All Forum Posts by: Michael K.

@Matteo Foglieni welcome to the community and congrats on your condo purchase this year. I think everyone on here has already made good points. Condo, SFH, and Multi can all work, it's just a matter of finding the right property for your situation. The main problem you're going to come up against is qualifying for the second loan on top of your pre-existing one. They will be able to count part of your expected rent (about 75%) from the rental of your condo towards your income, so that will help increase your eligibility.

I currently own two multiunit properties, both of which I purchased with 20% down conventional. My workaround for getting the loans approved was putting myself on the note for the first one and my wife on the note for the second one. If I want to go up to a third property I will either need to get creative with financing or wait until my income is able to support a higher debt ceiling. I personally like multiunit because I have some experience with construction and don't mind taking on projects that aren't move-in ready. That said, I have run the numbers on some of my friend's condos and found that they are able to cash flow healthily by renting. And just because you don't know when an HOA might levy a special assessment you also don't know when a furnace might suddenly die out in a single-family home. So be prepared for hidden costs with any option you choose and factor those into your profitability analysis.

Another option would be to sell your condo a few years down the road and do a 1031 into something like a multi-unit property where you can live in one unit and rent the others.

PM me if you need someone to bounce ideas off of!

@Svend W. You are right about this. There are a ton of neighborhoods and the boundaries are frequently not well defined and at times might feel arbitrary. I do like Infosparks ( i have access to it through the MLS) and generally, it's the first resource I go to when checking out a new neighborhood or trying to determine if a property is priced appropriately. That said, looking over a bunch of data charts can be dizzying, and easily forgettable. I suggest picking different neighborhoods to go for a run in. If running isn't your cup of tea then try biking around new neighborhoods to get a feel for them. Go out for lunch/dinner/breakfast in different parts of the city. It will take some time but you'll start to get a feel for the areas.

I have one tenant that I helped apply for this through the All Chicago rent relief program. We put in the application 2 months ago and have yet to hear anything back. They missed one month of rent but have been paying since. I will update here if we get a decision on the application. If they get denied I will just set up a rent repayment plan for the past-due rent. Fortunately for the time being only one month.

@Lindsay Op de Coul welcome to Illinois! Couple questions right off the bat. Will this be your first time buying a rental property? Do you have price range in mind?  and are you looking to manage yourself or hire a property manager? Also, I think you could set your goals for higher than just being cash flow positive ;)

When you said 150k for a turnkey multiunit I was thinking "In Chicago??". But if anywhere, Englewood would be the place to do this. I have clients who buy around that area but not directly in it. Curious to know, what's your management experience been like with this property? Are you renting CHA/Section 8? 

I like the Pink and Orange Line Neighborhoods. The farther west you go the easier to cash flow, Bridgeport is probably the worst for cash flow but makes up for it by being a nice place to live. Over the past year, clients have been taking me to the southside a lot more frequently. I like east of 90/94 up to Jackson park. There are also pockets further south and west where you can find some really nice buildings well within the 100k/unit rule. Just make sure you pick a block that looks like it's well cared for, and not a block that looks like it's been bombed out.

@Maurice Burnett I have got around this problem by supplying my tenants with heavy duty, commercial grade clothing racks with wheels. Think the kind you might find at a department store. I believe I paid about 100 per unit. They look nice and and do not wobble like the ones you might find at Target. If the tenant does not need them in every bedroom I just wheel them to the basement for storage until the next person moves in. That said, people with large wardrobes or people who require walk in closets are just going to pass on these types of homes. But fortunately not everyone falls in that category.

On the 4 unit building, it's about 5500 income to 3000 monthly mortgage, taxes, insurance. On the two-unit, income is about 4200 and expenses come out to 2700 per month. Both properties, including repairs, cost around 550k each.

I have properties in Pilsen and Little Village that I have purchased in the past few years that both turn a profit. You have to look outside of the hottest neighborhoods if you want to find something that actually cash flows. For example try looking in Partage Park, Hermosa, Belmont Cragin, or other outlying areas to Wicker/Bucktown/Logan. Also know that anything marketed as "turnkey" also means low CAP rate, and may or may not really be turnkey. Are you trying to owner occupy?

What sort of cap rate are you aiming for?