All Forum Posts by: Calvin Lipscomb

Originally posted by @Frankie Woods:

Originally posted by @Calvin Lipscomb:

Originally posted by @Frankie Woods:

Banks understand that all real estate is local.  If they do not understand the market, regardless of the purchase price, you'll hard pressed to find a non-local lender to fund the deal unless they are Fannie / Freddie sponsored.

 My problem was that many were "questioning" why I would want to invest in the Chicago market.  Many have no idea just how expensive the buy-in throughout the entire NYC is for 6+ units.  Unless you are counting great price appreciation, why spend 700k for a 2 family when I can spend the same 700k for a great 6 family unit in at least a B area Chicago.  This was a stumbling block for a number of potential lenders.  

 Interesting.  I do not quite understand why they would care about your rationale.  Out-of-state investors is not a new concept.  Maybe you are just talking to inexperienced bankers or banks.  I have never encountered a bank who loans in a market I'm investing in ask why I was investing there...other than is it a primary or investment property to establish the risk profile. 

 I can emphatically tell you that was a concern across the board.  And, the fact that we were first timers with no track record did not help as well.  We ultimately came up with a finance and investment strategy for the area to secure property and develop a track record.  When seek to cash out refinance in the spring a number of concerns would have been addressed.  As they say, you have figure out your strategy to get around obstacles and have to keep knocking on doors until you find the one that will open for you. 

Originally posted by @Courtney M.:

@Mike Dorneman

That sounds like a fantastic process. The markets I'm looking in probably would require $40k - $60k to buy a distressed property with cash. I'm just curious as to your average house price using your strategy.

 "average house price" as you noted is dependent on location.  If you have a great finance team in place people have made cash offers but, went to closing with a mortgage in hand.  Also, some finance solution services will allow you to close with cash and then allow you to do a cash refi  with the financing for the needed rehab costs.  

Originally posted by @Chris Mason:

Originally posted by @Calvin Lipscomb:

My group is just starting out on our real estate venture.  We are currently seeking financing for a Chicago 6 family unit that is currently rented.  We are purchasing the property all cash (we discovered that this can be a problem too) because we were running into two main problems when approaching lenders 1. This is our first deal and 2. We are NYC  based.   I expected some lenders to see that we are seeking to maximize our investment dollars by investing in a lower cost city.  You are not getting a 6 family unit in NYC for under $500k.  I had to explain our reasoning in detail to a number of potential lenders.  Which still did not help.  And we are seeking financing for the standard 75% of the purchase price.

Any thoughts on how to tackle this roadblock would be appreciated.  

 Keep doing your thing, but FYI often commercial financing gets a lot easier once you have one or two residential 1-4 unit properties under your belt. 

 We found short term financing.  We are hoping due to the number of purchases and deal transaction that would  be available we will not have such a difficult time when we have to cash out refinance around April/May of next year.

Originally posted by @Frankie Woods:

Banks understand that all real estate is local.  If they do not understand the market, regardless of the purchase price, you'll hard pressed to find a non-local lender to fund the deal unless they are Fannie / Freddie sponsored.

 My problem was that many were "questioning" why I would want to invest in the Chicago market.  Many have no idea just how expensive the buy-in throughout the entire NYC is for 6+ units.  Unless you are counting great price appreciation, why spend 700k for a 2 family when I can spend the same 700k for a great 6 family unit in at least a B area Chicago.  This was a stumbling block for a number of potential lenders.  

Originally posted by @Anthony Ladson:

Hello everyone I’m so glad I found this forum. I joined less than a week ago and already found some great information on the site. I’m from the Bronx NY but I live in Md now. I will be purchasing multi units properties soon but I must and will build my A team first. that’s where I went wrong years ago. This time I will be prepared. When you started investing in five units and above, what would you do different now that you are wiser from the experience?  Any suggestions will be very much appreciated. 

 Consider focusing on subgroups as well.  Since we are investing in Chicago we are part of that group.  The groups has been very helpful to me and our ventures.  I am going to post a question now.

Originally posted by @Anthony Ladson:

Hello everyone I’m so glad I found this forum. I joined less than a week ago and already found some great information on the site. I’m from the Bronx NY but I live in Md now. I will be purchasing multi units properties soon but I must and will build my A team first. that’s where I went wrong years ago. This time I will be prepared. When you started investing in five units and above, what would you do different now that you are wiser from the experience?  Any suggestions will be very much appreciated. 

 So much depends.  Are you buying near or far?  Are you looking for turnkey investments or value add opportunities?  My group is currently looking for value add opportunities to maximize returns and preserve capital for further expansion.  And we are investing in areas far from where we live and work.  Which impacts a number of investment options. 

@Taylor King The numbers told you that you could not afford a place like that without putting in repair work. So you wanted a truly rear deal from someone you have not done any business with in a hot market.

Originally posted by @Ronald Daley:

@George Sleweon I am currently looking for a good CPA and an Attorney in Chicago. Did you have any luck finding one that you recommend I should reach out to?

 I suggest that you interview the attorney we used for our closing.  She was very helpful and understood what we were trying to accomplish as an investment group.  She provided sound and timely legal advice for our last transaction.  

Karen M. Walker, Esq.
3353 S. Prairie Avenue, 1st Flr.

All the best.

Originally posted by @Cody Ray:

I'd be curious to hear more about your thoughts on the economic and demographic shifts in South Shore. I'm still torn. People have been forecasting improvements for 3 decades now, and they've yet to really materialize. But it does feel like something is changing, at least on the northern blocks near Jackson Park Highlands.

 Correct.  People have been saying a number of things of decades, more of a wish and a prayer back then.  As an out of state of investor and a non-native to Chicago I have to dig into more of the facts to make such a long term bet.  The skinny, the area will come under pressure due to University of Chicago continued growth and prominence.  That will continue to be a key anchor in the area.  The price points will get "too high" in the Hyde Park area and people will spill over to the Woodlawn area for greater value and opportunity.  Will it be tomorrow? No.  And, I am glad for that.  Giving my group an opportunity to try and cherry pick prime locations on that side.  Because once that trend becomes clearly visible it will become a self-fulling prophecy when the "big money" comes rushing in.  Next, the Obama Library will eventually be built creating a few jobs and more tourist to the area which will be another economic anchor in the community (I have discounted the Library as an outright stimulus for growth in the area.  Why?  Truly quantifying that is too iffy and speculative, in my view.  However, if it truly becomes a stimulus for the community it will only drive prices up creating extra unaccounted for value for property owners and business already in the area.).  In the next decade, I anticipate Chicago having a Republican mayor just like NY which will encourage more business investment in the area.  Those are few my thoughts around why I am investing in Chicago.    

Originally posted by @Eric Congious:

Congratulations on moving forward.  Would you care to describe your strategy on purchasing in this area, and what kind of financing you guys went with initially? I am a newbie and putting together strategies to dip my toe in the water.  Would love to hear your experience while its still fresh.  Thanks. 

 We are a long term buy and hold strategy.  Long term for us is 15+ years.  There are economic and demographic shifts in the area that will see a major shift in the South Shore area in our view.  So we are targeting 6 family units and doing the overall reinvestment into the properties for our long term hold.  The truly easy money was made 4-6 years ago but, I believe that there are long term opportunities in the community.  Having multi-family units will enable us to ride out the expected down turns and provide us with cash to scope up more properties when properties value drop.