All Forum Posts by: Kenneth Garrett

@Saran Mandhadapu

I only use commercial loans.  I'm not sure after the first five years what does it fix again at?  What is it based on?  4.9% for 5 years is pretty decent.  My financing is typically between 5 and 5.5% amortized over 25 years and is a balloon at 5 years.

It looks pretty good provided you can figure out what rate is after 5 years.

Good Luck.

@Howard Greisman

You need to find comps just as would for any time you want to sell even if it's in the future. You are correct the ARV is after rehab. Even with rentals it doesn't hurt to make some improvements. Look at comparable properties that are in similar condition. I believe in buying properties at a discount and rehabbing them for rentals.

I rehab my rentals at a higher level so I can refi them and pull my money back out.  Its a little bit of a different strategy.  One of the advantages I can attract higher quality tenants and higher rents.

Good Luck.   

@Adriel Hsu

I do not like option 1.  Over qualified from a financial perspective but has very low credit.  They do not sound like a good choice.  I understand the lease option but my gut instinct would say no.

If option 2 turns out the tenants have good credit and you know them I would prefer to go with them even though they only want a one year lease.

When it comes to selecting tenants the information on your due diligence is critical but so is your gut instinct.

Good Luck.

@Orin Orlopp

This not a simple transaction. Its an all cash offer with the use of Private funds. Nice job. OPM. Have an attorney draw up the documents not just the contract, but the JV or other document for your private lender. Protect your lender and yourself.

Illinois is driven by attorneys for real estate closings.  I believe in having as part of your team an experienced real estate attorney.  An attorney with experience in these types of matters.  The alternative of the contract or agreement being done incorrectly is not worth the money you think you are saving by trying to do it yourself.  

Good Luck.

@Hai Van Nguyen 

Do you have a LLC. If so then you must fill out a change of address for the LLC form LLC-1.36/1.37 to the Secretary of State. Its $25.00. I use my address for the registered agent and office. I also changed the address with the IRS.

Hope this helps. 

@Nuvie Ewharekuko 

Welcome to BP. I invest in the north and northwest suburbs. I have a number of rental units. I typically purchase projects, rehab them and then lease them (BRRR Strategy). You will find a lot of good information here. If I can help let me know. I am finishing up a rehab, if interested you are welcome to come out and look at it. I would be happy to go over the numbers with you.

@Jennifer A.

I'm with Jennifer if they lie about anything its an automatic no.  I'd rather wait then get caught up in an eviction.  Illinois is not a friendly Landlord so I am very conservative. 

@Jack B.  When I rent to applicants I consider what they tell me and then verify with Credit and Criminal Background checks.  The information is valuable but I think your gut instinct is telling you this is a no. The drama that is potential is not worth the aggravation. 

I have rented to people with bad credit, but its based on the background checks and the old gut instinct.  I do believe in giving people a chance.  I have been fortunate that my instinct has been correct up to this point. 

Good Luck. 

Hi BP Community,

I have been brought an opportunity to partner in a Boarding House near Northern Illinois University.  It cash flows great.  Two blocks from the University.  It has 5 tenants and a studio apartment 100% occupied.  Leases expire in July.    Unfortunately the current owner has cancer and is liquidating this asset.

I would like to hear feedback on anyone who has experience in these types of properties.  Specifically how you protect yourself from college students.  I believe that the parents should co-sign on the leases to protect me.  I own a number of rental properties but nothing in a college community. 

Any feedback would be appreciated.  

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If you are looking to implement private funding it requires networking so you have contacts when a project comes along.  Garnering a great relationship with an investor takes time for them to gain confidence in you.  Take your time building relationships.  Remember if you are being pressured and the deal must be done today or tomorrow, we generally say run and don't get involved.  Typically those investments or partnering are deals we would recommend you stay away from.  Don't get caught up in trying to hurry an investors due diligence.  At worst extend the closing date so everyone is comfortable with the deal.

Good Luck building private investor relationships.