All Forum Posts by: Henry T.

@Caleb Heimsoth

I appreciate your suggestion, however, please do not tell me to look in another area when nothing can be presented. We all start somewhere and I found it to be on bigger pockets. I have taken the steps to educate myself but as all things, it takes time and patience.

@William C.

I'll take a closer look with the individual who will further explain all factors I should include. Realistically, I will probably lose more than I gain from buying the multi-unit property. 

It worries to take a risk on a property and I did not factor in other expenses such as management, roof problems, additional repairs, etc. My excitement may have swooned me over by the numbers and inability to look beyond the "deal". I do respect and admire all the thought and advice you have given.

@Caleb Heimsoth

Correct yes, there are the correct numbers according to the seller. My father also asked me the same questions about sewage, lawn care and etc.

My agent mentioned something about Indiana and I have not pursued the thought of it. 

Be wary, I am still new and learning more as I research and read about the real estate industry. If I went for Indiana, where would the best area(s) to look? 

Matt Ellis I’ll be talking with someone with the numbers today, however for everyone who has said the calculations are off. I believe they are as well. I have asked my agent to see if any any paperwork to help support these numbers and I was told there were none to give. All the numbers given are in fact the true ones. My gut is telling me this is one I should pass on. I feel as if some expenses have been left out or underestimated in order to make it seem like “a good opportunity”.

Extra Post by Accident

@Rich S.

Thank you! The area is sketchy, it's not one where many would go to but I have a motor vehicle and it makes it more secure. There are also security cameras around the perimeter of the building. This is a risk that I am willing to take and go for as long as it is valid and within reason. 

A property management company will have to come into play. It's be repeated and reiterated by previous answers and think it'll be in my best interest.

@Dennis M.

I will ask my agent to see about financial filings to make sure those are true numbers. I do appreciate the words of advice, I'm still learning and taking it all in. I am from Saint Louis, Missouri. Therefore I am aware of the type of personalities, backgrounds and tenants that I will have to deal with. I'll make sure to stay on my toes if I do go that route.

Joseph M. I’ll check that episode or podcast out when I get home today to see what he has to say. Better safe than sorry! As it sounds, I’ll have to go with a property management company because it’ll be within my favor to do so.

Originally posted by @Matt Ellis:

So the utilities aren't submetered, not even electricity? That can be crazy especially during the winter if you are running electric heat. 

If those are your only 4 line items (insurance, tax, water, electricity) on your pro forma then I would take a step back and reevaluate. Things that I would consider.

Vacancy for the area... why are there 2 vacant units? If the current landlord says he will fill the two spots before the purchase then why hasn't he done it already? 

Gas - A lot of chicago has gas heating / boilers...  is it sub metered?

Deferred maintenance - If it is selling for less than the 2004 price, has had a period of vacancy in at least two of the units, then I would assume it's a motivated seller because he doesn't want to be in the RE business. In which case, he likely has not taken it upon himself to maintain the property. Have you seen the inside? Does it need a lot of work?

Property management - Someone else mentioned that Englewood is a hard area to operate in for a newbie.. and Chicago in general is not landlord friendly with a lot of small nuances and laws that you need to navigte. Ideally you would have a property management company coaching you through your first property for a year or so.

General maintenance - high maintenance tenants generally imply higher maintenance and turnover costs.

 When you say sub-metered are you asking if each unit has individual heaters and furnaces? In that case, they do. All tenants pay their own own gas, electric and heat.

The property manager mentioned they left the newer one open for owner occupancy which is in pristine condition. The second vacant one was recently evicted about a month ago which they are renovating before closing as well.

I have seen the inside of the property, the two occupied units have been there for at least two years and it’s a little dirty which could use cleaning and refurnishing when they choose to move out. But why kick them out if they are loyal tenants. 

The basement is not useable because it’s not accessible to tenants and where the heaters and furnaces are located. 

If it is wise to hire a property management company, I definitely will if it is the case.

I’m still new to everything but are sewer costs included in the water bill? According to the owner, it is public, he pays for the water and I assumed it was included with that. It was last bought for $175,000 in 2004. I’m not sure if that raises a question or concern about that.

Taxes: $3700 yearly Insurance: $1550 yearly Water: $2350 yearly Electric: $250 yearly Four Units: Each unit has two bedrooms They rent currently for $675, $675, $700 and $700 monthly. Two units are occupied, two are vacant. They are willing to occupy the other two vacant units before closing. I heard back today, they counter offered with $134,000. It is FHA approved. I would be the landlord in order to save management fees. I would still receive $2800 per month because my roommate is paying the $700 while I pay for the untilies for our unit.

It’s honesty and I appreciate it! It makes sense because at least the property would generate income as an outstanding debt. What other information is needed to help make a better informed decision? We have given them an offer letter and waiting to hear back on whether they accept. Then I will have an inspector check the property during a grace period before I decline. I honesty do not know if it is up to code but it does have new furnaces and heaters. The roof is apparently new which I doubt. It is four units with a unfinished basement. Let me find the numbers and sheet I received for the building.