All Forum Posts by: John Clark

"Money doesn't come without people. Sorry ...

"Money first"? Your business is doomed. Profit is -ALWAYS- a by-product, never a direct outcome.

You -NEVER- make a profit without ...

- doing the deal

- selling the product

- providing the service

People are required in every scenario. Sorry ...

Focus on the PEOPLE first, and you'll never worry about money."

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I focus on the people and make them happy because I want the money. If I wanted to focus on people and not worry about money I'd be a social worker.

My $0.02 ...

"Why be in a business when the customers you are trying to attract are seen as less than people - just payments?"

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Because if not for the payments, you have no business.

Nobody buys a drill because he wants a drill. One buys a drill because one wants to make a hole.

One goes into business for the money, not the people. Nice to have both, but money first.

"Leave your rants out of it. AIN'T NOBODY GOT TIME FOR THAT! "
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if you don't like a message, scroll past it. Suggesting options to someone (REITs if way out of state, northwest Indiana) helps when they're fixating on some location.

As for not having time, I think the only people lacking said "time" are those who are paid on commission if there's a sale in --say it -- Illinois.

Experienced pros like John Warren can handle the Illinois market. The original poster doesn't have a lot of experience if I read his post correctly. He needs to stay away from Illinois.

"My family and I are looking to invest about 3-4 million dollars in rental properties. We are deciding between a couple 3-5 units in the city or several (cheaper) SFR in the suburbs and outskirts."
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Don't be an idiot. Do NOT invest in Illinois rentals. Do northwest Indiana or in a REIT based on landlord-friendly states.

Why? Consider:

Rent laws are TOO friendly to tenants. I'm all in favor of protecting tenants from rapacious landlords, but Chicago and Cook County go off the deep end. The penalties for even minor, inadvertent, breaches, with no harm to the tenant, are draconian.

Rent control is coming. This is especially true now that Madigan has resigned. The pressure to turn Illinois into a bastion of "progressive" liberalism is overwhelming. Rent control is a high priority of the progressives (I'm center-liberal myself, but the wackos are going off the deep end). Keep in mind that they are utterly ignorant of economic principals and have rose-colored glasses when it comes to tenant behavior. You cannot talk sense into them. I am reminded of the old Will Roger's joke: "Some people learn by reading. Some people learn by observation. The rest have to pee on the electric fence for themselves." Trouble is, they're using your money for their lessons -- and the lessons don't involve reading.

Inability to convert/upgrade properties. Google Chicago gentrification ordinances 2021. The attitude will spread to the rest of the state as the poverty pimps take over. 'Nuff said.

Pensions. State and Chicago politicians have been criminally negligent with respect to properly funding pension plans, and have ZERO backbone in standing up to unions. That means taxes WILL go through the roof. Liquid assets can walk away. Illiquid assets can't. Therefore, illiquid assets will bear the brunt of the tax increases. Did I mention that real estate is an illiquid asset? Now combine tax increases and rent control and tell us what you get.

Corruption. By rights, Chicago should have 15 aldermen, not 50 (same per capita as New York City). The result is 50 corrupt hands  -- elected on the basis of race, ethnicity, religion, everything-but-ability -- in your pocket, not 15 competent managers who had to appeal to wide swaths of the population with their capabilities. Don't believe me? Just google Alderman Burke and the Burger King at 41st and Pulaski in Chicago.

I could go on, but you get the idea (I hope).

Let's look at the data, shall we? You said:

"For years I have been driving an old beat up pontiac that now has 250K miles on it. . .  Even though it's 5+ years old . . . . "

So you're putting 40,000 or 50,000 miles a year on that car, right? Are these highway miles? You need a reliable car in any event. What cars are out there that can take that kind of wear and tear, for how much money?

There's then the value of your time. City breakdowns can get you serviced fast, so a breakdown won't cost your time. Highway? You could be waiting hours for a tow and a look-see, then the guy has to get parts.

Now you can convince yourself that you "need" a nice, reliable, car.  Son, go buy that two year old, low mileage Lexus.

You're welcome.

Only the City can install a meter. They rightfully don't want anybody screwing around with the system, installing unapproved/inaccurate meters, etc. Problem was that installing meters was supposedly adding lead to the houses water systems. City was "investigating" but I never heard what the results were.

Unmetered billing is very high. I went from unmetered to metered and save in excess of fifty percent of the unmetered bill.

Good news is that installation is free.

Check with water department as to how you get on the installation list for when they do start installing again. Also, check with your alderman as to installations and when the City will start doing them again.

And don't forget to genuflect in the direction of the plumbers' union, which made sure Chicago REQUIRED using lead service pipes even though New York City banned its use in 1946 (why didn't we do the same back then?) and lead's been a known water poison since the Roman Empire (literally).

I had the inverse problem: One gas burner (of four) wouldn't light and I discovered it when the gas company came in to make sure appliances were working properly after moving the meter. I asked the tenant, who told me that that burner had never really worked (she'd been there four years), but she didn't want to bother me with "small stuff." I scolded her and told her to let me know whenever anything doesn't work properly. She pays rent, she's entitled to a working apartment.

Then I called a repairman -- broken internal stem meant turning the knob was useless. Turned out the stove was so old that you couldn't get parts any more. I bought her a new stove. Home Depot had a sale on one model of Amana gas stoves -- $650 marked down to $450. Cost me $80 for the repairman to come out re the old stove (twice, once with a replacement part that didn't work due to age of stove).

As for your question, the tenant is entitled to repair and deduct, but must use the cheapest method. Most of the time that means repair, not replace. There are times, however, when replacement is the cheapest option. And yes, you can wind up paying more for replacement if the repair try fails 9like mine did).

Start pricing stoves, and get a real appliance repairman out there to actually repair/replace parts. Preferably while tenants are there, and even you, if possible.

And no, you can't have my tenant.

Why are you notifying 311 instead of going to police station with footage and filing complaint? Also, notify your alderman. He can pressure the owner.

Some of the more wild and woolly aldermen in Chicago want (have passed?) to limit converting two-flats into single-family homes. While this is not your situation, it might limit your options after you dissolve a homeowners association and decide to get out of the rental business.

What, exactly, would having a pocket homeowners association prevent you from doing? As others have noted, they are fairly easy to dissolve, but expensive to create later.

Your problem, as you stated, is your bank, not you. Get a new bank, or perhaps get your current bank to make two loans to you. The terms for the rental unit might be different, but that should be do-able. Think of it as two units, two loans, not one owner, one loan.

BTW -- HELOCs can disappear if values crash. You might even get a call to pay back some HELOC withdrawals ahead of schedule. Mortgages are forever. It's your call.