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All Forum Posts by: John Clark

John Clark has started 5 posts and replied 1535 times.

Quote from @Ted Smith:

Hey, 

I have been reading these blogs for a long time.  This is a great site. 

Post Demo Dust


I hired a GC to perform demolition in Chicago, my home.  Per the code, I don't need a permit for 1,000 SF of plaster. 


They did the demo but did not protect my furnace in the basement or took any other dust control measures.  Cleaning is $700, at least.   I have two furnaces, one in the second floor.  The one in the basement is my main concern.  

The dust expanded everywhere, we have been cleaning for weeks  

They took no measures to protect against dust.  I have a basic contract, it doesn't carry any dust protection description, just notes demo.   

A few notes, please. 

This is for Chicago.  No need to comment on your own location/jurisdiction, please.   I am looking for Chicago-specific feedback. 

No need to comment on other contaminants within the dust.  Please, don't.

Is dust protection assumed as part of the work?  

Should I file an insurance claim or absorb the ongoing cleaning costs and move on. 

I have kids and we moved out for a few weeks to clean up.  Everything was covered with dust. 

Should I just suck it up?

Thanks for your help, this has been a bit hard.  

I don’t know of any contractors who would do more than hang plastic sheeting over open entrances, maybe on a good day they might block a heating vent if you’re lucky.

after I’ve had all the demo and drywall done, I have a cleaning lady I know come in to clean every surface, ceiling to floor. Then the painters. Then the floor guys and the cleaning lady once more for a quick wipe of the walls and floors and countertops. Depending on how much was done, I might have the floor guys in before the painters, Skipping the second cleaning wipe down.

Lastly I have a duct cleaning company I like come in. They do both the heating and returns. After that, change the furnace filter and lay in a supply of new filters.

No insurance claim. Just cleaning, duct cleaning  furnace filters.
Quote from @Ken M.:

I've been using "Subject To" and other various creative techniques for over thirty years and I've learned a few things along the way that may make it easier and less risky if you are trying to use them yourself.

1) First, there is no such thing as "zero down". It can be "little" down or "someone else's money down" but don't make the mistake of thinking you don't have to have some skin in the game. I allocate $25,000 per property and rarely exceed that. Compare that to having to put 20% down on a house using bank financing which on a $200,000 property is about $40,000 plus closing costs and carrying costs. I am "all in" at $25,000 and I get most, if not all, of that back from the Tenant Buyer I sell to. I generally cash flow my properties, some people rehab, some "buy & hold" - all using Subject To.

2) Order a Title Report on every property - it is insane not to and they generally run $50 to $60. I didn't say Title Insurance, I said Title Report.

3) Use Escrow to close. Table closings are a thing of the past. The risk is not worth it. Escrow can run to $1,500 or so, but a lawsuit can run $25,000 to $150,000.

4) Have reserves. You need to have on hand or access to enough to cover the underlying mortgage, utilities, HOA and various carrying costs in the event the house goes vacant for a few months. You affect the credit of the person who's property you are taking "Subject To". If you start missing payments and messing up their credit they can sue you. Oh yeah, they didn't mention that on the late night TV ad or the "Two Hour" real estate investor seminar you went to, did they? It's a serious business and you have to take it seriously.

5) Decide your exit strategy before you buy the property.

6) Record the Deed. Omygosh, what about Due on Sale? It is possible that the deed could be called, but I've done more of these than I can remember and I've had only two called. Don't try to hide ownership in a Land Trust. If it looks suspicious, they will dig deeper when they sue you. There is a proper way to do this step and most people won't take the time to learn or somehow think they are immune to it.

7) Know your options in the event that the Deed does in fact get called. There are several options, many of which put money in your pocket.

If this is useful and you want more, let me know.

What about animals, Ken? You know, like rattlesnakes ?
Quote from @Ken M.:
Quote from @John Clark:

Quote from @James Hamling:
Quote from @John Clark:
Quote from @Ken M.:

Did you know that if you buy a $400,000 property . . .

In a typically bank financing scenario you put down 20% or $80,000 and finance $320,000 for 30 years the Principal and Interest at 7% is $2,129 and over 30 years you pay $766,428 (the bank loves you)

BUT

if you take over a loan using a Wrap (Wrap To, it takes about $15,000 in costs) and take over the existing mortgage at 2.5% that was taken out 2 years ago your payment Principal and Interest is $1,264 ($865 a month less) and over the remaining 28 years pay $447,894 (you get to keep the difference)

That's a savings of $318,534 Three times a Year! For 5 years and you are RICH!

Who doesn’t want to do that!

Retire Early and move from CA to FL Uhaul will love you ;-)

When you are new, looking for lenders & considering Fix & Flip, BRRRR, or rental, as a buyer, I’d ask the owner/seller to be one of my private lenders with creative financing. This works in Southern California (CA), AZ, WA, and TX.

Tell us, Ken, is the buyer supposed to record his deed?

Your Question @John Clark: "Tell us, Ken, is the buyer supposed to record his deed?"


Your question  @John Clark  "Tell us, Ken, is the buyer supposed to record his deed?"" 
Why yes, @John Clark: "Professionals Always record the deed. It would be foolish not to. Any good trainer teaches that.




You are on record as saying otherwise when the buyer deems it inconvenient, Ken. Something about rattlesnakes.
Quote from @Ken M.:

Did you know that if you buy a $400,000 property . . .

In a typically bank financing scenario you put down 20% or $80,000 and finance $320,000 for 30 years the Principal and Interest at 7% is $2,129 and over 30 years you pay $766,428 (the bank loves you)

BUT

if you take over a loan using a Wrap (Wrap To, it takes about $15,000 in costs) and take over the existing mortgage at 2.5% that was taken out 2 years ago your payment Principal and Interest is $1,264 ($865 a month less) and over the remaining 28 years pay $447,894 (you get to keep the difference)

That's a savings of $318,534 Three times a Year! For 5 years and you are RICH!

Who doesn’t want to do that!

Retire Early and move from CA to FL Uhaul will love you ;-)

When you are new, looking for lenders & considering Fix & Flip, BRRRR, or rental, as a buyer, I’d ask the owner/seller to be one of my private lenders with creative financing. This works in Southern California (CA), AZ, WA, and TX.

Tell us, Ken, is the buyer supposed to record his deed?

Take lots of pictures.


tenant is interfering with everyone else’s right of quiet enjoyment and is endangering the building by conduct that prevents inspection and maintenance. When you evict, make sure you have the inspection documents and photos.

Quote from @Henry Clark:
Quote from @Aslan Madeniyatov:
Quote from @Henry Clark:

OP.  Looking at your profile your in Florida.   You’re already in a target rich environment.  Investing out of state for you would be like learning Norwegian and never planning to go there.  

You are far better off starting your REI in your local area. Florida has hurricanes, high or no insurance issues. Etc. That is good. With your boots in the ground you can take advantage of these issues looking for prime properties.


 Hi Henry! I'm in NYC, and I'm looking to start my investment journey, exploring different markets due to high prices and squatter situations. Would you recommend staying within my city or looking at other markets? As you said to the OP, is it better to invest in your own market, even with those issues above, or look elsewhere? 

I love Nasty situations.   Would stay in the NY market.   How much money do you want to make?  How much can you invest up front comfortably?  How fast do you want to make your money or investments? 

Can you or your friends “fight”?   Are you the type of person who is starving and will do whatever it takes to succeed?  If so can suggest a couple of RE strategies in NYC.

If your not that type of person and just want to do rental units have a strategy for you.

So do you want to make $200,000 in 15 years?  Or $30,000,000 in 5 years?  Safe and normal or ultra risky and dangerous?  



Rubbish. $30 million in 5 years is leveraged penny stock futures territory. 

Quote from @Bill B.:

I'm 6 months in to collecting 7% on a 75% LTV note with a five year balloon…

The only way someone could convince me to sell the note would be to offer 6% or more over the current balance. (I assume I can get 4% guaranteed from the bank so that covers 2 years of lost interest income.)

Personally. I’ve never seen someone offer the current balance, much less a premium. Even on a performing note, at a decent interest rate, where a failure to pay or failure to payoff the balloon would result in massive gains. 

How about you?

If they’re not offering a premium, what does that tell you about the risk? Are they bottom feeders, or are you blind?
Quote from @Allen Zhu:

I'm curious if anyone has seen tremendous success with out-of-state  real estate investing. From what I’ve observed, many of the most successful investors tend to focus on markets near where they’re based or in areas they’re familiar with. However, I’m wondering if anyone here has had success investing OOS in locations hundreds or even thousands of miles away and still managed to maintain solid cash flow.

Have you been able to overcome the challenges of investing in a distant market, and what strategies or systems have worked for you? I’d love to hear about any experiences where out-of-state investing has proven to be both profitable and manageable in the long run.

Yes!!!!!!!

specifically, the vultures/parasites who get paid when you buy and not before, They encourage you to buy because if you don’t, they make no money.


real estate investing is hyper-local be the time you factor in the risk of buying out of state or God forbid, the risk and expense of “building a team” no doubt courtesy of someone who recommends/profits from said “team” not to mention you buying a property.

Don’t fall for the siren call of buying notes, either. The higher interest rate you pay for out of state notes does not compensate for the higher risk (therefore interest rate). Should you buy a note. Make sure you can drive over and see the property.

Discount advice by people who get paid if you do a deal by 110%.
Quote from @Axel Scaggs:
On the seller disclosure, they checked "No" under "governmental ordinances affecting the condition or use of the Property." Would this not need to be disclosed? I used a realtor, purchased title insurance, had an inspection, received a seller disclosure, spoke with the seller's agent. 
I'm just baffled that I wasn't informed by anyone.

 "On the seller disclosure, they checked "No" under "governmental ordinances affecting the condition or use of the Property.""

--------------------------------------------

Which is a true statement. Your concern only kicks in if there is a total loss. Your seller properly disclosed.

Personally, I would call your alderman and see about getting an ordinance through the city council allowing rebuild at same-scale/kind of residential use if there was a total loss. Worst he can do is say "No."

Quote from @Eric Flatt:
Quote from @Felix Sharpe:

Only stopping by to say that I logged on specifically to search for forum posts where this question was asked. But your post was on the first page. I am having the same issue analyzing deals with 20% down. Wondering if I need to consider 40%-50% down for the time being.


 I've been thinking the same thing.  At the heart of it, a big function of cash flow is the principal and interest payment on the debt. In Chicago, property tax is also material.  Current interest rates make this difficult given that most investors (like me) are trying to only put 20 - 25% cash down.  I'm starting to accept that I need to consider more down to make more deals work.

Buying cash flow is foolish. If you are considering that, then you need to consider alternative investments as well. You need to look for the superior return on your investment, not “making “ one “ work.
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