All Forum Posts by: John Clark

"if $50K saving is discriminitary, then you can say 3X income is also discriminatory since blacks and latino are less likely to earn that income...."
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You miss the salient point: Rational relationship. Income that is 3X rent has been shown to be rationally related to one's ability to afford the rent (look up "rent burdened" some time). Therefore 3X rent/income ratio is acceptable.

That is not the case with having renters have $50k in savings, which is just about the median income of families in the US. I don't know if you want $50k per tenant, but that just makes your position even more ridiculous. People pay rent out of current income, not savings. Saving are only to help for a rough patch.

So unless you can show a rational relationship between insisting on $50k in liquid assets and paying rent, you are running a severe risk of disparate impact discrimination.

"so Sue's comment about the $50k is not discriminatory as long you apply it to ALL your applicants"

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Actually, you and Sue are wrong. Unless the owner can show that there is a reasonable relationship between a minimum of $50,000 in liquid savings and protecting the landlord's interests, and that a lesser sum would not do, the owner stands to get nailed for disparate impact racial discrimination. Far fewer black or latino prospective tenants will have the requisite trump than white prospective tenants. For background, start with Griggs v Duke Power.

"How are 3 people going to share 1 bathroom? Seriously?"

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You must be quite the princess if you think 3 people cannot easily share a bathroom. My parents and three siblings (a total of six of us) shared one bathroom when I was growing up. Inconvenient? At times.

Look at the local government's laws for the number of square feet required per occupant. That is different from the number of people per bedroom. Also see if there is a requirement of one bedroom per person unless they are sleeping together. If they are planning on converting a living room into a bedroom, for example, you MAY have a reason to say "No." I don't know. Check your local laws.

But three to a bathroom? No problem.

Flipping is vastly different from renting. You need to make up your mind which you are going to do. For example, a flip at 120k allows the use of FHA loans allowing for repairs and you can therefore buy in nicer neighborhoods and deal with a better clientele. Rentals, not so much.

South side and West side are better investments than the North side when it comes to renting. Remember, transportation costs are the same thing as housing costs. Get on the Red line (South), Green or Blue lines (West, NOT Northwest) or Orange line. As you travel, check neighborhoods. See one you like? Get off and walk around. Like the neighborhood? Write it down and get back in the L.

Then, with your list of areas you like, do targeted searches.

Want to flip Wait until covid-19 is cured and consumer confidence is back.

"Side note, anyone have experience with shielding asset debt from personal debt through a business entity?"

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Any bank worth its salt will have all entities in which you have a five percent or greater ownership interest guaranty the new loan and pledge their assets to the guaranty. So for Joe Piker (that's you and me and everyone else), it really makes no difference. Once you get some real weight on the asset side and some experience, you'll be able to persuade the bank to limit itself to only certain assets.

Keeping paying down the truck. Keep adding cash reserves, wait the six months and see if the banks will look at 100 percent  of rents for income and not just 75%

Chicago itself is very tenant friendly. There are serious moves to lift the ban on rent control in Illinois. When that happens both Chicago and its surrounding environs will pass rent control laws in a heartbeat.

As for taxes, not only are property taxes high in Illinois to begin with, but they will only increase as all levels of government pay the piper for ignoring pension obligations for decades.

"I don't expect the area to grow much or the house to appreciate, but it could be a good cash cow. Do you have any advice for me? Do's and don't's? Thanks!"
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Advice? Dos and don'ts? Here: Stay away from Illinois and find a much more landlord friendly state to invest in.

Illinois is beyond broke (quarter TRILLION in unfunded pension liabilities) and is tenant friendly to the point of being a simpering fool. The South suburbs of Chicago that you would be looking at are all grossly mismanaged, heavily indebted, and Chicago and its metropolitan area (including South suburbs) are basically circling the drain. If you seriously consider Illinois as an out of state investor you need your head examined.

Are there deals in and around Chicago, especially in the South suburbs? Absolutely. For an out of state investor, particularly a rookie? No way.

Try landlord friendly states.

Probably a way to find out about illegal units. I bet "Why should the LL profit from an illegal situation" is probably the thinking.

Of course, by that line of reasoning, it would seem that the LL could use self help to evict the tenant, since the tenant has no right to be there either.

It will be interesting to see how the consequences play out.

Not sure you are in the right forum. You are not going to rent out apartments/bedrooms within your home?

First, I question why you are buying in Lincoln Park or Lake View. They are chic and have ambiance, and you are way overpaying for that and to be with others of your young ilk. Go to the CTA website (transitchicago.com) and follow the train lines. You can find good neighborhoods and excellent transportation downtown on the South and Southwest sides for a LOT less money than you'd pay where you're looking now. You would not be "urban pioneers" either, if that's what you're afraid of.

" and not having the government protect property rights by banning evictions instead of backstopping rents and helping tenants pay."

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The left wants blanket rent cancellations, which is as asinine as the right wanting evictions in a pandemic. Means tested rent support is the way to go, but since the bubble heads on both sides won't allow it (goes to far // doesn't go far enough), we have what we have: State's using their plenary powers to protect health, safety, and welfare, and you'll have to go to court in the end to take money judgments against turnips.

Lawsuits against the governments is a waste of time. The states are within their rights to postpone evictions, like it or not.