All Forum Posts by: Nnabuenyi Anigbogu

I currently have a 4 unit and a condo that i own and i do the bookeeping myself (actually im trying to make my fiance do it lol)

I personally believe its better to start out doing it and then as you expand hire a bookkeeper. It also teaches you how to oversee what the bookkeeper does.

 However i think you should pay for a tax CPA early. They are worth it from what ive heard.

@Debra Muth

There could be more than one factor at play here. I believe the 30% the banker was referring to was in relation to counting potential rent from the current house as income for DTI. For some conventional loans the rule is you must have 30% equity before they will allow you to count that income. If they are saying that she does not qualify then that means her income cannot support both houses and a new mortgage will lead to a DTi that is too high.

Since you stated that she cannot meet any of the exceptions then she will not be able to get another FHA loan

Solutions - Ones i can think off (there are probably others)

1. Refinance current FHA loan to conventional and use FHA to buy another property

2. Get a cosigner that has good income and thereby reduce DTI and allow her to qualify for a conventional loan (can be as low as 5% down).

3. Look around and see if there are any special local programs that allow her to qualify with a high DTI. Some programs here in Illinois allow you to go above the standard 43%

4. Talk to a portfolio lender that allows higher DTI. She would probably need good compensating factors for this such as high credit score and great reserves (6+ months)

Its going to be tricky since she does not have enough for a 20% dp on the new property. You usually need somewhere between 2 to 6 moths PITI reserves in the bank for the investment property (her current one would now be an investment property) and also reserves of PITI for the new property. That adds up quick and since she doesn't have much cash i dont think she would have it.

@Mindy Jensen That is the beauty of working with an experienced partner. He has sold over 100+ homes in that area so he knows exactly what improvements to make. There is a resurgence in the rehab of Chicago bungalows in the area and most people (even retail buyers) are adding or expanding the second floor of their homes. We are taking advantage of that trend and hope to capitalize on it. 

We will actually be above the neighborhood in finish when done but not too far above the median price. That is the competitive advantage we are trying to use. And its bought cheap enough to allow for any variations that may occur.

I will provide updates as they occur.

Hey Derron,

Glad to have you here at BP. I am sure you will learn quite a lot as i have. Make sure to stay engaged and you will succeed.

@Wendell De Guzman I have my own spreadsheet that i developed that i use to further break things down. However i realized that for ease of presentation and understanding yours works better when showing others the numbers. Thanks sharing it with me.

I will PM you the funding source. 

Hopefully we can get a JV going in the near future. I would love to work with you.

@Bill Hinshaw On average he has been able to get done in 5-6 months (including sale). Some have gone longer but are usually due to issues beyond construction (title, financing etc). The time waster here in Chicago are the inspections and the city. Without that he can do the actual rehab in 2 months. Inspections can easily add a month. About half of his projects are presold prior to completion which helps. As to utilities, AC is not needed (chicago in November lol) and HVAC is not installed till later so gas wont be needed for a while. However even if i budget over 100 bucks a month im still good on profit. 

@Edward Adekanbi Yeah off the MLS. Was an estate sold by a trust.

@John Weidner

It is in the portage park/Dunning neighborhood. Near Irving park and Austin. Depending on who you ask its either portage or dunning so im not fully sure actually.

Property Info.

Currently a 3bd/2bath. Finished product will be 5 or 6bd /4bth total. We are essentially adding on a second floor (pop top) and there is enough footprint there for 3-4 bds with one of the beds being a master suite with its own bathroom. Basement will contain the other 2 bedrooms and 1 bath. First floor will be completely open with Living, dining, Family room and kitchen with two separate french door entrances to porch. Premium wainscoting all around the first floor.

Exterior - Top coming off

Dining room with mold

More mold

Old Kitchen

Bathroom

Just closed on my first Flip property yesterday afternoon and quite excited to get going. Previously i have only dealt with buy and holds. I decided to go the @Brandon Turner route and partner with an expert flipper for my first one. I have spent the last 4-5 months getting to know a guy who flips within a 4 square mile radius of Chicago (has done over 100 in the last few years) and has gotten to the point where he set his own comps at times. We are operating a 50/50 JV where i deal with all the financing, legal, accounting, insurance etc and he deals with the permits, construction, contractors, architects and so on.

Deal Stats

I am using a HML which of course reduces the profits (i could make 20-30k more with cheaper money). But spending 45K (over 6 months) to make 60K (30K when profit is split) is still great for me and builds up my portfolio and experience.

The rehab cost is conservative because my partner has been able to complete other houses with 125K-130K so we padded 10K just in case. Also it is always a total gut rehab down to the studs (even studs get replaced so its almost impossible to be surprised by any extra repairs (only surprises would be tied to outside factors like theft and fire etc...). All the other costs (except cost to sell) are exact because i paid them all yesterday. Insurance is prepaid for a year so its part of closing costs.

I will put up some before pics later. As of now the architect has been there and has started drawing up the plans and layout. 

I look forward to calling myself a flipper.

For all the newbies (im still one myself) you just have to jump in and do it. I decided to jump in this past February and i now own 5 buy/hold units, am a small investor in one flip, and now closed on my own flip with a partner. All while working full time (switched to a new job 2 months ago). I'm still very small potatoes and sometimes i feel like i haven't done anything but at least I have started down the path i want to go.

A basic LLC without all the optional adds will work. All those additions are there to make running the LLC easier. However you can also do them on your own.

i'e when i formed mine they wanted $60 to file for a EIN for me. I could do it myself online or pay them to handle it. Another was related to filing corporate minutes. Could do that myself also if i wanted.