All Forum Posts by: Tom Kaz

Mike - sorry for the brief explanation, the monthly utilities cost about $360-400 + mortgage/insurance/taxes. Along with these payments i also need to pay interest on my HELOC which would be about $350-360 extra per month which would leave me with about $450 in cash flow per month. Once that HELOC is paid off the cash flow nearly doubles, just the cost of doing business i guess (better then hard money). The rents have SOME room for adjustments but wouldn't want massive turnover.

The neighborhood itself is GREAT, close to highways and is close enough to the city without all the traffic. The railroad track which is next to the building (not super close) have the metra run through it and a freight or two, but in my eyes its a reason to justify the lower price. I plan on keeping the building long-term and the current owner has done some significant rehab on the interior but like i stated the roof/gutters need to be replaced. Which could run from 8-12k including labor. The asphalt driveway also needs attention but again it all comes down to what the owner would sell the building for. My agent reached out to me today and stated that the owner is looking to move soon and will entertain all offers... Just wanted some insight before i finalize my first offer to him, maybe i should aim lower with an offer of 325k, obviously he will come back with a counter but once i place my first offer i cant take it back.

Sorry for the confusion! 

Just got back from looking at a 4plex in a suburb of Chicago (nice neighborhood). Building is completely tenant occupied with 3-2bedrooms and 1-1bedroom, unit comes with new boiler, water tank and new coin operated washer and dryer. Units are in pretty decent shape but the owner has not cared for the roof (which needs a full replacement along with gutters and whatever else that may need attention). Building is also next to some train tracks.

Asking price is 430k (high-side and been on the market for over 150 days)

Monthly expenses are $360-400 (tenants pay cooking gas and electric)

Monthly income is $4000.

After all is said and done I would be cash-flowing about $3-450 depending on the final closing price. This includes mortgage, insurance, taxes (13k), utilities and HELOC interest.

The owner is “motivated” to sell and plans on moving out of the state so I figured I had some leeway with my “offer”. I was thinking about offering $340-350k and see what happens, any thoughts on this offer (should I go lower or does that seem pretty low?).

Any input would be awesome! This would be my second 4plex!

Jason - Very true about the rates probably being well over that in the 5 year time frame. I want to lock in the 30-yr rate but at the same time i want this HELOC to be paid down as quickly as possible. Either way i can still refi with the 30-yr and be happy about the low rate im currently supplied with. I just need to be strict in my practices going forward to make sure the line is paid, and a refi can supplement a payoff if needed.

Jaysen - Thanks for the input, i do not plan on selling the building within the next 5-years but i would like to possibly pull out equity and pay down the HELOC when possible. I have a 10-yr draw on the HELOC and will only need to pay interest (which is tax deductible). Obviously i would try to avoid this 4 years down the road if rates were high, but i want this HELOC line paid as quickly as possible.

The bank that offered the term for 4.85% was a conventional loan with 25% down. (busey bank) this was after the FEDS announced no increase in the interest rate.

Any other strategies to pay down the HELOC ASAP? I will try using all the cash-flow from both buildings to supplement this but i think pulling out equity over time may be the best strategy, assuming rates arent crazy high by then.

Happy Sunday BP!

Just recently got approved for my HELOC on my primary residence and plan to purchase my 2nd 4-unit building and am pretty stoked about it! I've got two buildings on my radar and plan to see them this week and hopefully shoot an offer on one of them! My current 4-flat cashflows about $800 a month and is currently on a 5-yr commercial balloon. I was about to refi into a 30-yr fixed but with the feds confirming no increase in the interest rate i figured i would wait till the end of the year to do anything.

Which leads me to my question about financing my second 4-flat. Im using my HELOC for the down-payment, after all expenses/interest accounted for in the monthly income, I will cash flow about $5-700 after all expenses (mortgage, taxes, insurance, utilities and the cost for using the HELOC).

My goal is to pay-down the HELOC i used for the down-payment ASAP, does it make more sense to lock in a lower 30-yr rate or do a 5/1 (commercial) and refinance and use the equity to pay off the heloc? My only concern is hedging myself against a higher rate in the coming years, but i want to pay the HELOC ASAP!

The terms im being presented are pretty good.

• 30 year fixed at 4.85% requires 25% down
• 30 year fixed at 5.3% will allow 20% down
• 5/1 arm at 5.125% requires 20% down
• I want to hopefully put down just 20% with the HELOC and no out of savings $$

The purchase price of the investments are about 350-400k.

I plan on keeping both investments long term for cash flow. 

Thoughts or advice on this?

@Randal Shaffer download the Stessa app, I’ve been using it for the past couple months and seem to enjoy it. They are still working bugs out, but it’s free.

@Joseph Konney good call, my building is in willow springs (cook county) suburb of Chicago. I was also reading that introducing a M2M lease may work out better as Illinois is a tenant friendly state.

Everything about Illinois in general just flat out stinks, lol.

I appreciate everyone taking the time to shoot me some insight on the subjects!

Now that i have finally got a taste of some real land-lording action, I feel as if my Illinois (cook county) lease is weak and needs some serious revisions. Does anyone have a very law intensive/safe Illinois (cook county) lease i could review and use?

Thank in advance! 

Your comment is 100% correct, i cash-flow about $800 off this 4plex so i do have reserves accumulated. 

Thanks for the input, i think they will work with me in keeping it tidy along with allowing showings. As for the repairs i did want to rehab the kitchen and bath to raise the rent $100-150. That seems like it will only work if i have downtime in the unit, which i don't want to happen but at the same time i could increase cash-flow.

I also agree with keeping the eviction quiet, this is a business and they are my customers.