All Forum Posts by: Michael K.

@Jorge Leon Last thing I forgot, the listed cap rates are obviously based on the list price, but maybe 6 something percent is not good enough for you. Figure out what cap rate makes the deal work for you and make an offer at that level, if they don't except then just walk away from the deal.

@Jorge Leon, looks like @Jason Albasha and @John Warren have already provided some great input here (and have helped educate me too!)

I would like to point out something that no one has mentioned, one of these properties is listed at nearly 1 million dollars more than the other! So I would think 2m would feel more manageable to you than 3m. 

I will also repeat what others have said, you need to disregard the numbers they provide and do your own due diligence. Are the rents they say they are getting realistic and sustainable for the area? Are you already familiar with one of these areas? Do you understand the area's strengths and weaknesses, potential for growth? As for cost of utilities, management, repairs, I think you should just be able to scale up the costs from what you have experienced with your 4 flats and get a reasonable estimate of what it will cost you. 

As for the Capex needed to get the buildings running smoothly I cannot make judgement without seeing the insides of building. If they have any unique systems in the building make sure you have an inspector who knows their way around these types of large multi units.

@Patrick Britton

Sounds like you actually want to be a gambler and not an investor, maybe your money would be better spent at the racetrack or at the blackjack table.

The run-up we are seeing in the stock market right now is not sustainable and a reckoning is sure to come.

If you buy an investment property and you know what you are doing you can count on consistent returns So long as you hold it. Mind you, you will have to spend money on repairs, so budget for that in your analysis. The IRS let's us depreciate the value of a properties for a reason! They are depreciating assets! I.E. just like cars, you need to spend money to keep them in peak operating condition!!!

@Klint Ruud

Education hands down is step #1, especially if he isn't starting off with a lot of financial knowledge. He should learn about his options (real estate is just one, and might not be the best for him). If he's already making 100k a year then this inheritance isn't going to be life changing. It will save him the time of putting together a down payment though. Personally I'd suggest that he split the money between stocks and real estate. And although the stock market is probably overheated at the moment, long term it's still something he will want to develop an understanding of.

@Jake Shulman

In reality there are 2/3 flats in every neighborhood of Chicago, except that in the more established and trendy neighborhoods most of these have already been turned into condos or giant single family homes, so the remaining stock is very limited. You will want to look at neighborhoods adjacent to the most popular ones to find better deals. Apart from the ones mentioned I also have properties in Pilsen and Little Village, which have a lot of 3-4 unit housing stock.

People in this thread are right to say that a lot depends on your budget and the lifestyle you intend to persue. If you just want to reduce your rent payments and have someone else help you pay off your mortgage you can look just about anywhere. If you want to live rent free and cash flow at the same time you will need to get more creative and look for properties off the beaten path.

@Supada L.

Properties advertised as turnkey are usually marketed towards novice investors and priced so that it is difficult to make a return. They will compare the return to that of the stock markets and argue that there's is higher than 7% or whatever number they use. However the difference is that, as much as people wish it was, real estate is not passive investing. Even if you hire a property manager you will still need to manage them. My advice is to get something in your area and manage it yourself. If it's not in peak condition try to learn how to fix minor issues like leaky faucets and clogged drains. Those things can be resolved in a couple minutes but if you call a professional they are going to charge you a decent amount just to come out. If you need a PM make sure you vet them first, And if you're in town you will still need to check periodicaly that they are doing a good job and are keeping their end of the bargain.

@Matt B.

Hi Matt I am an agent and investor. I have a few multifamily properties in Chicago but they only required moderate rehab to rent. I have been considering trying the same thing that you are and build something from the ground up. A number of my colleagues are doing this right now so i've been able to learn from them, would like to hear more about your ideas and plan of attack!

@Brayden Schiff

I started off with house hacking and multifamily before deciding to get my own brokers license. Let me know if you need somebody to bounce ideas off of. My cell is 8722407300

@Jeffrey Evans

Yep, I think Joe has done a really good job laying things out. BRRRR is a riskier strategy if you not know what you are getting yourself into. I would advise against starting with it unless you have significant knowledge/understanding of construction. House hacking is the best way to get your feet wet and also obtain a sense of what things cost by acting as your own property manager.

@Lamont Young Jr

You need something better than a guess