All Forum Posts by: John Jack R.

Okay so here goes! Las Vegas flip, bought it for $90,000. Rehabbed it in about 7 weeks. Completely new inside and out. It now appraises for $140,000, and my partners and I are having a debate on kitchen appliances!! Specifically I am all in to make house perfect. I want affordable stainless steel. They want none. What do you think?

Hi let's break it down one step at a time.

1. 1. You need to verify the numbers being fed to you by the seller. Typically I ask for access to the accounting records, their CPA, or even the bank statements. If they squeal, You tell them that the reason for this, is that you want to offer them top dollar for their property and in order to do this you need to conduct some financial due diligence.
2. 2. You need to assess the viability of renting the property. If the building were empty, how long do you think it would take for you to rent it up? And what kind of rents could you collect? In the past I have posted Craigslist test ads to see what kind of action and demand I can generate.
3. 3. Ask for a copy of their rent rolls, by unit. How much the tenant is paying and when is their lease up?
4. 4. You need to access each unit and make an assessment. Ask the owner if they are serious about selling? If they are, let them know you need access to a few random units. Landlord's have the right to inspect, provided the tenant is given sufficient notice.
5. 5. Bottom-line, you can spin your wheels all day long, or you could make a best guess offer on what you think you know. If they accept, do your due diligence and if it does not meet your expectations, pull out, or renegotiate with your due diligence ammunition in hand.

My experience has been that most building owners ask for a number that has nothing to do with anything. It's what they think their building is worth, or, what they heard a similar building in the local area sold for. What they really want is for you to make it worthwhile for them to walk away. With a motivated seller that number might be less than what the true value is. Essentially its a numbers game, make enough offers and eventually a few will stick.

By the way when you are calculating out what your offer should be (hopefully based on net income), take into account whether it's a total cash deal or, if you are financing, at what LTV and what rate, and take this into account when calculating out what your offer should be. The Good News, is that even if this guys says no to your offer, there are plenty of properties for you to make offers on, until eventually someone says Yes.

Hi just a quick question. When you speak of a MASSIVE property tax Hike, at the end of the day what does that really mean? What are you anticipating? Let's say rent is a dollar a month, by kind of a factor will the rent increase be? $1.08 or a $1.20? Yes, you are right, high taxes, any taxes can drive out businesses and people. Yet according to a recent article in cheatsheet.com and I quote "California ranks as the second worst state for taxpayers, with the average burden totaling $9,509. Yet the State of California has an incredibly vibrant economy and property values continue to climb because demand is high. How do you reconcile this? The reality is that there is more to this than just taxes. What do you do if a stock you own, take a nose dive? You can sell and lose, or, you buy into the dip. What is crazy to me, is when real estate took the huge dive, investors ran from real estate. All my deal guys would say "don't talk to me about real estate!" A lot of people made money from buying into the dip. Now that RE is back, everyone is buying in. It makes me smile. So if Chicago takes a dip, you have a choice, sell or buy. What would you do?

Look, when the price of gas or diesel goes up at the pump UPS & Fed Ex and other carriers still haul freight and deliver packages. They just pass the increased fuel expense to the end user, the consumer, as a fuel surcharge. People in Illinois still need a place to live, the only other option is move out of State. At the end of the day, every property owner in the State will be dealing with the same issues you will be dealing with. According to Tax-Rates.Org, the Illinois Property Tax rate is the sixth highest in the Nation, with a median rate of 1.73% with New Jersey (the leader) at 1.89%. At the end of the day, all costs associated with the property are and should be passed on to the tenants, with some upside for you. The real question is what did you buy it for and what are the TOTAL costs associated with the property? And what can you do to mitigate.

Really good looking rehabs! Super clean and elegant. With mass appeal.

What would you say you invested per square foot in each rehab, and, are you interested in Las Vegas Nevada opportunity Properties?