All Forum Posts by: Tom O.

Motion in bankruptcy to lift the say so you can file the eviction. 

Hire an eviction attorney who knows his way to bankruptcy court as well. 

In Illinois the proposed law had no automatic rent increases allowed with no caps. Instead you would have to go before some Soviet style regional bureau and beg for an increase based on some formula using inflation. 

So doing the math you're grossing at least 541,000 a year with 41 units at an average of 1,100 a month (which is low for the northside of Chicago). You want to pay someone $50k but you want to split that with someone else? On the one hand a PM will charge you 7-10 percent, right? But they will take care of all of that. 

A maintenance guy who shovels sknow is not going to be able to do plumbing, electrical, and HVAC unless you're talking about changing the furnace filters and not much else. I have guys who might do what you seek for $20-25 an hour. At $20 an hour times 40 hours a week you're looking at $38,400 a year. A plumber or electrician won't work for that. 

Although I don't recommend it if you have a free apartment that goes with the deal maybe that salary would work for a higher qualified person. Anyway, I do know guys who will maintain your building, cleaning, snow removal, light repairs, etc., on a per building/unit basis or per hour basis (I think). 

What happens with guys like you who have that many units is they create a property management firm within their own management and do it for others as well. Maybe if you pool together with some other owners you can bring more resources to bear and start your own PM company. 

I used to buy when I saw apartment buildings that were priced at 10 times NOI. Now nearly everything I see is 10 times the gross income. And they keep selling.

From the buildings I bought every seller had a reason to sell. Selling now because the value's have run up substantially doesn't seem like a reason to me but I'm only 4 years into this journey. If you have something better to do with the money then sell. If you don't; don't. Selling now so you can buy later is a huge speculation that prices will fall. 

Nothing suggests prices will fall. Even if we have a recession or the regular RE market for single family homes takes a crap that means even more rental demand, right? Because people who should be buying homes are still renting apartments. 

Quote from @Nathan Gesner:

Quote from @Tom O.:

The one thing I found really helpful in getting tenants out (and you really don't want to even think about eviction in Cook County these days) is cash for keys. In the long run it will save you money. I used it with a gang family and it worked so well it was astonishing. That and bringing cookies. 

Cash for keys costs money. It may save you money when compared to a formal eviction, but it does not save money. Saving money is what happens when you invest in a city/state with a fair judicial system that evicts misbehaving tenants in less than 30 days.

@Noah Lomax you're already committed, so I applaud you for doing the work to learn the ropes in this market. However, future purchases should consider property management fees as part of your calculation. If you need it, you can afford it. If you don't, that's an extra 10% to set aside for the next investment. I would also recommend you consider investing in a state that is not so heavily slanted towards favoring tenants. Chicago was a mess before COVID started and it's only getting worse. Yes, you can be successful there, but you can be successful much easier in other places.

 Nonsense. There's good money to be made in Chicago. And Cash for Keys SAVES you money because the sooner you get the tenant out the sooner you can re-rent to a paying tenant and the higher, new market rent. So it makes money in the short/long run. I used it to get out a tenant who was paying $600 a month and replaced them with a tenant paying $900 a month. And it got a gang family OUT of the unit without them being angry, and it helped transform my building and the whole block. You can believe me when I tell you the people on that block sure appreciated what I did and it has paid dividends ever since. 

Plus I didn't think the first non-hispanic investor guy buying a building on the block could afford pissing off one of the main street gangs in the neighborhood since they could return anytime and just burn my building down. So, no, cash for keys MAKES you money. I think you're being pennywise and pound foolish. 

Quote from @Nathan Gesner:

Here's my experience:

$550 x 12 = $6,600 per year

You are subsidizing her rent by $6,600 a year. Every year you are losing enough to replace the flooring, paint the interior, replace the furnace, or replace the windows. Every two years you are losing enough to replace the roof or the driveway.

I think it's acceptable to keep rent 5-10% below market for a PERFECT tenant, but I don't recommend letting it get more than 10% below market. You're over 30% below market.

There are many, many excellent tenants that will pay market rate. You're essentially putting the financial well-being of your tenant ahead of yourself. I doubt you got into real estate investing to help other people get ahead in life.

He's not "subsidizing her rent" for $6,600 a year. Also, you assume a new tenant will be perfect, problem free, pay on time, not damage anything, etc. He has a good tenant who is under market. You bring her to the market at a rate she can afford. Or you throw the market rate at her and try and find a new tenant who is as trouble free as she is. Also, you are assuming that the new tenant will pay rent. That's an assumption. You could be getting a new tenant who stops paying altogether. 

Here, everyone is right in telling you to leave it alone. I think what you did was fine, however. I try to suck up to the neighbors because they can provide valuable information about what your tenants are up to when you are not around. Here you did that; you investigated the complaint and figured out that the neighbor was the problem. 

The stupidity of this is to talk about a bubble with no mention of supply. No mention of the record low supply. I only took two economics classes in college but I distinctly remember learning that supply was a driver of price. 

I just don't understand how you had all the right information -- no permits -- and still bought the place. 

And, yeah, you don't get legal advice from a realtor. 

You need to talk to a local attorney who understands code enforcement stuff. 

Quote from @Andrew Goldman:

@Christopher Tokarski You can put down 20% on conventional but I put way more investors into DSCR loans nowadays since I can get them 20% down in DSCR too and its easier. We dont qualify based on the borrowers income history at all. Its much more about qualifying the property of interest than looking at the borrowers background.

What is a DSCR loan?