All Forum Posts by: Wayne Popelka

Anybody familiar with Equity Team? Their website seems like the most straightforward, and I like that they list their yelp scores compared to the other companies. 

@Paul Sian - Property management is another knot I'm working on. From what I've read, it's unclear to me if I can count on a PM company to arrange for and manage maintenance work and I just foot the bill, or if I'll be on the hook to set that stuff up remotely. I'm guessing it probably varies from PM to PM. I got a few names from another Cincy thread - Propertymanagercincinnati, Equity Team, Home River. I was going to reach out to them to say hello and get some rates, but any recommendation from anyone would be welcomed. 

@Andrew Hargreave - I grew up around Joliet (Romeoville, New Lenox)! I'd be interested in talking to you about your experience on the South Side. 

Thanks for the response, everybody! 

@Joe Verkamp - I'd love to take a look at the details - could you send me some info and numbers? 

@Kyle Bale - There's a number of reasons, @Andrew Hargreave had it right though - our state ain't in great shape. Another reason is that I'm looking to (eventually) get away from work and make my living from rents. We plan on using a management company from the start regardless of where we purchase, so I wouldn't save on that cost if we stay local. I want to be flexible and able to go where we stand to do best. Learning local won't teach me to do that. I can learn elsewhere and bring that knowledge back here if it starts to make sense. 

Hey everybody!

I'm Wayne- I'm from Chicago (Oak Park). I caught the bug a couple of months ago and I'm looking at Cincinnati as where I think I'd like to start. My wife and I (or maybe just me, we'll see what happens) are thinking about driving out next Saturday to look at a few places. Anyone know any brokers they'd recommend? Preferably one that invests. We'd like to get our feet wet with one or two duplexes that don't need too much work, and then we can look at BRRRR in a year or two when we're more confident about what we're doing.

I've got a ton of questions, both in general and specific to Cincinnati. Something I'm required to avoid due to my day job is section 8 tenants, is that going to be difficult getting started in the 100,000-200,000 range?  How's Evanston? Any other neighborhoods we should be checking out? Anybody looking to make connections? Anybody or anything I should run screaming from? Thus far, I've got a pretty good lender and that's about it. What else do I need to know? Is there anything I can tell you? 

Another question that popped into my head today about commercial loans. Is the more than 4 unit rule that black and white? Is there a little grey that you can squeeze a 5 unit though for conventional loans or anything like that? Or is it just 4 = conventional, 5 = commercial, regardless of other factors? 

We’ve done none of those things. Again, these sections of the family have had little to no contact in the past 20 years. I’d argue that the rent was taking care of these things. Maybe, in trying to to determine the missed cash flow, we’ll need to tweak how we account for property management as they did this. But wouldn’t we just subtract 10% for property management from our owed cash flow and credit theirs?

Another thing that crossed my mind was to offer my wife’s siblings $10,000 a piece for their portion of the 25% and then going to negotiate with the owner of the 75% to see how much of a percentage of ownership we could get in exchange for the owed cash flow. If I could get 50% owner ship (the 25% from my wife’s family and 25% in exchange for the owed cash flow), I’d have at least $800 a month coming in for just the $20,000 payout to the siblings. I haven’t drilled down into this too much, but it looks really promising to me at a glance. Any thoughts?

Hey everybody!

My wife and I are just starting out on our journey. We're gearing up to buy our first property and we've also a unique situation surrounding a property on my wife's side of the family that we're looking to unravel. Here's our understanding of the situation thus far: 

My wife's father died in 1998. At that time he had 25% of a duplex on the far northwest side of Chicago (Irving/Harlem area) that had originally been owned by his mother. The mortgage was paid off at some point before then and, as far as we know, nothing has been borrowed against the equity. Everyone believes that ownership either was transferred to his 3 children (including my wife) when he died or that the deed was updated with his wife's name (my wife's mother). In any case, they believe that 25% resides with them in some form or another. Since 1998, they haven't had any involvement in the duplex. The other party (an uncle, I believe) who owns 75% has managed the property and, I believe at times, lived in one or both of the units and also had both rented out. The Cook County Assessor shows that all of the taxes have been paid. My wife and her siblings have had no communication with this side of their family over the past 20+ years. When the subject of this property comes up my wife's siblings' and mother's gut instinct is to worry because they haven't been paying the property tax and I've been trying to explain to them that, as an investment property, the rent should be covering that. I played with the numbers and here's what I'm seeing: 

Assessor lists the property value at $362,000, so I'm just using that as a potential selling price. With 100% equity and minus 9% for closing costs, I believe my wife and her siblings would be entitled to around $82,000 if the property were sold. 

In terms of cashflow, here are my numbers: 

Rentometer lists the median rent in the area for a 3 bedroom at $1725, to be conservative I'm using $1600 a unit. 

$0 owed on the house

2017 Property Tax - $6769.64 ($564.13 monthly)

Vacancy rate in Chicago is 3.8, I'm using 5.0 ($160).

Property management - 10% ($360)

Capital Expense and Maintenance - 15% ($480)

564.13

160.00

320.00

-480.00

$1,524.13 Monthly Operating Costs

Subtracting the monthly operating costs from the monthly rent:

3200.00

-1524.13

$1,675.87 Cashflow ($418.96 = 25% of the monthly cashflow) 

I feel like, at the very least, my wife and her siblings should be getting their portion of the monthly cashflow. I think they're also owed quite a bit. So, anyone have any thoughts? Is my line of thinking correct? What courses of action might be available to us or recommendations on how to proceed? Does anyone have any idea how I could compute the cashflow they may have been missing out on for the past 20 years? 

Sorry about the length! Thanks for reading! I look forward to everyone's feedback!

Wayne

Hey Everybody, 

I've spent a good deal of time lurking over the past month and I thought I'd step up and finally say hello. I'm Wayne. I've thought about getting a rental property as a next step in life for a couple of years now. I didn't really have much of an idea beyond that; it just seemed like I was at point in my life where I was supposed to be taking some sort of step towards increasing my assets. A question on Quora about rental investing coaxed me to read RDPD, and it really got me to rethink my approach to money. So - pretty much the same story most folks share here. We're HELOC'ed and loaded and waiting for something appealing to fall into our laps.

I've been spending a good deal of time with the threads, books, podcasts, webinars, and then my spreadsheets to make sure I'm understanding how to analyze properties for cashflow. I think the logic behind all of it pretty fascinating and I find myself coming up with all sorts of hypotheticals I want to throw out into the world, and thought I'd start here. 

When I started talking to my wife about this, one of the things that occurred to us was that she might get her broker's license. We thought this would be a good way for her to participate and that it'd help her learn the space. Then the idea of her representing me on a purchase we might want to make crossed our mind, could that be a way for us to get a little 3% kickback at the closing? What if I also got my license? Could we swap roles the next time and guarantee that any time either of us bought a property from a seller using an agent that we'd ensure ourselves a kickback? Seems to good too be true. Any thoughts on it?