All Forum Posts by: Michael Kevorkian

Investment Info:

Small multi-family (2-4 units) wholesale investment in Chicago.

Purchase price: $325,000
Cash invested: $1,000
Sale price: $405,000

Brought to me by a Realtor as an off market deal. Signed the contract, sent a few emails out to my top buyers and sold it in a week. The buyer funded the property, listed on the MLS and sold it as-is for $576,000!

Investment Info:

Single-family residence other investment.

Purchase price: $45,000
Cash invested: $1,000
Sale price: $85,000

Delinquent tax sale lead, direct mail lead source. Purchased the property using hard money, did nothing to the unit, just listed as-is and sold in 6 days to another investor. They rehabbed the townhouse and sold it for $140,000.

What made you interested in investing in this type of deal?

Great deal in a great neighborhood

How did you find this deal and how did you negotiate it?

Direct mail & negotiated over the phone

How did you finance this deal?

Hard money

How did you add value to the deal?

Bought it right

What was the outcome?

Sold to another investor who rehabbed it

Lessons learned? Challenges?

Tax sale leads are great!

Investment Info:

Single-family residence fix & flip investment in Chicago.

Purchase price: $170,000
Cash invested: $1,000
Sale price: $295,000

Direct mail to longtime owner. Signed contract with seller and blasted out to email list. Received an offer for $250K from the email list which was countered at $265K. The potential buyer said he wanted to walkthrough it and would update after that. Once he walked through, he said he is pulling his offer. Then the deal was funded and listed as-is on the MLS. Got an investor buyer in 3 days who paid $295K for the property. That group rehabbed it and sold it to a retail buyer for $620,000.

What made you interested in investing in this type of deal?

Great deal in a great neighborhood

How did you find this deal and how did you negotiate it?

Direct mail to seller

How did you finance this deal?

Hard money

How did you add value to the deal?

Bought it right

What was the outcome?

Sold to another investor

Lessons learned? Challenges?

Funding deals and listing on the MLS will usually always get more money

Investment Info:

Small multi-family (2-4 units) wholesale investment in Chicago.

Purchase price: $325,000
Cash invested: $1,000
Sale price: $405,000

Brought to me by a Realtor as an off market deal. Signed the contract, sent a few emails out to my top buyers and sold it in a week. The buyer funded the property, listed on the MLS and sold it as-is for $576,000!

What made you interested in investing in this type of deal?

Great price

How did you find this deal and how did you negotiate it?

Realtor off market deal

How did you finance this deal?

N/A Wholesale

How did you add value to the deal?

Bought it right

What was the outcome?

Sold to another investor

Lessons learned? Challenges?

Should have funded it myself then sold on the MLS. I left $150,000 net dollars on the table that someone else got.

Investment Info:

Small multi-family (2-4 units) wholesale investment in Chicago.

Purchase price: $325,000
Cash invested: $1,000
Sale price: $405,000

Brought to me by a Realtor as an off market deal. Signed the contract, sent a few emails out to my top buyers and sold it in a week. The buyer funded the property, listed on the MLS and sold it as-is for $576,000!

What made you interested in investing in this type of deal?

Sweet deal

How did you find this deal and how did you negotiate it?

Realtor, paid the price she negotiated with the seller.

How did you finance this deal?

N/A wholesale

How did you add value to the deal?

Bought it right

What was the outcome?

Sold to another investor

Lessons learned? Challenges?

Should have funded it and sold on the MLS. I left $150,000 net dollars on the table that someone else got.

@Chad Wimberly I manage all of my and my clients projects but technically as a Project Manager since I am not a licensed GC. I do recommend hiring a general contractor for a variety of reasons but I cannot stress enough the need to manage them and the project yourself or hire a third party to do it for you. The reasoning behind my statement is:

1. The GC will have (or should) insurance to add a layer of protection for you if the job isn't done right, someone gets hurt etc.

2. They will do their best to make as much money as possible (as do we all) and unfortunately sometimes that has shown up in cutting corners on the job. When they know you have someone watching and approving or troubleshooting the work & job, they are less likely to pull anything that would otherwise be considered wrong. When the cat is away the mice will play... remember that.

3. A general contractor is going to cost you money (and so will a PM) so be sure to negotiate a fair price and do your best to pay based on an add on to material and subcontractor costs. In Chicago my experience has shown that a typical GC fee is between 15%-25% and PM fee between 5%-7%. Find a good PM and they'll find the right GC and negotiate their fees alongside the GC so you could end up saving a lot of money and aggravation. 

Let me know if you have any other questions, I'm happy to throw my 2 cents in if it's helpful.

@Jay Mayer I had a similar situation and struggled to approach my longtime tenant about a rent increase. Despite the property taxes going up, the cost of maintenance and area rent prices going up... I sat on it too long figuring "they pay on time and have been good tenants so why rock the boat"? I think the points to remember and try to balance are:

1. Why did you get into rental real estate investing?

2. Are you willing to risk the unknown (tenant moves, time your property will be vacant, repairs or clean up to  get the place marketed again, you get a new tenant who isn't as good etc.)

Obviously you can't nor shouldn't be held hostage by the fear of your tenant leaving and having to face the inevitable. You are in business to make money and year over year costs and expenses go up. As @Sebastian Taylor said... get their expectations in line that there will be an increase every year, 3% - 5% or whatever is reasonable. Have that conversation with them and any new tenants at the signing of the lease. This will at the very least make the future conversation and announcement of the increase less uncomfortable for everyone. 

Good luck and I'd love to hear how it goes once you cross that bridge.

@Angela Schroeder welcome and good luck! There is always going to be some unexpected obstacle between plan and execution so keep that in mind when you start out. Like Mike Tyson said, "Everyone has a plan until they get punched in the face". That being said, @Joe Aiola made some great points to consider and follow. Over the years I have been able to come to some pretty good price per square foot scenario depending on the level of work needed. These numbers change as time goes by but they still hold true for the most part in my business.

1. Interior only renovation = $45.00 per square foot

2. Interior & Exterior renovation = $65.00 per square foot

3. Gut rehab = $95.00 per square foot

4. New construction = $160 per square foot

These rough numbers all consider the finishes to my local market and builder-grade finishes. Nothing super fancy or custom as that would add to the cost. Ultimately you should talk with other investors if you can, get bids from multiple different subcontractors. If you call 5 plumbers, 5 electricians, 5 HVAC specialists, etc. you can expect 3-4 to actually show up and from them, 2-3 will actually give you a bid. From there you'll know what the job cost range should be within reason. 

I highly recommend you manage your own project or at the very least stay super involved. Where I have gotten in trouble in the past is having a general contractor that I blindly hired because they said they can do it all. The next thing I knew they were shorting all of the subs (I had to pay them eventually despite paying the GC for that portion the job already), juggling jobs and always ALWAYS behind on the project timeline and over budget on costs. 

I hope this helps and I'm looking forward to hearing how your first project goes.

@Brian Ploszay Thanks for the feedback... I have an investor that I work with who owns 62 single family homes throughout Chicago Heights, South Holland, Park Forest and a couple other outliers. He seems happy with them, all cheap, CHEAP SFH's and all Section 8 rentals. The only downside he has mentioned lately is the property taxes have really started to eat into his profits. That being said, I think Chicago Heights has a strong demand for move in ready, owner occupant buyers who seem to be FHA financing candidates. We shall see...

Hi @Michael J Scanlon thanks for commenting! Generally speaking, I am looking at all options but the location and long term maintenance on this property vs. the income potential isn't what I look for in a BRRRR deal. If I have to rent it (can't sell for a price that makes me happy) then I will always consider doing so down the road.