All Forum Posts by: Shawn Q.

I've used Chris Diana on the three rentals I've purchased recently as a new investor. He's been invaluable in helping me learn the ropes: http://www.twincityrealty.net/agent/2516/

Honestly I would avoid rantoul. That area is far enough from champaign that it's not treated as a bedroom community, and there are some possible problems with the water from the decommissioned chanute Air Force base. Rents aren't strong. Mahomet is a better bet if you want to stay out of champaign, but the buy and hold possibilities are just as good in champaign/Urbana proper. Between the two I lean in the champaign direction. Taxes in Urbana are much higher and rents aren't any higher. Also, economic growth is better in champaign (though this is less of an issue now than 5-10 years ago). Buy right in champaign and you can cash flow nicely. But don't buy for appreciation in rental markets - we don't grow enough to make that a viable strategy (at least in the rental neighborhoods I've looked at). Hope that helps!

Congrats - duplexes are pretty thin on the ground around here. Well done snagging them.

You might want to talk to a lawyer as well. I had a similar issue on a property I didn't end up buying - a driveway between the two houses (nearly a zero lot-line situation) with parking behind the houses. In some municipalities a de facto easement can be created by long-term use. In essence, if you can show a period of shared use, you can claim the easement. 

I agree that it might not be something to pursue while the existing neighbors are there, but you could research it and keep it as a back pocket option at a change of ownership. It also sounds as if these folks might be candidates for foreclosure. If that time comes they might be more amenable to an easement agreement in exchange for some moving costs (assuming they won't come down enough on the price for you to buy it). Lock up those rights and you'd have a stronger position with the bank - especially as you could then inform them of the encroaching fence that needs to be removed. The bank likely wouldn't want the expense/hassle of either removing that or dealing with the city.

How did this end up working out - just curious. 

I'd love to hear how this worked out, as I'm going to be in the same situation soon myself. Did you learn anything specific you'd like to share with someone starting down the same path? 

I'm going to be in this situation next month. OP - did you learn anything that I should be on the lookout for? 

Also, I was planning on modifying my existing lease and having my lawyer review. Any suggestions on that front? 

Wanted to post a quick update to this. Turns out this deal falling apart is the best thing that could have happened. 

Instead deployed my available cash into a property in my target area with an in-place renter, which was cheaper than the flip property. Kept to my strategy, saved cash out of pocket and didn't strain my skillset. I'm pretty pleased - now on to the next one!

It's looking more and more like a very good thing the deal didn't work.

I'm keeping it local (to Champaign/Urbana) for now - but with a strong preference for Champaign because of the lower taxes. Also, because I have a preference for buy and hold I want to concentrate my portfolio in as small an area as possible. Really key in on a sub-market. Wouldn't turn my nose up at a great deal anywhere, but that's where I'm focusing. 

But for now, I'm shifting focus to building cash - don't know the method I'll use, but likely wholesaling. If all goes well (I'll do another deal diary soon) this year I will have gone from owning my residence to having three rentals and my residence in one year. Need some time to pay down loans, digest those properties and rebuild my cash reserves.

So, this is going to turn out to be a short diary unfortunately, as the deal recently died. Still, might be instructive - and at least maybe some of you can commiserate. 

An ex-hoarder house, a 3/1 in Urbana, was listed for $37K and I got it under contract for $35K. ARVs in the area would make this likely an easy sale at $59K, although it would still cash flow as a rental with my conservative monthly rent of $650 - so two exits (always a good decision). I estimated the repairs at around $10K. Pretty much just new carpet and paint throughout, some much-deferred yard cleaning and a small amount of roof work. As we approached the closing, the junk still hadn't been cleared out and the seller found termites. Not a big deal, we agreed to escrow the treatment cost.

The bad news came when the lender's appraisal failed - the appraiser had done some strange things which eliminated 90% of the comps in the area - so we worked to bolster our case. I asked my roofer to write an estimate for the repairs needed (as that was the largest issue the appraiser hammered in his report) and he unfortunately discovered some issues. My $1500 estimate for repairs became a $6000 estimate for a new roof. Well, the deal still had some meat left, but the bank wouldn't commit. I tried another lender, but couldn't get them to act with urgency, and we cancelled the deal.

Overall, I think I'm lucky it came out the way it did. The economics of the flip were getting worse and worse, and this property is outside my target area (I'm a buy-and-hold investor, but in Champaign - for sister cities they're really quite different). Turns out, I have an offer in on something much more my speed as I write this, so I'm very glad I'm not in the middle of a difficult and costly flip. Lesson learned: Stay flexible and keep moving!