All Forum Posts by: Crystal Smith

Quote from @Emmanuel Rugamba:

Hi everyone I am 26 year old professional athlete looking to buy his first home but also house hack in the process. If Anyone has additional information on the Chicago market right now and some insight Id love to talk.

 Here's some information on the Chicago Market.  As the 3rd largest MSA in the country it's hard to generalize the Chicago market as it's actually over 100 different submarkets when counting the 78 communities in Chicago property and then adding in the various suburbs, including in and around Naperville.  With all of that said without know more specifics about what price points you're considering and location I'm going to Generalize

1. Median Prices for single families homes in the Chicagoland region went up about 7.4% as of November 2024.  Here's a link to the data:  https://mred.stats.10kresearch.com/infoserv/s-v1/vwxD-yIT

2. Median Sales Price for condo in Chicagoland went up about 8.4% over the past 12 months as of November 2024.  Here's a link to the data: https://mred.stats.10kresearch.com/infoserv/s-v1/vwxJ-5gH

3. Median Sales price for small multifamiles in Chicagoland went up about 11.2% over the past 12 months as of November 2024. Here's a link to the data: https://mred.stats.10kresearch.com/infoserv/s-v1/vwxv-Zs5

What this data shows at a Macro level is that the Chicago market is doing fine, but the market is too large to use that data to make any decisions about where you want to house hack. In my opinion the best way to house hack is to purchase a multifamily where you can live in one unit while renting out the rest. The decision you must make is where do you want to live from a lifestyle perspective. We've had clients over the years who love Bronzeville & Hyde Park and have purchased large buildings with condo quality finishes or updated the buildings & are cash flowing while living in the building. While other clients prefer the Northside or are looking at the gentrifying Near West Side & others that want to live in the suburbs. The lifestyle question is one that you must determine, then narrow down what parts of Chicago provide you with that lifestyle, then we can really answer the question- How is the market doing in those specific neighborhoods?

Quote from @Jennifer Fernéz:

Let's say you are a brand new investor. You are 40 years old and you have a family. You have $80K in your savings account, and you decide you want to invest in real estate.

Knowing what you know now, what would you do with your 80K? How would you make it grow the quickest?

 Before I give my answer I'm making the following assumptions- Your credit is decent, you have stabe income and make decent money; your debt to income ratio is relatively low. 

In my opinion the fastest way to grow the $80K is Flip, Flip, Flip- then buy and hold and repeat again.

1. Establish an LLC & a bank account for that LLC

2. Get preapproved for a Hard Money Loan- Many of these lenders can only lend to LLCs Many of these lenders will give you 100% of the renovation and 80 to 90% of the acquisition. Your rates will be higher wih no experience

3. Start Networking to find partner(s) with experience.  You don't want to do your first one on your own.  Also start networking to start buildign your team of find contractors, handymen, private lenders, real estate attorneys, title companies, architects,wholesalers....  You don't want to get a property under contract and then start searching for the right people. Start it now

4. Research your local market to see if it fits the following criteria. Are there communities where you can acquire homes for around $100K or less AS IS that will have After Repair Values of $170K or more. I chose $100K because you'll need to use about $20K of your savigns as a downpayment for the acquisition.  If you can't find that in your local market then you may have to go to a higher price point but it means using more of your savings which I'm advising against. Another option because of your networking is to joint Venture with someone to get into a deal. Add your $20K with someone else's $20K.

5. With the financing ready, your team in place, the market research complete- hire an investor friendly realtor. Pick one that also has a great network and can not only source MLS deals but will partner with you to source off market opportunities

6. Be patient- Get a fix and flip deal under contract. Minimum Net Profit $25K to $50K. This means looking for a lip stick project that can be completed and resold in 6 months or less

The formula in a perfect world

Fix and Flip a home- Make $25K to $50K (Yes you'll pay short term capital gain tax); Repeat the process 3 times; Now you'll have an additional $75K to $150K added to your $80K of savings. Then look for a property to buy renovate, rent & refinance (cash flow).  

Quote from @Celine Rechyy:

Hello!! im a high school student and I’m very interested in real estate investment and would love to hear some suggestions on how to get started. Specifically, I’m interested in house hacking as a way to begin practicing real estate after I graduate from college.

Can anyone share some learning directions, tips, or experiences? I’m excited to learn more and dive into this field. Thank you!

One way to learn is to become an assistant to a Real Estate Agent who works with Investors and House Hackers. With the right agent, you'll learn how to run the numbers and establish a network of lenders, investors, other agents, contractors... In Illinois, the minimum age to officially become an unlicensed assistant is 18. An official unlicensed assistant has access to the MLS.

Quote from @Kevin Hilton:

I am looking to acquire my 4th rental property, but I would like some advice from all of the seasoned investors in this forum. 

Property to purchase would be a STR at $240,000 - so we would need the 20% down payment and we are looking at different options as the source of the funds. I would use money from a HELOC that I have open to fund the down payment, but as @Scott Trench stated recently on the podcast, that is a short term solution, and I don't want to hold that $48k debt for more than a few months.  Our current portfolio looks like this:

LTR that is worth 150k with 65k of debt left on it at 3.65% on a 20 year loan - PITI = $785 per month - long term tenants paying $1650 per month

LTR that is valued at 110k with 45k of debt left on a 4%, 20 year loan - PITI = $583 per month - long term tenants paying $1550 per month

STR that is valued at $275k with 155k of debt left on a 3.5%, 30 year loan - PITI = 1080 per month - brings in over 35k per year gross for the last three years.

Would you do a cash out refinance on one of the properties to pull out some of the equity to pay off the $48k HELOC or would you sell one of the LTR properties to pay off the HELOC?

Or would you not try to do this deal at all and wait to build up the cash position to fund the down payment, which could take 2-3 years?

Thanks for any and all advice!!

 There is a variable missing in your post that is the key to answering the question of which asset to leverage to purchase the asset you have in mind. That variable- How much cash do you project the $240K asset will throw off per month after the 20% down?  The bottom line assumes that your overall cash flow will go up from acquiring this new asset, which existing property, when you leverage will have the smallest negative impact on your overall cash flow.  It's a math problem that you can easily figure out  

Quote from @Shawn Dandridge:

I am hiring a RE agent for a rental I have in DFW. In the contract it states she gets 100% of 1 month's rent if a tenant they found renews. Also, if they sell to a tenant, they get 6% of the sell price. Are these common now? I don't remember ever seeing this years ago. 

 There is no such thing as common.  Everything is negotiable. 

Quote from @Sam Lewis:

I understand the benefits behind hard money lending, its guarenteed return from your cash... however, what cases would a hard money lender trust someone they don't know/barely know? I'm getting to a point where I might want to pursue a lender for future investments but am trying to understand how these lenders choose people to work with.

These types of lenders are called "Hard Money" because they are not betting on the borrower.  They are trusting in the potential value of the "Hard" Asset. The borrower's experience is important, but what's more important is the "Hard Asset," Hard money lenders rely on their due diligence process to determine the potential future value, review the renovation plans to get to that value & sometimes even the contractor.  The experience and assets of the borrower are also part of the due diligence review. The more experience and more assets, the cheaper the rate a borrower gets.  Bottom line- As with all lenders, hard, money lenders have a process they follow to approve deals.  With that said I do know a few hard money lenders who operate on the principle that they have to like you to lend you money, but most 

Quote from @Jared Appel:

Hello BP,

My name is Jared Appel, recently relocated to Chicago by way of Miami, and diving head first into the BP community to start my real estate career. Would love to connect with others in the area and industry, I live in the Loop. Focused on reading, learning, listening and networking in the short term. Excited to utilize all the BP tools to analyze the market for new opportunities. 

Say hello, let's connect!

 Welcome to BP. Have you decided what sectors you will focus on?  I recommend you set up your BP alerts so anything Chicago will show up on your feed.  You should also check out the events forum.  Another way to start networking with like minded investors.

https://www.biggerpockets.com/forums/521

Quote from @Sebastian Bennett:

I've been actively using BiggerPockets for over a while, have been educating myself and attending a lot of networking events. All have proved helpful but still feel like I need some additional support. I've met plenty of individuals with far more experience than me who have offered referrals, advice and so on but I'm looking for more handholding than is reasonable to ask for someone to provide for free. I've done extensive research into the options and a lot of the paid options seem to focus on teaching specific investment methods. There's some who are more so there to help advise as I make my own path presumably with the ability to identify issues ahead of time. Consider it more so like having my own in house representative to be there as needed. I still  have to do some more research into the individuals behind both concepts but what option do you believe offers more value? I will close by saying I am not expecting a be a multi-millionaire by next year following someone's system. I am more realistic than that. 

In one of our companies, we have a board comprised of people with different expertise. I do not call them mentors, but at the end of the day, the role they fill is to provide advice based on their expertise and their knowledge of where we are in our business.  My recommendation:  Take all of the people you have met at your networking events, put them into a CRM, and categorize what expertise each person has.  Then, start building your informal board or "in house representatives" using the words in your post.  The challenge with using a paid option is expecting one person to have all the knowledge you need to succeed unless that person is giving you access to their board. 

Quote from @Teonia Riley:

Quote from @Crystal Smith:

Quote from @Teonia Riley:

Hi, 

I’m a newbie, buying first property but in need of advice. Below is the backstory, 

I have a house under contract that I admired the remodel, got an inspection and a lot of things were wrong with that property. Though, the HVAC has reached its life expectancy per inspection report - It was recommended that it gets serviced and clean. (Still awaiting Seller to confirm report it’s been done as she agreed to the inspectors recommendation but has mentioned she’s not replacing it) In additional to the foundation has shifted and need reconstructed due to a lot of slopping in the home (My agent said it comes with wear and tear, so they might argue that their not going to fix it so I didn’t put it on the IRSA to repair). However, everything on the inspection report - Seller agreed to fixing. It’s taking Seller a while to provide the HVAC report but while time passes after due diligence - Flooring cost is way too expensive at the price point they’re asking for 130K + Care of property never took place till decided to sell so I’m not comfortable any longer - Home sits on corner lot on a slight hill with crawl space - Lots of weather changes has caused the home to settle + improper supports needed. I’d rather pass this problem off & keep shopping options. 

I’m aware I should’ve backed out when the inspection was done but thinking I could bare the cost - it’s not sustainable for the goals I have with this property. I’d rather terminate due to foundation issues and high possibility I’d have to replace the HVAC in my first year of ownership. Agent has explained, I’d potentially be sued because I agreed to them fixing everything then backing out in the middle of repairs. I thought better to terminate in the middle of repairs prior to them completing everything + Owe appraisal fees to Lender.  

What type of trouble am I in? Any feedback is appreciated! Never bought home before and learning as I go. 

 Your options:

1. You back out of the deal & lose your EMD. Can the seller sue? yes. Will they sue? Not likely.

2. Depending on what type of relationship you have with your lender you can have them disapprove the loan to protect your EMD.

3. Close on the property- Purchase a Home Owners Warranty to cover the HVAC.  If the HVAC goes out the warranty will pick up the repair and/or replacement. It will not cover foundation issues

Thankfully, no EMD was used in this during this deal.

If its unlike for them to sue, how does situations like this normally play out if Buyer doesnt want to terminate? Thank you for the helpful info! 

 They are unlikely to sue because unless this is a multimillion $ deal it will cost them more to sue you to close than it will to just move on.  

Regarding there being NO EMD- If you sent me a contract and did not put up EMD then as far as I"m concerned, we do not have a binding contract. Both sides must put up consideration for a contract. The seller is putting up the home and a buyer usually puts up EMD as their consideration. If it was my property I would not act on any of your requests without EMD & I'd advise my seller clients not to act or even sign a contract without consideration from the buyer.

Quote from @Teonia Riley:

Hi, 

I’m a newbie, buying first property but in need of advice. Below is the backstory, 

I have a house under contract that I admired the remodel, got an inspection and a lot of things were wrong with that property. Though, the HVAC has reached its life expectancy per inspection report - It was recommended that it gets serviced and clean. (Still awaiting Seller to confirm report it’s been done as she agreed to the inspectors recommendation but has mentioned she’s not replacing it) In additional to the foundation has shifted and need reconstructed due to a lot of slopping in the home (My agent said it comes with wear and tear, so they might argue that their not going to fix it so I didn’t put it on the IRSA to repair). However, everything on the inspection report - Seller agreed to fixing. It’s taking Seller a while to provide the HVAC report but while time passes after due diligence - Flooring cost is way too expensive at the price point they’re asking for 130K + Care of property never took place till decided to sell so I’m not comfortable any longer - Home sits on corner lot on a slight hill with crawl space - Lots of weather changes has caused the home to settle + improper supports needed. I’d rather pass this problem off & keep shopping options. 

I’m aware I should’ve backed out when the inspection was done but thinking I could bare the cost - it’s not sustainable for the goals I have with this property. I’d rather terminate due to foundation issues and high possibility I’d have to replace the HVAC in my first year of ownership. Agent has explained, I’d potentially be sued because I agreed to them fixing everything then backing out in the middle of repairs. I thought better to terminate in the middle of repairs prior to them completing everything + Owe appraisal fees to Lender.  

What type of trouble am I in? Any feedback is appreciated! Never bought home before and learning as I go. 

 Your options:

1. You back out of the deal & lose your EMD. Can the seller sue? yes. Will they sue? Not likely.

2. Depending on what type of relationship you have with your lender you can have them disapprove the loan to protect your EMD.

3. Close on the property- Purchase a Home Owners Warranty to cover the HVAC.  If the HVAC goes out the warranty will pick up the repair and/or replacement. It will not cover foundation issues