All Forum Posts by: Chidi Osuji

My two partners and I are making about $1500 per month in Cash flow only deducting the mortgage. If we put 10% away for maintenance, repairs and vacancy, we're left with a little over $1200 per month. What to do with that extra money is a topic of conversation. We can:

1) Take the cash flow and split all of it 3 ways to help with our personal finances

2) Take no money out and aggressively pay down the mortgage over a few years (we owe ~$82K) to get it off our records, own the place free and clear and eliminate mortgage payment (P&I ~$412/mo). Re-invest in RE with the equity

3) Take no money out and accumulate cash reserves to re-invest in building #2

4) A combination of 1 & 2 or 1 & 3. 

My thinking is there's no tax benefit to paying down the mortgage principal and I could use the extra money ($400/mo) now to pay bills. But don't want to be too short-sighted.

What do we do?

I recently bought an inhabitable investment property and we bought it knowing that it needs some brick work and tuckpointing that will cost $12,000 to complete. Rather than building up the $1500 net profits every month, I'm thinking to just get a loan for the 12K and pay myself a bit less after deducting mortgage and construction loan payback. We have a new LLC that we are likely going to quitclaim the building into. How can I get the 12K loan for the brand spanking new LLC and not have to get one personally which would affect my DTI ratio and thus my ability at a new deal?

I have a deal on the table to buy a 2 unit building in West Garfield Park (West Side, say Pulaski and Madison) for $110,000. With section 8 tenants who have been there for a while and expect to be, it makes $2,000 in rent per month. It's a turnkey with fairly new HVAC, roof and rehab work. My potential partners don't think West Garfield Park is a neighborhood that will see any type of development or appreciation in the next 5 years and they may be right. But I see it as an easy way to make additional money. The mortgage might be around $775 when you factor in PITI, so you're talking a net of more than $1200 per month alone! How do you suggest I go forward? Should I hold off and use that 30K down payment and look for a better deal in a possibly sooner-to-be appreciating neighborhood? Or just go for the easy money now?

@Steve Babiak  Thanks for the reply. Heating system and roof are all pristine per the inspector so the property is very attractive. Will have to wrestle it out a little bit or just build up reserves slowly as @Scott Weaner said. These aren't immediate things, except the termites.

It cash flows well, even with a mortgage, taxes and insurance we would net 1400-1500 per month, so we could be close to 5K after 3 months. But I'm asking about this juncture. The seller counter-offered $5000 less than what we asked for in credits. Do we then reduce our offer? Ask him to fix the issues prior to closing?

So my real estate partnership LLC (a couple friends and I) are under contract to purchase a 2-flat/duplex in Chicago. The inspection uncovered termites, basement floor joists needing replacement due to the termite invasion, moderate tuckpointing needed and a couple of things sured up on the back wooden deck. There were a few minor things needing long-term attention as well. Other than that it is a good investment, section 8-approved, fully rented GREAT cash flow. So we asked for the credit to pay contractors to address the termites, floor joists, the back deck repairs and half the tuckpointing quote, amounting to about $6,400. The seller will only cover the termite eradication (about $1400) leaving us to repair the rest. We are pretty much throwing what we can out of our pockets/retirement funds to cover the down payment and won't have 2-3K each on top of that to cover the repairs - at least not for a while.

What are our options? Do we walk away? Ask to reduce the sale price? I want the building but don't want to sign up for taking on all these issues without the seller helping out in a fairly significant way. I'd like to think he's a motivated seller but apparently he has his limits.