All Forum Posts by: Shawn Alexander

@Lucas Miles I was thinking the same thing, just will have to be patient and wait for a good time to jump on a small MF unit. Any other suggestions then realtor searches. Have you done any foreclosures ect?

Hi all!

I have 1 SF home near chicago IL and have been saving up for a possible MF unit and considering a STR (condo/house).

I have a few questions. Does anyone have any suggestions on different sites or ways to determine best CoC return on STR's. I've looked into Airdna a little bit and I think I got some good info from there. I've looked into doing a secondary home mortgage and curious if people have utilitzed that in their STR's. Lastely does anyone have a preference on condo's vs SF homes?

Thanks!

Hi all!

I currently have 1 SF rental in Joliet IL, been saving up and ready to start tansitioning into a small MF (2-4unit). With that being said I am looking at these MF homes and just confused on who wants to actually buy them. Most are selling from 300k-500k with a cap rate of 5% and a CoC return of 1-5%. Dropping 60k-100k for only 1-5% CoC return and a cap rate of 5% seems to be a waste of funds. Just bad deals or does anyone have any input? I could be missing something here.

Thanks!

@Miriam De Haro

Sorry for this inconvience, but where I live a brand new AC install you're looking around 2-3k with the coil still installed. You're getting a new AC unit for $1250, ****** thing happened but honestly that new AC is gonna last you for years to come.

@Devin Monroe

Hey buddy,

Ok so I do most of my work, I can tell you first hand if you don't intend on doing the work yourself get multiple quotes. Ask for references, ask if they cert their work, and also ask if they have a facebook page where you can see their current work.

If your walking into a home at least in my market. A fair size kitchen 10x15 is going to cost you roughly 10k. A bathroom 7x10 will cost you 5k. 1/2 bath will cost you 1500-2500. AC installed into existing furance roughly 3k. 90 liner feet of drain tile and sump pump about 4-5k. 1500 sqft roof roughly 7-9k. 1000sqft of carpet roughly $1.5 per sqft, thats with old carpet removed. 

I've seen other people judge it with this method. 

Lipstick fix (fresh paint, carpet cleaning and minor landscaping) $5 per sqft 

Minor gut (replace carpet, repair a window, replace a door, fresh paint, install new appliances, repair a section of fencing) $10 per sqft

Major gut (remodel kitchen, bath, major cap ex IE roof, furance, ac repair/replace, fresh paint, new carpet) $20-$30 per sqft.

Again if you are not going to do the job yourself, I would suggest to at least be the general contractor yourself. Most general contractors takes the stress off of your shoulders and they handle the other contractors that will be needed for the job. You will be paying for that service. I would atleast add another $2-$3 per sqft if you will be using a general contractor.

Also be completely clear on what you want done and your expectations., make sure they will grab the proper permits required by your city.

I always make it completely clear when I want a job done, now I know about how much time it takes to do these jobs so I add %20 to that you never know what comes up and most of these good contractors always have the next job lined up. 

I pay material cost up front. Labor cost come after the job is complete and meets expectations, I've worked with my HVAC guy four times now on personal homes and my investment SF home. I pay %75 up front since I know his work and he knows my expections. 

I hope this helps!

@Devin Monroe

Hey buddy,

So I started investing in 2020, only have 1 SF home. I am sticking with the BRRRR method. I do most of the work myself besides roofing, foundation, and anything electrical involving the panel. So everything else I do. Now I live in Joliet IL, so the market here is a bit different from your market. I bought the property for 116.5k, all in with rehab I was at 60k cash. I am able to refi this house currently for 190-200 @ 75% with my current lender. So I did really well with this property. My wife is a real estate broker, and a property manager as her second job. I can tell you we will not be using a property manager. Most of the companies in our area have terrible reviews and we know a couple of people who have tried them out and have had nothing but negative things to say. I would suggest you take to 10% per month out and just manage the first couple homes you have yourself, you will deveolpe a lot of skills this way, in my opinion.

Im not sure what you're intending on doing with the properties you buy, just a quick lipstick fix and rent? Doing the BRRRR method? So when I figure out the expenses for the property I added 5% for cap ex, 5% maint, 5% vacancy. BUT I literally fixed this home from the top down, full rehab. With that being said the cap ex I took off for now. Maint I reduced to 1%, mainly due to call outs or a leaking faucet or something along those lines. As far as Vacany goes I left it due to covid. But the market out here is very competive for rentals so as soon as covid goes away i think I will reduce that amount to 2.5% (basically if someone does move out I give myself enough $$ for cleaning/carpet repair/replace ect.

Rent is $1680 per month (should be around 1800 but due to covid went  a little lower to attract more potentional renters.)

Mortgage/Prop Tax/Insurance is $750 a month.

$1680* 6%(maint/Vac) is 101

Cash Flow $829 per month, before I refiance my $$ out. Estimated Refi im looking like cash flow will be around $350 a month with refi out of $77,250.

Original Investment $60,000

So in my opinion, find something that makes sense on paper add 10k to it. If it is still cashing flowing good pull the trigger. Money is cheap right now, now is the time to make the move. If you house hack even better.

If you want any more information or just to shoot ideas back and forth, connect with me on here and I'll shoot you my e-mail or number.

I bought a SF home in July with 25% down amortized over30 years. I would shop around with different lenders to be honest. I know at least in my area Joliet IL I could get a 20% DP amortized over 30 years right now no problem.

good luck!

@Brent Coombs

Thanks!!

@Glenna Wood Have you ever seen cities give incentives to build property or any type of multi-family homes?

@Glenna Wood 

@Steven Foster Wilson

Thank you both for that information. I figured it would be easier to by a slightly run down duplex and fix up for rentals then to build/sell. We are in a decent sellers market currently in Joliet IL so was just putting some feelers out there.