All Forum Posts by: Danielle Cage

@Nicholas L. I’m starting small so a PM doesn't fit in my plan at the moment. When I scale I do plan on using one

I am closing on my first rental that is in Kane County IL and am looking for a quality IL lease agreement to use. BP offers one that looks ok. Does anyone here use them? Aside from that, are there any recommendations for another lease template? 

Thanks!

@Chad Gilchrist I'm in the Aurora area and have watched multi's along the corridor from where I am all the way north to Elgin for a few years. I would expect a better deal for an off market property. 400k is over priced. 

Batavia has a small town feel (I think it's still well water?) and like all areas have exploded in price since 2020. There are factors you have to look at. It's probably a C+ to B- neighborhood. You won't find significant crime, but it's more bread and butter. Rents are fairly solid, so you can pull in something decent, but with rates how they are, I can't see cash flowing at all - unless you're not financing. In that regard, who knows how property values will hold in this area once the market corrects... and no, it hasn't corrected yet in Chicagoland.

If you look just south of Batavia, there's a 2 unit on the market for 355k in North Aurora. The area is a bit less attractive yes, still they can't move it and just did a price reduction.

Also, Geneva and St. Charles are not the same values as Batavia. 400k in St. Charles and especially Geneva, that's something to most likely jump on. 400k in Batavia, I wouldn't... unless you're getting a lot of surrounding land or other exceptional value to the deal.

Quote from @Axel Meierhoefer:

Quote from @Danielle Cage:

Quote from @V.G Jason:

6% interest is actually good, so I don't know why you're saying that as a concern. If we do hit a recession, your rents are likely already locked in a on a 1-year tenure. Now is your tenant suitable for renting through that? That's the right question and depends on the quality of your PM.

You're missing somethings; the quality of the location, how much maintenance it needs, and your PITI. 

I agree 6% is good, for now. My concern is if both rates and values drop. I may have difficulty refinancing so I could be stuck stuck at that for long time.

Believe me, I remember 11%+ rates back in the 80s. I know now isn’t the worst it can get.

-Its a c class neighborhood. 
-It needs no maintenance right now and is fully rented, but will need approximately 20 in the next probably 2 years. It could be longer but I prefer not to put it off longer
-PITI is 3340

I am curious. Is your PITI based on current numbers or the post purchase calculation. In IL you get reassessments that can be brutal. I had a 40% increase in the property taxes in one of my IL properties last year.

This is something I hadn’t looked at. According to the county website last year an assessment was done however the final 2024 tax bill is not listed yet.

Based on what I see so far, they’ve increased assessed value by 6400. Using last year’s rate, the total increase thus far is $600/ yr.

The PITI had provisions for a $300 yearly increase. If it holds at the current assessment showing on their site, at $600 it's doable.

I’ll call the city Monday morning and find out when the final assessments will be released.

Thank you so much for pointing this out!

Hi,

I have my first multi unit under contract located in Illinois. It’s a mixed use building with 4 units. 3 are being used residentially and 1 as a business.

The business is a studio with no equipment inside. There is essentially a couch, a salon chair, and a bowl to wash hair. It might be 300 sq ft. Rent is currently only 500.00/ mo.

My insurance agent said because of this unit I need a commercial landlord policy and the price is 200.00 more a month than anticipated.

Does anyone have experience with this? Does this seem accurate for Illinois? Any thoughts on what I can do to lower the cost?

I can convert this to a residential studio so the insurance cost will drop but it will cost me ~8k.

Hi Dan,

Yep I used an arbitrary # that all the calculators offer. What do you recommend for figuring capex and maintenance?

It is the new 5% conventional down. I negotiated max seller credit.

I appreciate the feedback about the Great Recession and rents! Makes total sense.

Quote from @V.G Jason:

6% interest is actually good, so I don't know why you're saying that as a concern. If we do hit a recession, your rents are likely already locked in a on a 1-year tenure. Now is your tenant suitable for renting through that? That's the right question and depends on the quality of your PM.

You're missing somethings; the quality of the location, how much maintenance it needs, and your PITI. 

I agree 6% is good, for now. My concern is if both rates and values drop. I may have difficulty refinancing so I could be stuck stuck at that for long time.

Believe me, I remember 11%+ rates back in the 80s. I know now isn’t the worst it can get.

-Its a c class neighborhood. 
-It needs no maintenance right now and is fully rented, but will need approximately 20 in the next probably 2 years. It could be longer but I prefer not to put it off longer
-PITI is 3340

Quote from @Robin Simon:

I'd look into the property tax situation very very carefully especially if in Cook County.  Can get in a tough spiral that can ruin an otherwise good deal

That is an excellent point! Luckily this is just outside Cook.

Quote from @Peter Baldridge:

What you have to worry about is tenants who can't pay due to job losses. You could reduce the odds of that happening by buying in areas with recession-proof or well-diversified industries.

Thanks Peter! I’ve selected a c class city that has a fair amount of diverse industry in it and surrounding it. 

Quote from @Bill B.:

Sounds like a deal but I also question the $15k down? $100k would be more common. Are you moving in to a unit? Is it off market? Either way if your numbers are right it sounds like a deal even if $20-40k in deferred maintenance. 

Yes I’ll be moving into a unit to satisfy occupancy requirements.

I understand it would be best to put more down, however I figured I could wait another 2.5 years saving to put down 100k, or I could jump in now.

This loan is only 5% down, however my next will be an investment loan and will require 15% down on an SFR.

What I’m saving on the 4 unit I’ll be putting into my next property. This way I can do 5 units this year.

There is easily 35k in deferred maintenance. 

I’ve analyzed at least 50-60 multi units in the last year or so and this one, even with the maintenance, looks decent comparatively (especially with the low down payment).

Thanks!