All Forum Posts by: Henry Lazerow

Read a nice discussion on Reddit and would love to hear BP members views on this chart. Many seem to be waiting for the next crash but real estate does not necessarily cycle with short term ups and downs with the potential for this to go on another decade. Outside the likely once in a life time subprime loan crash real estate has had steady growth over the last 30 years with a very slight reduction in 1991. 

How long do you believe this market can continue growing? How do you feel this will affect investing and how have you changed your strategies? What is real estate doing in your local market, hotter then last year? 

We are having a trend in Chicago north side of the farther out neighborhoods 2-4 units exploding. For example Avondale I sold a property $695k just 7 months ago and I relisted it for $799k now and it went contingent first week multiple offers. I am seeing huge growth in many of the "farther out but still desirable for young professionals" neighborhoods such as Avondale, Albany Park, West Town and Humboldt Park. Many clients are able to do larger flips/refi's from the added short term appreciation vs just the equity made through value add. 

I personally think we will see continued growth in major cities for many years to come. For example Chicago will go from .7-.8% rate deals to .5% rate deals being the norm (rent to purchase price ratio) while smaller towns will continue to see increases but at a much slower rate. This is of course just my opinion and only time can tell. Unless of course anyone on here has a crystal ball I can borrow ;) 

Landon Hoon I use him for all my 2-4 unit clients. PM me if want his contact info. 

I think you are making a mistake with cap/ex/maint/repairs $700 a month is way to large for a 4 unit. The "10% rule" is for small properties for example a $80k single family or a $150k duplex where cap/ex will be a larger percent of the lower gross rents. With $3500 in gross rents I would run analysis using a flat number such as $300 a month for cap/ex/maint/repairs. This will cover things like roof cost averaged over X years, furnace averaged over X years. 

I definitely would not build there you likely will be in the red unless your construction costs are very low. This area has seen an increase of lower income families over the last decade or so it is on a downward economic slope hence why it's so cheap for investment.

Just use a differant agent. Doesn't mean she is a bad agent but she might not be right fit for YOU. 

Agents all have differant styles. I am super fast to respond as know for investments it's critical but I also know lots of decade old top producers who do not answer the phone after dinner time and are great negotiators/marketing but definitely not fast to respond they tend to do better with seller clients vs other faster agents who may be better for buyers. 

@Brandon Salinas use this link and then just type in the property address. https://data.cityofchicago.org/widgets/ydr8-5enu 

Those low of rent units sound like a nightmare. Cap/ex will destroy those profits. Be careful. 

1031 but go lower leverage. Like 50-60% LTV. Once you have a lot of money liquid you don't need to be trying to max out your return on investment through high leverage and peace of mind while still making nice cashflow is more important.

You should be able to 1031 into more then one property this helps spread the risk. I just did a 1031 for a client where they bought two buildings and together they bring a pretty stable cashflow. 

Go for class B to class A- buildings. These are the highest yield with the lowest headaches. 

Reach out to @Mark Ainley he manages there and can give you realistic rental rate. If you can cashflow just keep it. 

If it's on the south side best bet will be getting it rehabbed mildly (new counter tops/sink, update bathroom, repaint the place, etc.. Most areas of chicago if this is 3br with some renovations will sell $80k+. Other then maybe Burnside or South Chicago neighborhood it should be worth more.

Feel free to PM me the address I can let you know realistically what it's worth with the MLS past solds. I don't do brokerage for low priced properties like this so will give you an honest no conflict of interest answer.

BTW If it's a $40k house this is not C class. C class in Chicago is $100-300k house. This is most likely D or F class.