All Forum Posts by: Crystal Smith

Quote from @Jillian S Young:

Good day, from new york ;). I purchased a foreclosed 2 flat in the northern austin area 8/2023...it's now 6 months later and i am having a horrendous time finding legit, reliable and competent contractors. I have of course lost money and time running through contractors who have no time management skills, overwhelmed with other projects and or are just incompetence's ( installing wrong sized toilet and unable to close bathroom door), ( sloppy placement of drywall, botched paint jobs. I am looking a licensed GC, PLUMBER and Electrician who can service the Chicago area. ALL referrals help !! I am an out of state investor , trying to create a go to team. Thank you ; ) 

 I just dropped your a direct message so I can provide you with some referrals.

Quote from @Mimi Perez:

Hello all,

I am not yet an investor, but have been listening to podcast for months trying to best determine how I can start the process. My goal is small. I would like to be able to own a multi family unit (4units or less) where I can live in one of the units. I am 52yo, a full time nurse and will not be leaving my job, but I would like to decrease the amount of hours I work.

My dilemma: I currently own my own home (I owe about $165,000). I wanted to start by house hacking but (1) I am not allowed due to strict HOA rules and (2) my city isn't as desired as the next city over. I can sell for $100,000 more than what I paid.

The city I would like to purchase rental property in is more expensive than where I currently live. So, I thought I should sell, take the profits and put into high interest account, rent a room for myself for about $1100 per month with all utilities included and that way I can save additional funds for a year.

I'm torn because people say "don't sell... houses are going to keep going up". I have a great interest rate at 2.64%. The area I own is growing. But my taxes, CDD, and HOA total are about $6000/year. I can't rent the whole house because my subdivision has reached it's rental capacity, but I can get my name on the list.

Any advice would be greatly appreciated.

Thank you!!

 Given your objective it seems like the solution is to sell.  The potential challenge when you sell though will be capital gains tax which means you may not be able to pocket $100K of gain. Some options to research:

1. Research selling under a Land Contract or Structured Installment Sale- It's an alternative to a 1031 exchange that investors use to delay the tax man.   You may want to discuss your options with @Aaron Hickey who specializes in this type of sale

2. Consider selling as Rent to Own- We had a property in a location that had a moratorium on rentals so we sold it as Rent to own.  There was a sales contract that included an exercisable option to purchase. The city fathers said it was ok because it was on a sales contract. I can't say this would work for you but I'd have your attorney see if you can get away with it. The key to this strategy is the person you're selling to has to put up a significant downpayment, so you can start the process of finding your next investment

Quote from @Johana Villamil:

Quote from @Crystal Smith:

Quote from @Johana Villamil:

I am having problems with my GC. We are 6 months into a whole house gut job and I feel like we are wasting a lot of time. There are days even weeks that no work gets done. His communication with me is terrible. He never answers the phone and just sends me a text here and there. Today I had a new GC come into the house and said we are not even 50% done and he will give me an estimate. He looked into the online portal and said the build permit will be expiring soon. He also saw my house is under investigation. Has anyone had these issues and needed to change their GC? what happens with the initial scope of work and the company that's funding me? At this point I feel I need to take some type of action. I tried to give my old GC a chance because I did not want to increase budget and don't have the funds for another deposit, but I feel stuck and just need to move forward asap!    

At this point in the process it's time to protect your asset.  If you have given the contracdtor a deposit and that deposit has been used to purchase materials, & those materials are in your property I would;

1. Secure the home and all of the materials left in the home.  By secure I mean change the locks, install security,..... Ensure that the old contractor cannot get back in the property

2.  This one's a little tougher but when sending the termination letter you should also see if you can get Lien Waivers signed.  The objective:  Prevent the contractor from putting a mechanics lien on the home.

3. I would not communicate directly with the contractor.  At this point all communication between you and the contractor should come through your attorney.  You have to send a message that you are serious and nothing says serious more than a communication coming from your legal representative.  This includes requesting return of your funds.

Thank you for your insight Crystal. I did Contact an attorney today and he will work on this for me. But I still need more funds to continue with this rehab because hiring the new contractor I will be exceeding my rehab budget. I personally don't have enough funds to come out of pocket. Would you happen to know what I can do to get some more cash and finish this project?

 We work with a National Contractor that operates on a business plan where they get paid after a property sells, which means no $ out of pocket for a homeowner or investor. Here are the ground rules for this contractor.

1. They will not work on properties that have a Hard Money Loan in first position

2. The After Repair Value of the property must naturally be more than the cost of any liens and the cost to renovate so they get their money back.

3. They will only work through realtors. Why? They require the property to be listed on the MLS once the renovation is completed.

I can't guarantee how competitive they may be but it's a solution that we have used on some projects. 

Quote from @Johana Villamil:

I am having problems with my GC. We are 6 months into a whole house gut job and I feel like we are wasting a lot of time. There are days even weeks that no work gets done. His communication with me is terrible. He never answers the phone and just sends me a text here and there. Today I had a new GC come into the house and said we are not even 50% done and he will give me an estimate. He looked into the online portal and said the build permit will be expiring soon. He also saw my house is under investigation. Has anyone had these issues and needed to change their GC? what happens with the initial scope of work and the company that's funding me? At this point I feel I need to take some type of action. I tried to give my old GC a chance because I did not want to increase budget and don't have the funds for another deposit, but I feel stuck and just need to move forward asap!    

At this point in the process it's time to protect your asset.  If you have given the contracdtor a deposit and that deposit has been used to purchase materials, & those materials are in your property I would;

1. Secure the home and all of the materials left in the home.  By secure I mean change the locks, install security,..... Ensure that the old contractor cannot get back in the property

2.  This one's a little tougher but when sending the termination letter you should also see if you can get Lien Waivers signed.  The objective:  Prevent the contractor from putting a mechanics lien on the home.

3. I would not communicate directly with the contractor.  At this point all communication between you and the contractor should come through your attorney.  You have to send a message that you are serious and nothing says serious more than a communication coming from your legal representative.  This includes requesting return of your funds.

Quote from @Lamar Athill:

Quote from @Crystal Smith:

Quote from @Lamar Athill:

I am new to real estate and Im looking acquire some rental properties. What would be good advice on how to get started

 How to get started:

1. Get your financing in place

2. Hire a realtor

3. Get on every wholesaler list possible 

4. Start networking with other investors

5. Start developing a list of property management companies, General Contractors, handymen

6. This is probably the most important- Make sure you understand the financials associated with rentals

7. Start getting recommendations for real estate attorneys

8. Consider establishing an LLC for your real estate- On my first property I had a loan from a bank but I had established a Property management LLC to manage the property. While I lived in the property my tenants did not know I was the owner. All payments went to the LLC.

I probably forgot something.

By the way I saw a few negative comments in the thread about why you should not do this.  Ignore them.

How do I get on a wholesale list?

 You'll have to start networking with investors in your community to find out who the wholesalers are.

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Quote from @Madhur Mehta:

Hello everyone, I have been grappling with the below question for the last few weeks.

We have a condo in downtown Chicago that we bought for $150k 10 years ago which generates ~$900 per month on Cash flow. The CoC is great and we don't have a mortgage on the condo, however the current market value of the condo is about ~200k, so very less appreciation in last 10 yrs.

Should I sell the condo and invest ~200k (minus fees) to buy an investment property with 30-40% down in an area (Durham, Raleigh) where I could expect greater appreciation down the road. With the current interest rates, I would be -ve cash flow 200 to 300 per month.

I am currently based out of Raleigh, NC.

Appreciate the help.

 The wonderful thing about owning an investment property are the options/strategies to consider in a situation like yours. I'd look in to the following options:

1. See if you can tap into the equity in your current condo to purchase another cash-flowing asset. The objective- Keep your current positive cash-flowing asset in Chicago- Your cash flow may go down if you use a HELOC or refinance the asset, but make sure it's still a positive cash flow. Then use that cash for a down payment on another asset. The nice thing about this strategy is you maintain the cash. flowing asset in Chicago along with the appreciation, even if it is low

2. I'm sure there's a mention of a 1031 exchange on the thread. It's a great way to push the capital gains tax down the road if you decide to sell and purchase another investment.  In my opinion, you should identify the new asset you want to acquire first or make sure there's an adequate supply before selling your current asset.

3. If you decide to sell another strategy for you to consider as an alternative to a 1031 is a structured installment sale.  I've known about this for a while but just met with @Aaron Hickey.  He's in a better position to explain how this strategy can benefit you from a tax perspective,

We're looking for homes to purchase in and around the Washington DC rea. We're cash buyers and will share 25% of our profits with partners. Feel free to reach out to us at https://www.chicagodiscountproperties.com/joint_venture_part...

or [email protected]; (312) 605-1916.. Share this with your friends. We're offering 25% of our profits for the right deal.

We're looking for homes to purchase in and around the Chicagoland Area. We're cash buyers and will share 25% of our profits with partners. Feel free to reach out to us at www.chicagodiscountproperties.com/joint_venture_part...
or [email protected]; (312) 605-1916.. Share this with your friends. We're offering 25% of our profits for the right deal.

We're looking for homes to purchase in and around the Chicagoland Area. We're cash buyers and will share 25% of our profits with partners. Feel free to reach out to us at https://www.chicagodiscountproperties.com/joint_venture_part...
or [email protected]; (312) 605-1916.. Share this with your friends. We're offering 25% of our profits for the right deal.