All Forum Posts by: Trevor Fritz

@Crystal Smith Ideally my goal would be to cashflow the property while living in it, even if it is by a small margin. Because I am looking for value add apartments, I would live in the unit that needed the most work, or possibly the garden unit. 

Hello to all my Chicago investors (and everyone else). I currently am looking for some guidance to help me narrow down my search for my 2nd property. I currently own a condo unit in the NW suburbs, but am looking for something different. I keep going back and forth and spending time researching 2 different avenues for my next deal.

1. Buying a SFH in the suburban area as a rental property, most likely a 3/2.

2. Buying a Multi-unit, preferably in an up and coming area in Chicago and using an FHA loan and living in 1 unit.

My price point varies, with the SFH I am looking to keep it under $275,000, while the multi-unit with the FHA loan, I would look for something a bit higher, close to $400,000. I am looking for value add properties. Anyone out there recommend one over the other and I would appreciate any reasons why! Thanks and I look forward to your responses.

@Robert Clark an FHA loan is the owner occupied loan that was spoken about previously. You should use this on your bigger purchase. This is for (I think) first time home owners. Following your plans, you would have to buy the 1st property as an investment property (25% down typically). Your second property (multi unit) would be an owner occupied apartment hopefully, which is when you can use the FHA and put down as little as 3.5% and get a very low interest rate.

I currently own a 1/1 condo as an investment property and am looking to use and FHA in the Chicago area on a multi unit. I like your strategy, but I would be wary about buying condos. I got mine at a great price, but after researching and learning more about condos, many investors stay away. I am slowly seeing why, even though I am happy with my unit. Feel free to contact with any questions seeing as I am where you are now.

Best of luck,

Trevor

@Jean Bolger I appreciate the comment. I think I may have worded this incorrectly, which is why you found my comment incorrect and you misunderstood my intentions regarding not future taxes, but previous taxes (paying the 2014 taxes in 2015). @Brie Schmidt thank you very much for the clarification, that does help significantly. 

@Mark Ainley and @Linda Weygant thank you for the reply. You are both correct. When I look over the title commitment it says:

"THE FIRST INSTALLMENT OF 2013 TAXES SHOWS NO AMOUNT BILLED.

THE SECOND INSTALLMENT OF 2013 TAXES SHOWS NO AMOUNT BILLED.

THE FIRST INSTALLMENT OF 2014 TAXES SHOWS NO AMOUNT BILLED .

THE SECOND INSTALLMENT OF 2014 TAXES IS NOT YET DUE, PAYABLE OR DELINQUENT." - I found this surprising as well, but my lawyer said there were no red flags.

Also regarding the contract:

"The general Real Estate taxes

95 shall be prorated as of the date of Closing based on \CSSgo of the most recent ascertainable full year tax bill. All

96 prorations shall be final as of dosing, except as provided in Paragraph 22. If the amount of the most recent

97 ascertainable full year tax bill reflects a homeowner, senior citizen or other exemption, a senior freeze or senior

98 deferral, then Seller has submitted or will submit in a timely manner all necessary documentation to the

99 appropriate governmental entity, before or after Closing, to preserve said exemption(s). The requirements of

100 this Paragraph shall survive the Closing."

I guess my main question, which I should know, if someone typically purchases a property in 2015, does the buyer pay the property taxes for the 2014 year or does the buyer not start paying taxes on the property till 2015 taxes is due? Thanks again for all of the help

@Matt Devincenzo Thank you for the response. Just to clarify, since the property taxes are paid the following year, I pay for the previous year's taxes? 

The tax bill is for the 2nd half of the year for 2014, not 2015. I bought the condo in March of 2015. I was under the impression that I would pay the taxes from 2015 from March - December of 2015 and the taxes would be prorated for 2014, Jan-March 2015. Am I wrong?

I bought a condo unit back in March. I got a good price on the unit and have been very happy with the profit I am making on it. Recently I received the tax bill for 2014. When I bought the property, the taxes were shockingly $0 because of deductions the previous owner received (she was out of state, elderly lady, not sure what else). I went over this with my lawyer a few times and he simply replied that her deductions could make this possible. I was surprised, but I went along with it. 

When I received the 2014 taxes, the bill was for a significant amount of money that I did not account for.  One reason he guessed might have been the case is the previous owner did not keep the deductions in place or file the paperwork. He said because this breaks the contract we could go after them. The only problem is, the owner now lives in Texas (the property and I are in the Chicago suburbs) and had been difficult to get a hold of during the closing and negotiating processes. This was my first deal and I have learned a great deal, but I am looking for some guidance and feedback from fellow investors. I appreciate the help and hope to give back in some capacity to you all!

@Brent Coombs

 Hi thanks for your comment! Because I will be buying the whole duplex, the rent / year at a conservative $1350 / mo for both sides which would be $3240. Does this change your numbers? 

@Ramon Jenkins

 I liked your idea and may contact you a little more about your experience with seller financing. 

Conservative Numbers

Vacancy @ 5%

Insurance $75/month or $900 / y

Maintenance - decent amount of rehab so I would estimate 1-2% / y of property so $1700 - $2400 a year or $170 / mo

Utilities Tenants

Could you run me through a scenario using your idea of owner financing for 6 months? I have never done this and would need to do my due diligence, but what costs would incur for me if I wanted to seller finance? Thanks for your ideas!

@Fred Heller I understand your perspective. My reasoning - which may be unfounded - is that I would not have to put in $10,000 into redoing their bathrooms and basement right away and I could use my $ and energy on the other unit while that unit is still bringing in money. My thought was that I would only have 1 side vacant for a period of time as opposed to both sides.