What size are the units?
How many bedrooms each unit?
Is unit 4 currently rented? Get an exact amount of the actual rental.
How is a garage being rented for 300$ a month? How many cars does it park?



Can we get a picture of this property? As well as surrounding properties?



The 50% rule doesn't really apply if you will be living in it. It's a good idea to buy an investment property, live in it free, only worrying about taxes.


If property prices have dropped 55% from past 2 years, with these interest rates, jesus, I'd be on a buying spree right now.



One last piece of advice: Don't believe anything you're told from seller or seller's agent. Verify everything.

Not sure on exact size. Can verify that they have very good sq. footage compared to most Chicago units.

Unit 4 is being rented right now for 1200/mo, but was after a long term renter (4+ years had been renting for 1500). Apparently they left, and the seller is in dire straights financially so they under priced the unit to get someone right away.

Garage is 2 spots, 150 each spot.

I'm aware the 50% rules doesn't apply if you're living in it, but the goal was to get a place I could eventually move out of and still make $$$ from.

Plus, my thought was that it's a good way to save and essentially 'earn' money while living in it. I'm able to put away/invest a much larger % of my income.

forgot to add, got confirmation from both the seller agent and my agent that the seller's wife is very sick, which is why the drastic price drop. They need $$$ now for medical bills.

Property itself is in good condition structurally (no roof damage, new siding)

However, unit 1 does currently have floating wood floors in the bedrooms, which are sort of funky, and we may replace with carpet/hardwood.

Is there anything I want to specifically make sure to do besides have an inspector go through everything?

Use your judgment and depending on how sophisticated the seller and his agent are I would attempt to verify everything that matters.....Copies of all the leases, utility bills that you will be responsible for, bank statements, and p&l/tax return for the last 2 years. Requesting all of these docs may be insulting to the seller if hes not sophisticated, but with commercial deals (yours is very small obv but its still income producing property that could seriously affect the value if anyone is not being truthful) this is the way its done, and his agent should be able to put something together.

Agents will do and say anything to sell something in struggling markets, ie listing properties with inflated or just false rental rates and occupancy numbers, low ball or not even list expenses to make a deal seem more attractive than what is actually going on.

Google is your friend. I found historical Case-Shiller Index values in about 30 seconds.

spex has stated his compensation for property managers runs around 2%. He says it would be around 8% for a professional management firm.

A) In your experience is spex' claim of 8% in the ballpark?

B) If a professional management company changes significantly more than 2% (say 5%+), what is the value-added they are providing to justify the spread?

Thanks.

It's funny that no matter how long a property has been on the market there are always a few other people who became interested at THE VERY MOMENT a prospective buyer shows up.

Listing agents have fed me the same b.s. on every property I've ever owned.

Q: How can you tell when a real estate agent is lying?

A: When you see their lips move!

Great points and I'm even a bit more hard core, as I'm approaching this from a lender's perspective. If a package doesn't include the seller documents you mentioned it's not a complete package and can't be underwritten.

As for a seller possibly being insulted, we are considering paying him hundreds of thousands or perhaps millions of dollars. He needs us more than we need him, especially in this environment. REI isn't about feelings, it about math and due diligence.

Go make an offer. Don't wait around. Offer in the high two hundreds and go from there.


Floating floors ain't no biggy at all.


You analyzing too much.


Is it possible though to get a picture of this property? And amount of bedrooms in each unit is important to know.

unit 1 - 3BR/1BA
unit 2 - 1BR/1BA (with family room)
unit 3 - Studio APT (1br/1ba)
unit 4 - 4br/2ba (slightly larger size than unit 1, but a bit worse layout)

Pictures:


This is the rest of the street -- so obvious teardown + rebuild value here:

You know the old adage, buy the worst looking home on the best block. Which looks like you've got a winner there. Good luck.

Edit:

You've got 4k in rent revenue, with the 2% rule, you'd need to get the home for 200k. However, I feel that this property, given that you are going to be living in it, has added value that can skirt the 2% rule somewhat.

I'm a newb though, but from what I've read, this may be one of those instances that deviating slightly from the 2% rule may work out "ok". Naturally if you could get it for 200k, it'd be better, but don't think it will make it a bad investment. Just slightly slower returns.

2nd edit:
Have the two investors live in the lower rent places.

we plan on living in the two best units. Someone has the 4BR unit currently leased through the end of the year, so short term we wouldn't be able to do this.

Make an offer in the high twos. Property looks okay.


Street looks good.


Bottom line is, if you two live in this property, you won't "lose". You'll be living almost for free, and it looks like it has future value.

thinking of buying my first property... currently renting, and will live in it and rent out second bedroom
257cherokee.com
asking ~185 but thinking i can get it for 150

i would put 40 k down

Loan 110k
condo fees 310 per month (should be no gaps in insurance when adding 300 per year see below)
1600/year property tax
apartment insurance 300 per year

accordinig to mortgage calculator my note would be about 1100... place rents for 1400... so assume 700 for other bedroom (i'll supply furniture, nice tv, etc. so fair price) I have plenty of friends that I can rent too... and would be a good size if i got married

so instead of rent i'm paying now, i pay 400 bucks a month to the note and get 1100 month in equity

+obama tax incentive
+plus other tax incentives from ownin a home
+ I can live in a much nicer place, I don't wanna spend 700/ month in rent

seems like a good decision for me if I can get it for that price... now just worried about getting a loan :/....

Its next to two universities... and is one of very few gated buildings so there should be very little trouble renting... especially as a bonus my university and fraternity connections, i should really have no problem renting it

310 a month seems kinda high for condo fees with no pool or no major services....

If you are buying a condo/townhome/anything with association dues/fees/etc., you really need to read and understand the association documents and carefully review the financials.

Definately look at the financials of condo associations.


Some associations have no idea what they're doing and they're burning through money for unecessary maintenance / repairs.


I once saw a 2005 construction with completely rusted gaurd rails. Condo person was saying that the following year they were going to replace all the gaurd rails.

*face palm.

I don't get it.

Horrible maintenance.


If they merely maintaned the rails by sanding / painting the rusted spots every year than they wouldn't have to spend tens of thousands on completely new rails.

I'm sure most people understand this, but for those that don't, in condos,townhomes, building associations, etcs. there are periodic fees that go for things like maintenance of common areas. Now if something comes along that wasn't in the budget on which the fees are based, there can be a "special assesment". Special assesments can be killers. In theory the fees should be high enough to include a reserve for capex. The problem is that builders/current owners have an incentive to keep fees low because it will increase the resale value.

As an example of how bad this can be, a few years ago here in Chicago there was a building on north end of the "Magnificant Mile" (which is a high rent district). Something was wrong with the building and they had an enormous special assesment. The people that owned those condos couldn't give them away. There always 25+ on the MLS and the listing prices were extremely low relative to the neighborhood.

Very true.


Many new developments are advertised by developers as "low condo fees".


Then when the property is finished, the developper washes his hands and gives it over to the association.


Association then finds out the condo fees were barely sufficient and have to raise them to cover expenses.

i understand the pitfalls of condos.... but i have no experience and really no way of analyzing condo fee financials

I will be owning slightly over 25% of the building (5 units mines the biggest)...so i figure i will have some say in it correct?

also the seller is an owner/agent, does this mean I don't have any closing costs?


any advice on getting a loan i'm a poker player but only been pro for the year of 2009(was college student and graduated in may 09)

thanks for your help guys... really appreciate it

It starts with your credit score. Do you know what yours is?

Did you declare your poker income and pay taxes on it?

If the answer to either question is "no" you should correct the situation immediately.

ya i declared my earnings and will be paying taxes on them in a couple weeks... but not even filing as a pro cus I was student for part of the year... and all of my money in the bank will be going towards paying taxes and the down payment

my other poker money isn't mine i'm being "staked"... whatever don't wanna get into too much tax talk.... basically tho everything i'm paying taxes on will be going towards down payment

If you can get the other owners to accept your input, maybe. But some strata councils(and especially the chairman) are tough to get through to. They have their quirky rules that can negate your vote. Get a good lawyer with experience in those types of agreements to explain your rights and obligations under that contract.