All Forum Posts by: John Warren

Hello everyone!

When my wife and I closed on our new fourplex we knew there were several issues we had to take care of with the township. One of them is that the plumbing for the in unit washers may not be vented properly. I am getting this checked out by a plumber friend this week, but I still am debating pulling the washers out and replacing them with a coin-op to offset the water bill (paid by me). I also could just use this as an excuse and remove them altogether and not have laundry in the building. 

The building is located in a solid C+ working class area where many comparable units don't have laundry in unit. The rents are all extremely low, but I may be able to raise them to top of market if I do keep the laundry. Current rents range from 550-695, and the market appears to be between 750-800/ What do you all think?Should I keep them in unit, replace with one coin-op, or remove them completely?

Thanks everyone for all of the great advice, and sorry that I am just now responding! I received the rent on the 15th, and my tenant had mailed the envelope on the 14th. I greatly appreciate all the advice, and this incident prompted me to get my lease ready for when I have to renew leases in August! 

Hello everyone!

My wife and I closed our first deal on the 7th on our new four unit property which is fully occupied. One of the tenants is a co-worker, which was not something I was terribly excited about initially, but the deal was good so now he is my tenant. His rent was the first due, and it was supposed to be in yesterday (May 15th). I checked the p.o. box at midnight (I know, excited new investor right!) and there was no rent check. 

My questions is, what would you all do? Should I call him first thing this morning and just talk to him, or should I serve a five day notice right away? I was obviously hoping this wouldn't come up immediately! The building is located in cook county, Illinois by the way, so it is not a terribly land lord friendly area. 

I am closing my first deal on Thursday, and I am very interested in establishing a long term relationship with a real estate lawyer and CPA who specialize in working with investors. I will need help establishing an LLC and preparing for the new complexity that this will bring to my taxes! Would anyone be able to recommend anyone you have worked with before?

Thanks!

John

Are you looking to invest in the city? I know some people looking at Pilsen right now. That seems like an interesting neighborhood, although it is on the near south side. 

Thanks for the good ideas! I had thought about keeping him in the "onsite property manager" role for reduced rent. I have a while to decide anyway since his lease isn't up till February. 

Thanks for all the great feedback everyone!

I am not sure if I can accelerate the leases or not. I am in cook county, and I have never heard of that before. I wouldn't mind keeping my co-worker as he is a nice person! I will have to look into the lease acceleration idea with my lawyer. 

Hi everyone,

I am finally going to be closing my first deal on a fourplex. The property is great, and it cash flows from day one, but the real reason I am excited about it is that all four units are rented significantly below market value. The only issue is that I am not sure how best to go about raising the rents on the current tenants. All four units are identical, and according to my research should rent for between $725-750 per month. Here are the current rents.

Unit A: $550 per month

Unit B: $650 per month

Unit C $650 per month

Unit D $675 per month.

To make matters more interesting, Unit A is occupied by a coworker that I know fairly well! How do I tackle raising his rents? He used to do small maintenance projects for the previous owner who was an elderly lady, and has he has lived in the property for 15 years. I am interested to see what the community thinks!

Thanks for the ideas! The vacancies in this area are pretty low, but you are right that I will need to start saving for some expenses down the road. I am probably going to just save all the extra money for the first year anyway as I don't need the cash flow to live. 

Hi everyone,

So I am about to close my first deal next week. I would love to hear your thoughts on the deal. The property is a four unit building that I am purchasing for $195,000 with 20% down. I used a cash out refi and a HELOC to get the money for the down payment, so I am already being pretty creative to get this done. I calculated all of my costs, and it appears that the place should cash flow to the tune of $800-900 per month after paying the mortgage, taxes, insurance and bills.

The place is going to need some "sweat equity". I have a long list of items to repair from the town inspection, but I shouldn't have to put more than $5,000 into the place to get past the inspection. The worst item long term is that the seller had the roof replaced without replacing the skylights. I will definitely be fixing that right away! I also will probably have to do some updating to kitchens and bathrooms in two of the units down the line, but I am handy enough to do them myself.

The best part about the place is that I am buying the least expensive four unit that has sold this year (no comps to be found!) and that the rents are all under market value. One unit is at least $150 under the market price!

Let me know what you all think!