All Forum Posts by: John Clark

condoing is easy, your lawyer can create a condo declaration.

Do you intend all units to be the same as a rental? If you are renting, try a mix of one and two bedroom units. More than two bedrooms and you start running into "professional renter" families. Avoid those at all costs.

One and two bedroom units don't need in-unit washer and dryer. Have a coin-operated common laundry room in the basement that can be accessed from inside the building. You don't want them on each floor because a leaking/flooding laundry will be a major problem for you. Put watery things in the lowest level if you can.

First of all, Chicago WILL make you increase the size of the service pipe to the building, and it will be copper. Lead is no longer allowed (much to the plumbers' union dismay).

Second, figure that you are going to have to replace/upgrade the sewer line(s) and as Scott Mac said, put in backflow preventers.

Third, You will need a separate electric service for the common areas.

Fourth, how are you doing heat? If common furnace(s) your ductwork will have to be large and extensive. You might want to consider individual apartment furnaces (ductwork will kill you) or, better yet, go with all electric heating. You will want to invest heavily in insulation to keep heating costs down (electric heat is most expensive) for the tenants and each apartment will need on the order of 150 - 200 amp service. To save yourself nuisance calls from tenants when a circuit breaker trips, put the breaker boxes in each apartment. Good part is that each tenant now pays his own heat, and without the extra ductwork, interior layouts are more flexible.

Fifth, decide whether air conditioning will be window units that tenants have to buy or built-in apartment units for each unit 
(and design your electric and ductwork layouts accordingly).

Sixth, who is supplying hot water? Are you doing one gas-fired unit for all, or tankless gas units for each apartment, or electric hot water for each apartment? I don't think there's tankless electric, but maybe there is. Adjust electric service accordingly.

Seventh, Reconsider your decision to not replace the roof.

Eighth, re-evaluate the windows situation, only with an eye towards insulation. Cold tenants complain, especially when they get their electric bills and realize they're paying through the nose for heat.

Ninth, get your head examined. Why have six tenants when you can easily create a super-nice duplex building, condo it, sell the condos and move on to something that doesn't expose you to the risk of professional renters or the "democratic socialists" on the Chicago City Council?

Quote from @Michael Speck:

Im closing on a banked own property. The Bank doesn't know who lives in the house the previous owners have both passed away, so, I suspect a squatter. I connected with a lawyer and they told me the county is backed up and will be till September before the police can remove them. My question is I know I can't remove them but can I get a tenant into the property with a signed lease not being the owner will the tenant have the ability to kick out the squatter?

The tenant's rights are derivative of yours, so unless there's some quirk in Georgia law giving tenants greater rights than owners, he can't do anything you can't

Quote from @John Cervera:

Hello y'all,

My parents own their home, and are in their mid 70's. I have a daughter with severe special needs, so me and my parents are trying to figure out a way to generate some income and stability for her long term future. My father and I have talked about doing some flipping, as he has decades of construction experience. At his age, and without a steady income, getting a mortgage or HELOC, seems like not a great idea. Here's my question:

Is there any way to get their home in my name, at a low cost, and allow me to turn around and get a Home equity loan or mortgage. Value is 400k ballpark

Thank you all for any help

John

Others have given good advice, but consider this: Mom and Dad convey the house to you, subject to a life estate to them, ending with the death of the last of them. As far as the IRS is concerned, your basis is the value of the house when the last of them die.

You, Mom, and Dad toddle on down to the bank and see about YOU getting a HELOC or mortgage to which your folks subordinate their life estate.

Quote from @Peter Burnside:

Just wondering if anyone uses a rule like this in determining rent (in an area where there are few comps).

 First, the market determines the rent. Your expenses are irrelevant. "High cost producers" go bankrupt.

Second, look at the TOTALITY of your investment and expenses (including risk) and see if the return on investment (and expenses) is greater than it is for alternative investments. Factor in odds of appreciation/depreciation of asset price from owning. Personally, I disregard tax advantages from owning since tax laws can always changes.

Third, decide accordingly.

Quote from @Jon Q.:

Quote from @John Clark:

I would concentrate on proving that he asked you to change the contract because it said “no pets.” As others have said, and as he said after the cancellation, service dogs aren’t pets. So why then, did he want to change the contract? Either the service dog wasn’t a service dog OR it was being used as “cover” to bring in additional beasts that were pets. 

Yes John. But the problem is that the more he does at this point, the more can be used against him… if this goes to court.

it is legally best that he severs all contact with that person.  And if, in the future, he needs legal representation, seek it.

 I agree and you notice I never said to contact the man just concentrate on his evidence that the man wanted to change the pets clause, which is irrelevant to service animals. 

I would concentrate on proving that he asked you to change the contract because it said “no pets.” As others have said, and as he said after the cancellation, service dogs aren’t pets. So why then, did he want to change the contract? Either the service dog wasn’t a service dog OR it was being used as “cover” to bring in additional beasts that were pets. 

Quote from @Greg Scott:

If you get sued, the ambulance chasers first will try to get the insurance payout. Assuming they have a good case, they will start looking for the next-level of pay-off. A paid-in-full property is an easy target. They can get a judgement for the value of the property and then sell it. However, if the property has a 75% LTV loan on it, it isn't worth their time.

There are people that try to sell properties they do not own.  That is easier to do with a paid-in-full property.  One that has a mortgage will require communicating with and paying off the mortgage holder.

Most people don't think of a mortgage this way, but it actually provides for some asset protection.

First line of defense to properly run your business, so I question "[a]ssuming they have a good case." Ask yourself: "What am I doing/not doing that would open me up to a suit?"

Second, If it's a rental, once there's a judgment, they can intercept the cash flow.

Third, as to title theft, consider putting the property into what is known as an "Illinois land trust." It's a type of land trust recognized by most states as not being a dry trust (dry trusts are executed under common law). It, too, requires communication with a third party; the trustee. That makes title theft more difficult.

So the first question to ask is: "On what basis could I be sued?"

Hire a private adjuster and dispute.  Read your policy. You only have a limited time to contest the decision. 

I recommend the two-flat or maybe three-flat house hack where you live in one of the apartments. Don’t go out-of-state or worry about stacking houses or such. Find out if you even like being a landlord first. You might not like it, so don’t jump in at the deep end. Go slow and manageable, see what you can handle, then scale from there. It’s not important to get big quickly, it is important to start. If you find being a landlord isn’t for you, there are other ways to invest in real estate.