All Forum Posts by: Lucas Hammer

I have not found an investor specifically, but the Realtor I'm working with is very familiar with investing (and now that I think about it, he easily does both, but I haven't pried). I'm in contract on a condo in Albany Park right now that I'm waiting for the bank, but even then, especially with it being a short sale, he's very attentive and responsive when I have a question about another property, and he'll likely be my Realtor for future deals as well. I'd also like to back-up @Kumar Paj in that you need to get some paperwork done and be ready to go, which is what I did with the mortgage broker to get started on my first deal. I found out what I could afford, where, met a Realtor, and within a couple of weeks made an offer.

Looking back, I wish I'd have known more about deal analysis than I did when I put in that offer, but if you want to ride the ride, you've gotta buy a ticket.

Hi Myia,

I'm slightly further ahead of you in that I've gotten some connections (basically a realtor and a mortgage broker), and this is my $.02. 

First, decide what you want your beginning strategy to be, whether it's flipping, buy-and-hold, etc., and decide where you want to do it, whether it's Naperville, Chicago, another suburb, etc.

Second, start looking online at places like realtor.com to get an idea of the market prices that you're looking at and the condition of the homes that meet your budget. If you can get conventional financing due to job history and credit, contact a mortgage broker and see what you can get approved for.

If you're not having luck online, contact a realtor. I contacted a couple before I found one that could walk me through the details. He listened as I talked about buying a place, doing some work, moving to another, renting out the first, etc., and was very encouraging with that. He was able to help me temper my expectations of what I could afford with my budget and has continued to answer all the newbie questions for me, such as "How does an auction work differently?", "What are typical HOA fees on condos in Chicago?", "How do short sales work?", etc.

Note: All of this information can be found online, but it helped me a lot by going into his office, sitting down with him, and talking through it. Any time I have a question on a specific property or offer, I call him. Any questions I have that are more specific to investing, I post here.

Hope that helps!

So I'm waiting on my first deal still, but there's a chance it falls through (condo, short sale, pending bank approval currently), and if it falls through, we're considering a 3-flat (house hacking), possibly on the southwest or west side of the city (following the pink line basically).

From my admittedly little experience of the neighborhoods, are they showing any sign of appreciation or gentrification? I'm currently in Albany Park and prices are skyrocketing so if this deal falls through, there's a real chance that another might not pop up in my neighborhood, at least close enough to the brown line for me to consider.

I've personally always felt comfortable and safe when in LV, but I'm not sure if anyone investing in the area knows if there are any signs of price increases from Pilsen that might be spilling over to the west.

Thanks in advance!

Awesome, thanks. So to make sure I understand that right, if we put it up for rent in 2017, we could claim everything we did in 2016 toward it for startup costs and expense it in the year it goes up for rent? 

Okay, great. Thanks for that. Hoping it's a quick answer, and my plan is to have it rented out soon enough that it won't be an issue, but if not, I'd like to still be able to write-off the things I'm doing to start building my business here.

So I'm just getting started and I apologize if my question is basic or ridiculous, but I'm buying my first property and depending on closing, I may not have any income during this calendar year, but I was wanting to start paying for research, learning Spanish (I'm investing in a highly hispanic area), and things like that. Do I need to have an LLC set up or make income in the current year for any write-offs or can I write those off as business expenses even if my first property isn't rented out by December 31st?

Thanks, and let me know if I can clarify anything in this post.

Thanks for the advice. Including all hoa fees and everything, I'd still be cash flowing right out of the gate. Also, there is a special assessment, but it's all being paid by the seller prior to closing so that wouldn't be a concern in the near future. Finally it's an area that I'm intimately familiar with that is almost all condos (at least for anything near my budget), and with rent already high and climbing very fast, the cashflow would be growing noticeably each year and I'm getting it at a good enough price that I can drop out if needed. 

That said, I have heard the horror stories and studied the hell out of all the condo documents before deciding to go for it. The biggest reason for this offer was the price and neighborhood and I really want to start with an area that I know everything about, especially in Chicago since it varies so much. Just hoping it doesn't bute me later. 

Awesome, thanks for the reply. Just to clarify, I'll be doing 5% down on a conventional mortgage, but I won't really have to rehab it at all. I guess in a scenario such as this, which would would typically be considered a better deal? (Also, I know some of this might easily be personal preference.)

Property 1:

    Cashflow $350/month

Cash on Cash ROI 13%

Property 2:

    Cashflow $225/month

Cash on Cash ROI 30%

In the first scenario, there'd be more rehab to be done up front before renting it out, which would lower the Cash on Cash ROI, but the second one could start cashflowing (at a lower amount) without the additional cash up front for a remodel. I'm not sure if it's just a preference thing or if one of these would automatically be a better deal based on the numbers. Thanks again.

Hey everyone. So I'm a brand new investor already under contract for my first condo in Chicago. It seems to be that the standard format for most Buy & Hold investors is to buy a place that needs work, fix it up, then rent it out.

I was listening to Brandon Turner's webcast yesterday and the deal we analyzed originally wasn't great at the asking price because the Cash on Cash ROI was lower than he normally likes to buy, but it seems like that would be a big problem with almost any place you had to rehab, even if it's cashflowing quickly.

Basically, I went to the calculator and looked up the condo I'm buying and estimated $3,000 in upgrades (it's already in pretty good shape and would cashflow), and in addition to a couple hundred in cashflow a month, The Cash on Cash ROI was ~33%.

I guess what I'm wondering is, based on those two facts, is it always going to be better to buy a place that's already fixed up if it'll cashflow? The Cash on Cash ROI seems like it'll always be higher with very little rehab cost as long as I can be positive on rent vs mortgage, insurance, etc.

Cheers man, that's awesome! I'm 31 now and just getting started on my first deal. This has me inspired to be independent while I'm still in my 30s though.