All Forum Posts by: Paul Cijunelis

All of the things you suggest are options to the beneficiaries. Sounds like the house is not local to you, OP. Without having much info, I would need to know the financial situation of the 'close family' to determine a best approach. I would ask...

Are carrying costs a problem moving forward? How long will they have to cover property taxes etc for the decision they make?

For costs, if you're an investor, you can probably do a video walk through to get a ballpark estimate on rehab. Again, see question #1.

Selling as-is means selling it cheap, no hassle, quick sale. Wholesalers drag out the process if you go with a bad one. they are not buying the house. they only want your signature. Renovating usually means you need money to renovate. Do they have spare cash? Do they have good tastes? Are they familiar with what they should do for colors, amenities, etc? If not they could spend money and time and offend buyers if they update the property incorrectly.

There are other options, such as landlording. Contact a local property manager. Can they get it rehabbed for rent for you? Is it near a nice beach for STR? There are so many questions...

Quote from @Gene D Stephens:

Jason,

Thank you for the advice.  The asking price is under $125k and like mentioned earlier, the renovations would be 50% so there are major repairs (not move-in ready).  Sounds like, from your perspective, this type loan would not be best for my situation.  I also kept my first home and it is paid off now and worth approximately $150k, with current renters.  I've been doing some light reading, and it sounds like refinancing that property and using the proceeds to reinvest elsewhere might be a better option.  I'm relatively new to this and am grateful for any advice from the forum.  Thanks again.
Gene

I would use a PML for the acquisition and rehab. These are typically interest only and require a payment of 1-4 points up front depending on your area and the PML. Around here 12+2 is typical. Typically they would require your numbers up front, rehab with a schedule of "draws". This is advantageous bc later you have a third party loan (not your personal money) so seasoning period is 90 days to DSCR out. If it was your own money I think you have to wait 12 months to refi.

Run your numbers and make sure you will CF with a renter first. Make sure your rehab is "renter" cost rehab. etc.

Quote from @Victor Tofilski:

https://www.zillow.com/homedetails/3290-E-M-36-APT-2-Pinckne... had this unit listed over 2 months I started out too high at 1350. Its been vacant for 21 days now

I’ve had it down to 1200 for weeks and just added $500 off first months rent.

Does anyone have any other tips?

I didn't read all the replies but I did look at your link. I think the property is a nice property for renters. Seems clean, visually appealing and somewhat updated. Cannot tell location or amenities, etc. However, I think the photos could be improved. It is challenging in the winter months as people tend to focus on the holidays, shopping, dinners, parties, etc. It was also an election year which makes it even harder. So for the photos:

1) The floor is dark. I would have an extra light on a stand to brighten the spaces.

2) Your first photo is of an empty room to a doorway. Are there any windows in this home? It is a bizarre choice for a "headline" photo.

3) Kitchen seems to be galley, hard to shoot, but you should consider a result that does not portray a cramped space - which is what I get looking at these.

4) wide angle. I don't think you used a wide angle which pretty much every camera phone has. Taking pics of the bedrooms where you see the door/doorway makes the room itself look tiny.

5) video might help here though my camera does not have a wide angle video option.

Summary: most people won't read descriptions first. They will look at pics and move on if visually they aren't interested

Quote from @Kevin Sobilo:

Sadly wholesalers have a stigma for not being honest about what they do. So, often times they don't tell you they are wholesalers and act as if they plan to purchase the property themselves. 

Isn't that the truth... Unfortunately I don't buy in Milwaukee (I stick to the chicagoland area), but if you deal with wholesalers put in a clause or have an addendum they have x business days to find a buyer and resell the contract if you do sign. That way they can't dangle the carrot forever. Good luck.

Kevin, sounds like you're a bit new to this and while I did not read all the way down I will offer some advice I did not see up to this post of yours. Since we are both in Chicago, I would highly advise checking into the landlording laws here. 

As Sean Wagner mentioned, the city of Chicago has adopted their own regulations on charging what's commonly referred to as a "security deposit" you need to do it another way. 

Another thing I would say is for you to is to contemplate dropping rent to $1750 if comps are +$2k. In Illinois and especially the city of Chicago, getting rid of a tenant is not easy as some previous posters must believe. Having been in the RE market for many years, I've seen and heard some horror stories. Giving away the place cheap only creates more work for yourself screening lower income individuals, and attracts scammers. Then if they don't' pay and don't want to move, you have to evict which in Chicago means 6-12 months and/or "cash for keys" (landlords please stop doing that it just incentivizes these people). This is very costly to an owner of course. A steep drop in rent just attracts scammers imo. Also stay away from craigslist. Again, scammers.

One horror story... I acquired a 3-flat in Humboldt a couple months ago who had two units not paying (ouch). Two units 11 months no rent, each. Plus damages. Owner was desperate to sell. The price was too good to pass up. If I shared the price people wouldn't believe it so I'll leave it at that. Just finished the rehab, likely will go through the same thing. It's winter, hard to find tenants. the last thing we want is bad tenants who don't pay, though, so while it is listed a bit lower than market it is not a screaming bargain. I am expecting my two units to probably not rent for a bit. Screen hard. Don't bend. Make sure whoever you put in there is financially responsible and I'd do a 6 month or month to month explaining in summer rates will increase.

Keep us posted.

So i built my home about 8 years ago. I had one kid at the time, she's now in HS and the new one is turning 5 soon LOL. Big 10 yr spread there. So I would say that once she moves out we will probably sell our "forever home" and it will mean 10 years-ish is "forever" for us. Because once the oldest moves out, I know the wife won't want to have a large home anymore.

Sorry to hear about your divorce. Sounds like you have your act together with passive income and a savings, as well as motivation to build wealth from there. Congrats, you're a rare find, enjoy your unicorn status!

Looks like Tim and Ezekiel have provided a bunch already...

What are costs associated with snow/harsh winters? Nothing over any service you wanted to provide.

Do property taxes fluctuate? This is public info and usually it will change based on seller being there a long time or something like an elderly tax rate.

What are insurance costs like (we've got a lot of local variability around fire insurance for ex.)?

Most ins providers I work with (chicago, FTW indiana areas) are nationwide. Maybe yours is too. But usually for a tenant occupied it's like $90-120 per month

I've noticed a lot of multi-family buildings are pre-WWII housing inventory - are there restrictions or issues common with that (historic districts, crazy high utility costs, etc)?

You'd need to call the local township which I would recommend doing for any LTBH. Opinion, avoid historical districts...

To me this is a combination of things. Main things being population growth and landlording laws. If those two things are in your favor, you will do well.

Quote from @Kyle Kline:

Quote from @Paul Cijunelis:

Quote from @Kyle Kline:

On a recent Bigger Pockets Podcast episode  [...] 

Kyle some investors are in a different place than others. If you are starting this is an approach that assumes more risk tolerance. If you want less risk it's not for you. the cost of capital right now is forcing some to get deals at par and hope for appreciation (due to inflation). this works if you have other income to offset.

That makes a lot of sense. I appreciate your input!

Kyle, you can fund an entire acquisition with OPM (other people's money). It's your risk tolerance. I rarely use OPM to fund a rehab but I sometimes use OPM to fund an acquisition. For example, I used a HML (hard money lender) to fund the acquisition of a property in Indiana I purchased off-market from someone in foreclosure, but paid for the rehab with my own cash. It's being listed/rented right now. This was an Oct 15th acquisition and took about 2 months to clean out and repair/rehab. So the timeline is dependent on experience, amount of work, contractor trustworthiness and promptness, etc. A typical rehab is going to be 3-4 months, with a month to list/rent. I would figure 6 months carry cost (cost to carry the property while it is vacant). So there's acquisition, rehab/repair, carry, insurance (vacant/contractor insurance, yes there's two types), and any other expenses (closing, etc). If you had eyes on the property and have a good idea on all this you can hit the HML for all the costs and take draws after the initial acquisition to do the rehab for the rest of the amount. Good luck.

The honest answer here is in this marketplace not knowing what you're doing the risk is high.

Knowing what I know now on the forums is totally different. I would invest in ugly houses that need lots of rehab work to build the equity and refi spreads needed to offset the work and preserve most/all of my initial capital. I'd DSCR into the property, and refi trad out. then repeat.

Best advice is to join or visit a local REIA meetup and start shaking hands.