flowing deal post-move-out and started to build wealth by force appreciation.

Lessons learned? Challenges?

In Chicago also have a good property tax attorney underwrite your deals at the current property tax bill and at YOUR purchase price. If the deal looks good after running your numbers you should probably pull the trigger!

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

Yes! I worked with my agent Sarita Scherpereel who is now my Team lead on the Sarita Sells Team!

Hey everyone!

I just wanted to introduce myself to the forums. I'm a long-time visitor and first-time poster! I started my real estate journey back in 2022 as a client of @Sarita Scherpereel when she represented me on the buy side and helped me buy my first deal. 3 years later and not only am I finishing up my 2nd deal, a 3 flat BRRRR in Chicago, but I also joined Sarita's team as a licensed realtor! It's good to be on forums giving back after using what I learned here in the forums, podcasts, and investor stories to help my investing journey!

I'll be posting some stories about my own deals and the growing pains I had to experience when it comes to investing in Chicago. 

-Tj

Licensed Realtor with the Sarita Sales team