All Forum Posts by: John Clark

Let's break this down: You have a property that is cash flowing (probably not as much as you think, but still positive), a good tenant, and a desirable area, so it will always rent quickly. You have roof and air conditioning issues, which  you are reserving 12 percent of your rent for, and are 5 years down the road before something "must" be done, and which are tax deductions in any event. They also probably don't have to be done in the same year. You have $30,000 in appreciation, much of which will be sucked off by commissions, transaction taxes, title insurance, lost rental income (buyers usually don't like inherited tenants), and the fact that any buyer is going to say "I have to replace the roof and AC in five years or less, so I'll discount my offer."

Keep the property, start getting roof and AC quotes to give you an idea of what to expect, and in three years, start making needed repairs.

Might be high, but what are the conditions the guy's working with? For example, I have a brick building that has 1/2 inch furring strips screwed into the brick, thick wire mesh attached to the furring strips, and at least half an inch of plaster (not drywall) sprayed onto the wire mesh.

So you can't use the walls for running anything, and my electrical conduit actually runs on the floor joists, with the subfloor fitted around the conduit. The conduit runs at angles, so there's never a stick of hardwood,  or carpet, or tile, where the conduit runs directly underneath it for any appreciable length. It does mean, however, that adding circuits is a nightmare.

There's also the fact that replacing the breaker box and the meter are specialized tasks. I know experienced electricians who can do everything electric, but they won't touch changing boxes or meters on general principals -- too much can go too wrong too fast.

Get some more bids -- as others have said, this guy may not want your work -- but factor in what construction conditions the guy is going to contend with.

"I assume the debt should always be covered by tenants. . . "

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As others have said, it all depends on your risk level comfort. Given the pro-tenant eviction moratoria we've had for the past 18 months, I question your assumption. Those with leverage and without section 8 tenants or conscientious tenants are losing their shirts. Those without debt have been in much better shape.

I just wonder how many mom and pop landlords are going to quit the business after being abused for so long.

Give the video to the police. It's got to be a violation of City ordinances to vandalize property like that. Then give him notice. You don't need that kind of tenant.

Keep in mind that you are caught between the devil and the deep blue sea. Specifically, if you are buying a hot market, then the high down payment requirement is what you need to do the deal and have the seller take you seriously. So the cost of doing business is that you have to take the cash flow hit now and pray for appreciation down the road. So factor in the opportunity cost of having your bid stand out in the crowd.


So part of that equation is: Do you really want to invest in tenant-friendly states like California? People talk about great California appreciation, but you have to look beyond generalities and headline numbers and look at the appreciation numbers for the class of property that you can afford in that particular market (for example your cash might buy you a 6-flat in X town in Texas but only a 3 flat in Los Angeles, California -- look at the rental markets (and appreciation) for each class in each area). A lot of California appreciation is in single-family homes in areas that don't allow renters. Tease that out to see the real appreciation for your investment opportunities.


Eviction moratoria KILL cash flow and small investors. California likes eviction moritoria not only on philosophical grounds, but just for sh**s and giggles. Medical reasons do not enter into its equations. You need to factor that into your return on investment (cash on cash, appreciation, whatever) in deciding where to invest.

In the final analysis, you are asking the age-old question of which does one want, appreciation or cash flow. Figure out your risk appetite and then look in the mirror for the answer.

Marco Morales is exactly right: Look at comparable apartments and see what they (the market) are doing for finishes in exchange for how much in rent. Go SLIGHTLY better than that, but not much. That will tell you your budget.

Make sure you have an extensive WRITTEN screening standards check list for tenants. That way you'll get tenants who can make your numbers work.

In-unit laundry is a HUGE plus.

Originally posted by @Genny Li:

 Home inspectors often give very bad advice.  Just in general.

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And your basis for that statement is . . . . ?

"the lead in flux is enough to make your babies all low IQ...."

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Leaded/tin solder has been banned from plumbing applications since 1974.

"I'm a full time psychotherapist in Chicago and entering the world of real estate."
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Sorry, but I have to say it: You need to get your head examined. Chicago (and Illinois) is no place for a rookie. Team up with an experienced investor and play the money (wo)man for some of his deals. Pick his brains as to why he accepted/passed on deals and on tenants. Then, after a few years, you find a few deals, explain why you selected them and ask him to vet them for you. After that, start flying solo.

It's not important to get big fast or anything like that. It is only important to start.

Northwest Indiana is a much better place to start when you finally go solo.

Originally posted by @Genny Li:

PEX is inert and doesn't poison anyone. 

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Uh, no.

"One of Whelton’s research studies, published in 2014, was the first US study on the effects multiple PEX pipes have on the quality of drinking water. The team investigated tap water quality in a new PEX plumbing system, and examined the odor quality and chemical impacts of six PEX pipe brands (more than 70 have been certified by the IAW NSFI/ANSI Standard 61 as safe for drinking water). Whelton and his team discovered eleven PEX-related contaminants in the plumbing system: one, toluene, was regulated, and several were unregulated, including resin solvents, manufacturing aides, initiator degradation products, and antioxidant degradation products.

For 30 days, the team monitored new PEX pipes, both with disinfectant (chlorine) and without disinfectant, for water chemical and odor quality. Over that course of time, both odor and total organic carbon (TOC) levels dropped for all of the pipes. However, odor levels remained higher than levels recommended by the EPA. The observed odors were not caused by known sources, methyl-tert-butyl ether (MTBE) or ethyl-tert-butyl ether (ETBE).

In all, 16 organic chemicals were identified, including 2,4-di-tert-butylphenol, methylene trichloroacetate, pyridine, and toluene. The team detected some of the organic chemicals during their field investigation of the plumbing system. Whelton and the other researchers concluded that users should flush out pipes before using them, because they are not cleaned sufficiently before they’re used by consumers.

Moving toward workable solutions

Tasha Stoiber, a senior scientist at the Environmental Working Group, comments on the potential for ongoing risks after the pipes are flushed and long-term exposure to PEX pipes.

“We don’t have clear answers here yet as there are not a lot of long-term data,” Stoiber explains. “From Dr. Whelton’s studies, chemicals were still leaching from some PEX pipes after 30 days leading to measurements above EPAs odor threshold and with similar findings in field studies from samples from homes where pipes were 1 and 2 years old. It’s also difficult to characterize the risk, because many of the leaching chemicals measured are unknown.”"

Source:  https://www.fondriest.com/news...

Long story short: PEX is not inert, and its widespread use is too new to know if PEX is good enough. Copper is the gold standard for plumbing.

And remove, don't just cover up, asbestos.