All Forum Posts by: Joseph Konney

@Tremon P. - before doing any tours, always check out the Chicago building violation page to make sure there is nothing that you don't want to deal with such as stop work orders, demolition cases, significant structural concerns, or a project scope that is more than you'd like to bear. https://www.chicago.gov/city/en/depts/bldgs/provdrs/inspect/...

Also check Google Street View for any blight or value dropper like the rear of the yard butting up on a train or too many boarded up properties. 

"How should I scale my business to look for opportunities? ... Also looking to do partnership too." What do you bring to the table? 

@Omar Prado - In my opinion, you've received poor advice on this matter thus far. 

Taken from https://www.ballmccannlaw.com/...

"Illinois clearly delineates the rights and responsibilities of tenants and landlords in these situations and regulates those rights and responsibilities pursuant to authority of the Rental Property Utility Service Act (“The Act”), among others.

The Act specifically states “ No landlord shall rent or cause to be rented any unit in which the tenant is responsible by agreement, implication, or otherwise for direct payment for utility service to the utility company and in which the utility company billing for that service includes any service to common areas of the building or other units or areas used or occupied by persons other than the individual tenant and those occupying the unit with the tenant on the utility account…” Now of course there are a few exceptions to this rule such as if there is full disclosure to any potential tenant prior to offering an initial lease, etc…

If those exceptions are not applicable, but the general rule is, then “Upon proof by the tenant that the tenant was billed an amount for service not attributable to the unit or premises occupied by the tenant, the landlord shall be liable to the tenant for 100% of those utility bills.” Furthermore, the court may treble the damage award when the court finds that the landlord’s violation of this Act was knowing or intentional. The tenant may also recover costs and fees, including attorneys’ fees, if the amount awarded by the court for utility services is in excess of $3,000.00."

Additionally, it sounds to me like the basement apartment is illegal and the city would require it to be de-converted to original use if it was inspected.  There should be three meters on a two unit property - one of them should be a 'common' or 'public' meter for electric uses outside of individual dwelling units. If you perform a building renovation or electrical upgrade on a two unit property that only has two meters, you will be required to make it code compliant with three meters. Furthermore, if you do have circuits crossed between the three meters going to areas they should not be servicing, it would make sense to have an electrician trace and correct those problems. 

Your matter is likely complicated further by existing lease agreements or 120 day notices for month to month tenants to change the terms of your tenancy agreements. You have a serious disclosure issue on your hands as well!

Other references:
https://www.***********.com/le...
https://www.ilga.gov/legislati...
https://www.ilga.gov/legislati...

Note: these are my opinions and not legal advice. 

Hi @Listiarso Wastuargo - It sounds like you need a competent attorney who specializes in evictions and has good repour with the county legal system. Here's a few things you can do to mitigate this from happening: 

Hire a house sitter (~100 per week)
Ring alarm monitoring system (~20 per month, no internet required)
Plant some flowers in the front (imply occupancy)
Install dummy or real security cameras (some area even cellular based for live capture)
Drill the exterior doors shut 

As far as theft/vandalism goes, make sure you are insured correctly with a builder's risk policy that covers it. 

@Jay Garrison - To expand on the exclusion topic, thoroughly check baseboards for gaps between the wall/floor (get low to the ground and check closest, behind dressers, etc), check for gaps around all water/gas/vent supply and drain pipes (including for radiators), install door sweeps / weather strips where there are even small gaps. Rodents climb, so just because an entry point is not on ground level doesn't mean it doesn't need addressing - that includes the roof. 

Additionally, I'd recommend some exterior tamper resistant bait stations outside the property. Just like humans, rodents can be picky about what they eat, so you may want to rotate different kind of baits to see what they accept the best (try a pro pest shop like Bug Stop in Chicago for a better selection and product than big box chains). Smaller tamper resistant stations may be good for the inside where you have children and pets too.

For a ~1200sqft 2flat, if I recall correctly, it was about $2400 for a new riser pole, new breakout box (the area that the meters get installed into) and hooking it up to the 2 existing panels. However, for $13-14K I had that done and had the whole building rewired with new conduit and the additional 3rd panel.

If you're buying with depressed rents and looking to do some cosmetic updates and get market rate rents, there is a good chance that current and paying tenants will balk at the new rental price. For that reason, I'd go for an empty place or be prepared to hand out 30 day notices unless less you plan to update upon regular vacancies. 

I've been through a number of evictions and regularly end up needing one after a new acquisition. It's part of the business. There is still a lot of artificial government support in terms of keeping businesses afloat and boosting unemployment pay. It's hard to say how stable the rental market will be after those programs fade. 

Here in Chicago/Cook county, we can't yet evict for failure to pay rent. Hopefully by the end of next month we can. 

You might not have as many tenant issues where there are strong demographics, but you will tend to have better cap rates on the weaker demographic areas. It's a risk/reward to consider. I strongly recommend MFR in any case. Typically, the bigger the better.

Owner occupied multifamily is a great option. You get lower interest rates, lower taxes, lower down payments, economy of scale, self management to juice returns and gain a foundation of knowledge to bolster your future rental empire. There are also a number of homeowner grants available depending on where you are looking to buy - you might be able to acquire for less than 3.5% down with those grants and purchase sooner than you think!

@Joshua Vanderzanden - I agree with Eric and Lumi. When you get big, it will be to your advantage to understand the foundation of your business/investment to a higher degree. The savings on property management while you can handle it will juice your returns to save faster for your next deal. I have over 20 rental units in Chicagoland - feel free to reach out if you'd like to talk my experiences self-managing.