CHICAGO - Buying 2 Flat - How to do due diligence

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CHICAGO - Buying 2 Flat - How to do due diligence

Robert Obniski
Investor · Madison, WI · Member since 2015 · 128 posts · 33 votes

I looking to purchase a 2 flat in the chicago area and be a live in owner. It's an off market deal through a wholesaler. One of the requirements is a $10k non refundable earnest money deposit. 

Like all deals the seller is having the buyer do all his own inspections and due diligence. 

My question is... what is the best way to go about checking if there are any violations or unpaid fines that can be carried over to me? I basically want to know what outlets i use or call or whater to cover my own a$$?

There are no contingencies in this deal so I need to get it right the first time.

Please share your wisdom BP!!

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Mark AinleyBusiness Member
Property Manager · Roselle, IL (Chicago Suburb) · Member since 2013 · 2k+ posts · 1k+ votes
10y

If the property is in Chicago you can go on the city site.  If in the burbs most villages have the ability to request a Freedom of Information online or going into the city hall.  Also have a title company run title which will outline any liens.  Some of the more sophisticated wholesales have been pulling title themselves earlier in the process to prevent probs down the road so ask the wholesaler if they have title pulled.  

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  • Mark AinleyBusiness Member
    Property Manager · Roselle, IL (Chicago Suburb) · Member since 2013 · 2k+ posts · 1k+ votes
    10y

    If the property is in Chicago you can go on the city site.  If in the burbs most villages have the ability to request a Freedom of Information online or going into the city hall.  Also have a title company run title which will outline any liens.  Some of the more sophisticated wholesales have been pulling title themselves earlier in the process to prevent probs down the road so ask the wholesaler if they have title pulled.  

    [email protected]630-781-6744Podcast Guest on Show #72
    GC Realty & Development LLC4.61060 Reviews
    WebsiteView Page
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  • Dhru Das
    Investor · Chicago, IL · Member since 2016 · 160 posts · 41 votes
    10y

    @Robert Obniski

    I agree with what @Mark Ainley just said. I purchased a SFR in south burb from a wholesaler. We did a quit claim deed and POA. But later the owner came back denying she signed anything as apparently the wholesaler didn't pay her all the money he was supposed to...I could have taken her to court and won anyway, but it was just a waste of time and delay in rehab process...It was my first deal so I didn't know lot of things back then which I do now...make sure you go to the city site and you can check for any liens against the property, back taxes etc..

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  • Ronan M.Pro Member
    Rental Property Investor · Chicago, IL · Member since 2015 · 352 posts · 281 votes
    10y

    For any past and present violations and record of permits pulled just google Chicago Building Violations. That will take you to the City website. Enter the property address and it will bring up anything that is or has been recorded by the City for a number of years. Big dollar items you might want to look out for is any mention of decks/porches being out of code.

    Good luck.

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  • Lorenzo Perez
    Chicago, IL · Member since 2016 · 13 posts · 4 votes
    10y

    Here are some websites (county and city) to complete your due diligence. 

    Find property PIN and property TAX information

    http://www.cookcountypropertyinfo.com/Pages/PIN-Search.aspx

    Find City of Chicago building code violations

    http://www.cityofchicago.org/city/en/depts/bldgs/provdrs/inspect/svcs/building_violationsonline.html

    Find record of deeds

    http://cookrecorder.com/search-our-records/

    Find more tax information on property & delinquent tax info

    http://www.cookcountytreasurer.com/payment.aspx

    http://www.cookcountyclerk.com/tsd/delinquenttaxsearch/Pages/DelinquentTaxSearch.aspx

    Building Permit Information

    http://www.cityofchicago.org/city/en/depts/bldgs/dataset/building_permits.html

    City of Chicago Land Lord Tenants Rights

    http://www.cityofchicago.org/city/en/depts/dcd/supp_info/rents_right.html

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  • Crystal SmithPro Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
    10y
    Originally posted by @Robert Obniski:

    My question is... what is the best way to go about checking if there are any violations or unpaid fines that can be carried over to me? I basically want to know what outlets i use or call or whater to cover my own a$$?

    There are no contingencies in this deal so I need to get it right the first time.

     Looks like you're getting good feedback on what resources to use for due diligence.  My caution on the non-refundable deposit- The deposit should be held by a 3rd party (Attorney, title company....) & should be refundable if the wholesaler cannot deliver clear title.   

    312-681-7487
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  • Robert Obniski
    OP
    Investor · Madison, WI · Member since 2015 · 128 posts · 33 votes
    10y

    Great info everyone and great points being made. Thanks for that. 

    I do plan to use an attorney and do plan to use a title company and get title insurance and all that.

    Now after doing some research, the only thing that is showing a red flag (besides $10k non-refundable) is that this 2 flat, under the tax assessor website, is listed as a 1 story single family home with 2 beds and 2 baths. 

    In reality it is actually a 2 story, 2bed 1 bath in each unit. Looks to be separately metered. 

    It is zoned RS-3

    So what do I do now?

    I do plan to buy cash, rehab with cash then refi.

    And finally i plan to live in one unit rent the ither for atleast 1.5years

    So...what do I make of this?

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  • John Yousef
    Investor · Chicago, IL · Member since 2016 · 53 posts · 22 votes
    10y
    Robert Obniski , it seems this might be a legal single family home that someone converted to a two unit. Which happens all the time. You can have your attorney get a zoning certificate from the city to see if it comes back as a legal two flat or not. However, in the mean time, see if the property has 2 separate ComEd electric meters. That's usually a good sign if the units are legal or not. It's not always 100%, so get the zoning cert ASAP.
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  • Robert Obniski
    OP
    Investor · Madison, WI · Member since 2015 · 128 posts · 33 votes
    10y

    @John Yousef

    Alright Ill definitly take a look into that. 

    How long is the turn around to receive the certificate?

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  • John Yousef
    Investor · Chicago, IL · Member since 2016 · 53 posts · 22 votes
    10y
    Robert Obniski It can take about a week usually, two the most if they are busy. It also cost around $300 or so, but it's worth it.
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  • Account Closed
    Investor · Los Angeles, CA · Member since 2015 · 53 posts · 34 votes
    10y

    I bought a house in Chicago that was illegally converted to a 2 flat many years ago, with 2 ComEd meters, 2 water/trash accounts, and 2 gas meters.  But zoning cert shows it as a single family.  So the existence of meters and separate utilities does not necessarily mean it is zoned as such.  

    Definitely get a zoning certificate.  You should be able to check the zoning classification online before you get the certificate, depending on the city.

    As Crystal said, make the non-refundable deposit subject to clear title.  

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  • John Yousef
    Investor · Chicago, IL · Member since 2016 · 53 posts · 22 votes
    10y
    Blake Facente In Chicago, it's very hard to get a 2nd electrical meter without permits before the utility company will install the 2nd meter. However, mistakes happen and sometimes they will. I always recommend to get the zoning cert to be 100% sure, but checking the electrical meters is always a good start. You can't check online for the legal units that zoning allows in Chicago, so you have to do it manually unfortunately...
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  • Josh Kundrat
    Chicago, IL · Member since 2015 · 77 posts · 39 votes
    10y

    I had the same thing happen to me with a 2 flat, separate everything, but still illegal. If i'm not mistaken RS-3 can be either single family or a 2 flat, so yeah definitely get the zoning cert.

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  • Drew Millard
    Investor · Chicago, IL - Illinois · Member since 2015 · 33 posts · 13 votes
    10y

    When you google "building violations chicago" you can take a look at all the violations, permits and specs from the building department.  One of the categories says DU which is legal dwelling units.  The zoning cert is the end all be all but this will give you a much quicker answer.  You can also pull a FOIA from the department of buildings to attain legal DU.  If you want to give me a call I can walk you through it.  

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