All Forum Posts by: Tom O.

I think wholesalers are leeches who take advantage of ignorant sellers and these leeches should be put out of business by regulation. Go ahead and prove me wrong. 

I get so many calls from people trying to buy my buildings. And when I ask what they are offering they offer me 2/3 of what I recently paid for the building. Are they morons? Do they think I'm a moron? 

Look: bedbugs and ****** mattesses and bedding and you're asking if you should do something about that? Of course you should. You should do No. 1 and then when you get the money do No. 2. You don't really have a choice. 

First, get the place cleaned up. Get rid of the bedbugs which will kill a rental. Clean, fix, paint, etc. Do as much cosmetic and remediation short of gut rehabs you can. Get every unit up to some base level of adquacy.  Figure out what units are worst or which units will bring the most money. Fix/rehab them first. 

This is just advice from a schmuck who only owns long term rentals, however. I don't do STR and don't pretend to know anything about it. This just seems obvious to me.

1. Did you take a security deposit? If the answer is yes you do NOT want to evict unless you are confident your security deposit game is perfect. In evictions the tenant rights attorneys ask prospective clients one question: did your landlord take a security deposit? If the answer is yes, they will take the case. If the answer is no, they will typically refuse to take the case. 

2. I would meet with him and bring a "cash for keys" agreement. I would also bring any notices required by Chicago or Illinois for eviction to move forward (mediation thing, etc.).  But cash for keys is great because it provides the carrot and the stick. Carrot -- take my $500 and leave. Stick: eviction. If you bring both and serve the pre-eviction stuff it makes it more clear that you will evict. 

This is where you need to talk to your eviction attorney NOW not later after you've already screwed it up and wasted time.

3. If you don't have an attorney for your eviction I would retain this guy now to get your advice on exactly how to move forward and what notices are required, etc. But I think knowing how backed up Cook County is and how slow the process is moving (all cases go to one court like a central station) I would do anything I could to avoid eviction including cash for keys. Maybe you pay him $500 to get out. Find out what the attorney will charge and offer the tenant some amount of that. 

His name is Rich Magnone and he knows his stuff. This is his highly informative blog: 
https://www.chicagoeviction.co...

Read David Lindahl's book: Multi-Family Millions. 

Read their lease carefully. See if it has a "holdover clause." So you need to terminate the tenancy in many states with a notice of varying lengthy. Often 30 days. Figure out your local/state law requirements. That's step one. 

Step two: if you do nothing it becomes a month to month. But if you give them notice you are not going to renew and you are terminating the current tenancy that should make it NOT become a month to month. Again, check your state/local rules/laws/ordinance and read the lease to see exactly what it says. 

Step three: if you have a holdover clause it will say something like: if you stay after being given notice of termination of tenancy you are a "holdover" tenant and your rent will increase by $ XX a month/week. You can put in your notice with a citation to your lease that if you stay after xx date you are a holdover and your rent will be $ XX. 

I used that clause to nicely ask a tenant to leave at the end of the lease terms and they did leave. This was NOT California, however, it was in a much more landlord friendly state. Good luck.

In LA, it would be incredibly expensive to build a multi-unit building. Generally, new RE investors start by buying a small multi-unit and fixing it up and leasing it or selling or re-fiing it to get their money out and repeat. Or do a few light flips to get the hang of rehabbing costs. 

But for a noob investors to say "I want to build a multi-unit building" in a place like LA it's like going to Hollywood, walking into a studio and telling them you want to star in a major action film. 

My advice: 

1. Start small. 

2. Start somewhere affordable. Not LA. 

3. Read David Lindahl's book "multi-family millions." 

What's the question? Why don't you raise the rent a little each year to get closer to market rent? If you have equity in the building you can HELOC or Re-Fi to possibly pull it out and buy another building but make sure it still cash flows.

And what's the point of this structure in your mind? 

You're really putting the cart before the horse here aren't you? You don't even have your residence and you're already trying to get around the mortgage/investor rules on your second place which you also don't own yet? I can think of so many other things you should be thinking about and not this. 

But to  give you something of an answer: your best bet is what's called NOMAD where you keep buying your own residence and live in it for a year before repeating. That way you keep getting to put down a low down payment and are not running afoul of anything. Plus, once you buy something what do you really think your odds are of having the ability to buy another something right away? That you want to live in?