All Forum Posts by: Jake Fugman

@Mark Ainley @Tom ShallcrossLove to see you guys breaking records!  There will soon be a day that everyone even thinking about investing in Chicago will know SUICI. The content is top notch and always evolving. 

1. Is it better to have current tenants or no?  -  FOR FIRST TIME INVESTORS I RECOMMEND TARGETING PROPERTIES THAT HAVE AT LEAST PARTIAL OCCUPANCY SO YOU HAVE PROOF OF CONCEPT FOR RENTAL AMOUNTS.  100% VACANT PROPERTIES ALSO RUN THE HIGHER RISK OF THEFT/VANDALISM. 

2. Any areas preferred and any areas to be careful about?  - THIS DEPENDS ON YOUR THRESHOLD FOR RISK/REWARD

3. Any hidden costs or legal things to be aware of?  -  TYPICALLY THE LARGEST COST THAT INVESTORS FORGET TO UNDERWITE IS LEASING EXPENSE. IF YOU USE AN AGENT OR PROPERTY MANAGER THEY WILL CHARGE YOU 1 MONTHS RENT.  ASSUME UNITS WILL TURN EVERY 18 MONTHS ON AVERAGE. 

4. any good neighborhoods in north or northwest Chicagoland? - THERE ARE A LOT OF GREAT AREAS ON THE NORTH AND NW SIDE THAT CAN STILL OFFER GREAT UPSIDE BUT ARE ALSO STILL "AFFORDABLE"

5. Any quick and dirty techniques during preliminary screening?  - FOR A VERY HIGH LEVEL TAX CHECK I TELL PEOPLE THAT IF THE CURRENT TAXES ARE <1% OF ESTIMATED PURCHASE PRICE THEY WILL LIKELY GO UP. 

@Jason Marcordes and @Mark Ainley will take good care of you

Hi all!  

Does anyone know the minimum notice a landlord has to give a tenant that has been in a unit for 3+ yrs but is now on a default month to month lease?  30,60, 90 days? . In Illinois if the tenant has been there over 3 yrs some counties require 6 months.

Thanks!

@Antonia Rigales   BiggerPockets has an agent directory of investment friendly brokers.  You can find it under the NETWORK tab at top of your page.  

@James Robert Congrats on the margin! Assuming you are able/willing to live in a similar neighborhood/market with $200-250k/door inventory - I would go for FHA financing (3.5-5% down) and secure a $400-600k 2-4 unit multifamily and house hack. You can likely still AirBnb at least 1 of the units while living there then if you want to move out after 1 yr the building should slightly cash flow - even if you convert all units to long term rentals. I would focus more on the value on later on when you cant leverage owner occupancy financing and longer.

@Demetrius Davis If you are already looking at 4 units it might be a good idea to dive into 5-6 unit MF or smaller mixed use - if you can afford it. That way you aren't competing with FHA or residential buyers. Typically CAP rates are better in these asset classes AND commercial financing rates are still in the low 5's - which equals better CoC%. You sacrifice the 30 yr fixed rate, but you have the motivation to steadily add value before loan is due in 5,7, 10 yrs.

@Seth Williams Hey Seth - That depends a lot on your budget and financing plans. If you need to conform to FHA loan limits/SST you may be limited so areas that have inventory in your range. All the locations you mentioned do have solid inventory of 2-4 units around $150-250k/unit so you likely have a solid start. I would consider a couple of other areas closer to the lake as contenders as well - E. Woodlawn or Rogers Park also have similar priced inventory.

Im a fan of Marshall Square (east Little Village) in general.  Close to pink line and rents are going up quickly in the area. Up to $1300/mo for updated 2 bed VS only 3-4 yrs ago about $900/mo for similar.   If you stay east of California and north of 23rd you will find a few blocks with new construction - always a good sign. 

Good luck! 

@Jon Loca Welcome to the Chicago market! As you are likely aware there is always a sensitive balance between appreciation potential and ROI. Some of the highest crime areas in Chicago might have the best chance for appreciation since only a small value jump increases will look like heavy appreciation on paper (ex: $150k property going to $200k VS $500k property going to $550k). Same $50k increase but far different % gains.

I would focus what "balanced" areas with an average price of $150-200k per door are likely to see the biggest value gains.  These types of areas have the highest chance of becoming the next "trendy" spots to live or where families will settle long term. A few of them that come up (some already mentioned)... Heart of Italy, Little village, McKinley Park, Brighton Park, East Woodlawn, Portage Park have good balance at the moment that have room to grow IMO. 

@Carli Schlaker Early congrats on taking initial steps! Since leveraging low down payment financing will be a huge part of any successful multi family house hack I recommend speaking to several lenders in advance. An FHA mortgage is great tool but has restrictions all buyers need to be aware of (loan limits / stress tests / etc). FHA got a nice boost to loan limits in 2022 but any 3-4 unit building will still need to pass something called the "self sufficiency test" which essentially will limit most buyers to a certain price point if they plan to put 3.5% down. Talk to someone like @Zack Karp early on to get an idea of what is realistic for your personal goals.    

Good luck!!