All Forum Posts by: Jordan Callaway

AUM is a good one @Jeremy Woods or you could do utility estimate fee so tenants could pay for example $30/month for water +$10 per extra person; $50 for gas etc both good options

@Cameron Dye If I were you, I'd read every single page in this forum, maybe some pages multiple times, read the comments, not everything is searchable as much as understanding what the different opinions and routes to take are. Everyone on here has different ideas and some things are one-size-fits-all systems that work every time, and other things don't work in markets that are proven in other markets... For instance a property on the border of a neighboring state could be extremely different in: Rent, Taxes, Laws, Tenants, Income Levels, etc, than one on the other side of the border. So one property ten minutes on the other side of the border may may 100% sense, in one and $0.00 in the other case. Great to see you on here! Let me know if you ever need anything. I also recommend reading every book you can on RE *try to avoid the fluff books and look for the timeless classics! I've read some books that within two seconds I could tell the book was written just to sell books. Any of the recommended books on here, and written by and offered by Bigger Pockets are worth starting with!

@Mindy Jensen IMHO, for rental property: 100% tub surround with no seams, grout, or silicone. This may never ever leak and can be cleaned very easily. Even if you have great tenants they still may not report mold or cracked grout or sliding silicone in tile showers, and game over for that whole wall if not cement board. Also even if tenants clean their tile bathrooms, most of the time, the solvent people use on tile/grout breaks down and deteriorates the grout and silicone over time, so lose-lose! May of my clients with several hundred apartment units over time have gone to tile surrounds. 

I disagree that someone said they can't be used in nice apartments and also look high-end/nice. We're selling a 29-unit, 2017-construction MF property w/ granite in kitchens but they still used tub surrounds in bathrooms, with nice fixtures, and keeps rental maintenance close to 0, but still looks very nice in high-end apartments. Not to mention the ability for a tenant to screw it up reduces greatly. For-Sale homes and residential end-users/buyers, I agree with the sentiment above - home buyers love seeing the nicely tiled custom showers. 

@Alex Bok tn u going?

It appears he's doing his best to get you to buy it without contingencies. Those contingencies are extremely important to unwind the situation for any buyer because RE is buyer beware (caveat emptor), (unless you're extreeeeemely experienced and/or really want the deal and have the cash, already know the property well, and are the end buyer). The problem is, if you agree to those items you will be required to close and thus if you do not (which it sounds like you do not want to be the end buyer), he can sue YOU personally for non-performance. Also, Fishers, Indiana tends to have a lot of California owners/investors (I know a few myself).  He's probably an experienced investor trying to prevent you from wholesaling. Not sure, but just my gut feeling. OR, they just want to know they have a real buyer. Honestly not trying to scare you but just hoping you see the inherent risk involved. Would hate for your first deal to turn you upside down. If he agrees to keep your items in the contract, perhaps it's still a viable situation, but you may want to reach out to a local investor and/or RE attorney and ask for their help. 

Originally posted by @Eric James:

This thread led me to look up some data on Chicago/IL.  Chicago population has decreased since year 2000.  Came across a story stating Chicago was the only major US city to lose population from 2015-2016.  The state of IL is also decreasing in population.  It's not good when people have to go back to the 1990s to claim that Chicago population is 'growing'.  Also using 'anecdata' of seeing cranes in the city. I wouldn't be looking to move into that kind of market, but that's just me.  People who make money by selling RE or investing services in Chicago of course have to promote the area.

Perhaps the total population has decreased but the average household income and high paying jobs have increased over the past five years. Many of the neighborhoods have improved dramatically over the past 5-6 years, and many investors are thriving in Chicago. Rents and occupancy are both strong. A population of several million creates massive amounts of inefficiencies and arbitrage opportunities for all! It may not make sense for someone to enter this market if they're not already in it, but there's perhaps a high barrier to entry thus giving the locals an edge. Also there wasn't any rent growth for decades until five-six years ago, and now there's a large rent differential between long-term owner buildings and recently renovated buildings everywhere in the Chicagoland. 

Yes Grant! Just closed a 192-unit & a 118-unit, just missed your friends, great opportunities in Chicago Suburbs... I have a 2007-constructed 144-unit available now - student housing at ISU (upside thru management/expense reduction), and a 173-unit in Tulsa, Oklahoma (renovation & management upside). We also have a few smaller deals such as 13 units, 17 units, 36 units, etc. Also, we do have deals in KY and in the SE, I'm actually licensed in KY too... Grew up in Chicago, started my career in Kentucky, in Lexington, while at UK. Learned first hand from 4 incredible mentors and old school brokers in good ole Lex! Would love to talk!

Originally posted by @Grant Rothenburger:

@Meghan McCallum I think it's like most markets you can find studs and duds in Chicago. I know some investors up there who love the market but just can't find any deals at this time.

 Grant send them my way!

Stud! I agree though, you still need to get either a great deal, or an irreplaceable location with tremendous upside...

Meghan, great question. It's ironic because many NY & CA investors are buying deals for 2-4 CAPs at $500 to $2,000 per square foot in their markets, and our MOST expensive deals in Chicago are $300-$400/SF, maybe $500, but many B & C  class deals are in the $60-$150/SF range... YES, there are market, tenant, and operational challenges/red tape, but overall, this gives an ability to increase rents after renovation! 

In secondary and tertiary markets with no employment growth and low total population numbers, it's possible those property values may not be able to receive very much forced appreciation of value through unit renovation... For example, a Chicagoland property with $800 rents, non-renovated, could potentially derive $1,100 renovated, thus a $300 rent pop, per unit. This same-sized unit in a tertiary market may only be renting for $600 and after renovation could rent for $700... 

On a 6-unit building:

$100 * 12 months of rent = $1,200 additional rent * 6 units = $7,200 = at a 7.5% cap is $96,000 in increased value/forced appreciation, where as: 

$300 * 12 months = $3,600 additional rent * 6 units = $21,600 at a 7.5% cap is $288,000 in increased value/forced appreciation. 

ADDITIONALLY: 

In the city of Chicago, there are approx. 77 neighborhoods... There are about 15-20 which are potentially overvalued right now, depending on who you ask and the product type... Intrinsic values for the rest may not even be close to reaching their full potential. This isn't even including the suburbs, there is tremendous potential in the second city/third coast, IMO.

One technique is to offer them a $15 discount on rent if they pay on the 25th of the previous month