All Forum Posts by: Jim Gramata

Find a broker who does add value. I know they are in your area. Be specific and clear what you're looking for when interviewing. See who in your area is selling properties that you're buying. Talk to the managing brokers too and ask them who in their office fits your needs. 

If not get your own broker license and collet a nice commission for doing the work you seem to already be doing. Typically an investment broker (someone who understands NOI and IRR) will add serious value to the deal.

If not get a license and access to MLS and add your own value to the bottom line.

IN my case with my tenants I have had over the years I have only had to take money from a security deposit one time and the tenant agreed with the action (his desk and chair scratched the floors in the living room). So for my portfolio I no longer take security deposit money. This is strictly to avoid the risk of being sued over missing some technicality on the lease or in the management of the funds. I am pretty sure I could write a bullet proof lease but again I am going this route. 

If my tenants cause damage and I cannot collect the money I will report it to the credit companies. I would have my attorney write a letter of my terms for collection then worse case file a law suit. Hopefully that doesn't happen but it can.

I agree with Brie 100%. I am a broker but rarely use the MLS for my properties. It may be true the MLS would draw a more professional selection of tenants but do your due diligence and you will be fine. The market is pretty hot especially this time of year. Go for it but DON'T MESS UP on the lease! Perhaps that alone would be worth the cost of a professional marketer. Cross all of your Ts and dot your Is. The leases can be complicated especially here in Chicago.

Do you ever used the security deposit as the last month of rent?

Absolutely do NOT use the security deposit in any way for rent. Period. 

In fact. I do not recommend nor do I collect security deposits anymore due to the 3x deposit penalty for making any kind of simple mistake on the lease or in the management of SDs. I am told it is impossible to protect yourself from these shark attorney's who sue landlords. 

Hope this helps. 

Daniel I have a lot of lenders I can refer to you but here is one local experienced broker you should contact. I am pretty sure they can get you a better rate and terms.

Chris Chambers

[email protected]

VP Mortgage Lending

Guaranteed Rate Inc.

Good luck!

I can't speak to the market in Carpentersville (I focus on downtown Chicago) I can say I am of the belief to keep the first few investments within a short distance (drive) between your work and home. From there you can expand the radius to include anywhere in the country (although I would argue even that is not a good strategy) but for now draw a 15 or 20 mile radius around your home and then around your office then look ideally at that overlap or anywhere near there. You should become the market expert in that area. Learn it inside and out so you're ready to go when something comes up. 

Good luck!

@Leo N.  it depends on your business model and/or purchase goals. 

There are tons of opportunities in many Chicago neighborhoods especially at that price point. Here is a glimpse of the west side neighborhood market trends in Chicago (some of these 'hoods were mentioned in this thread) for residential multi-units (we call them 2 to 4 flats) comparing 2012 to 2013 data and looking back 1, 5 and 10 years median sales comparisons. 

While I agree some hot deals are gone in some of these neighborhoods you will see there is still a huge upside to where prices were 5 and 10 years ago. The areas in this graph are pretty tough but depending on your business model where else can you buy a $70,000 to $100,000 multi-family so close to the city center and still look forward to such positive equity gains? The ROI is many cases is impressive. Austin, Humbolt Park, East Garfield and Belmont Cragin to name a few.

For $400,000 you can buy in many other areas or buy 10 properties in this section of town if that fits your model and goals.  

I've used a Tilt n Turn (euro style) window for this purpose and it is much less expensive than the $2500 range I am reading here. It depends of course on the size but I recall the window price being in the $500 range plus installation ($1000 range total) unless you're cutting concrete etc. This window tilts in (hinges on bottom) but also opens up to 85 degrees like a door. 

Advanced Windows in Chicago is my source. My salesman there is Greg. 

Remember too, each township, village and municipality has their own overriding codes (trumping Illinois or National code) so it is best to call the village and ask them directly or a local architect. 

While basement bedrooms are legal in Chicago anything under grade will not count as a bedroom when the appraiser comes out on that next refi so keep that in mind too. 

If you are disciplined (most are not) I suggest getting the 30 year fixed rate for a few reasons. One obvious is the better cash flow. But more importantly it allows the option of freeing up the additional cash savings for you to control. If you are disciplined enough (I use auto pay) to make additional principle payments each month then your 30 year can easily turn into a 15 year amortization (or 20 or 18 - whatever). Figure out how much additional principle you need to put in each month and stick to it. 

The nice thing I like about this strategy is you control the money flow.  There may be a period of time (short term hopefully otherwise this idea falls apart) where you need to divert that additional principle back into your accounts. You don't have that freedom with a 15 YR. The bank wants their share each month. 

If you don't ever see the extra $ being needed and you can get cash flow to hit or exceed your target then 15 YR is fine. 

I just always like to be in control of my money for as long as I can prior to and in this scenario during your next investment.