I WANT TO SHARE WITH YOU THIS WEALTH OF INFORMATION ON REAL ESTATE INVESTING


7/18/2017
So, I am excited to tell you about the opportunity to attend a live (also simulcast) event of an evening and a day of learning with Chris Wilson about real estate-wholesaling, fix n flip, buy & hold, and changes in the “Dodd-Frank” law. Chris is one of our instructors and is a seasoned real estate investor of 30+ years. He started and owned his first rental property in Kenosha, WI in 1981. He has been a landlord (buy n hold) and a lender. He has done fix-n-flips, whole sale and lease options and he holds a real estate broker license in Arizona. In his early career, he had a corporate job with Lucent Technologies in sales, marketing and technology support where they paid him what they thought he was worth and what they thought his deal was worth after taxes. In real estate, he pays himself first and now runs his own destiny.
Event Information
SIMULCAST- Friday 3pm to 6pm CST AND Saturday 9AM to 5PM
I will take care of the registration fee so if you want to attend please let me know ASAP whether you will join me live or view the simulcast.
email me at: studiominvestments@gmail.com

Concept Design & Finding an Architect

5/23/2017
Last time I talked about my core beliefs on design. Today, I will take us back to the Albany Park property and tell you what I did next.
While the building was being prepped for rehab, I began my search for an architect to do the design drawings which would eventually lead to construction drawings for permit. I was lucky to know an architect that was self-certifiable; lucky that I knew of him, not so lucky in how I met him. I found him several years ago on a deal gone bad, yes, gone bad, a discussion for another time. Today we having a working relationship currently working on several rehab projects for other Bungalow clients. So, what does a self-certifying architect mean? It means that the architect can certify the construction drawings for permit reducing the time it takes to get permit by weeks and sometimes months. That person can also approve in-field project changes.
While my architect did the existing building survey (taking notes and dimensions of the building) I spent several days sketching out my ideas for the layout and design of the house. The interior of the house was in such degradation it required a full gut which allowed me to investigate the design of an open floor plan, not just opening walls but removing them and using beams to support the structure. Again, I would retain as much as possible; in this case, it turned out to be the wood floors in the front of the house, the two stained glass windows and the drop-down ironing board; not very much to work with. As I was sketching, my first thoughts turned to the layout and functionality of the space; the existing layout and its original intended use. Then turning to what would it take to make it a modern-day family home with requirements such as master bedroom en-suite, nanny/ parent suites, indoor/ outdoor space for entertainment, home offices, and the latest in appliances and technology. With all this in mind I was able to keep most spaces in their original location with the exception of removing the middle bedroom on the first floor and moving the staircase in its place. My concept ideas resulted with an open floor plan, a 1st floor master en-suite, two large bedrooms and full bathroom on the second floor, a fully finished basement with rec room, bedroom, full bath and utility room. And, a large deck. I then met with the architect and gave him my sketches for review and incorporation into the design drawings.
Next time “How I found a General Contractor or…. Owner Occupant as GC?”

Design

5/8/2017
My core belief is that existing buildings have history and design and those two things should always be considered in any new ideas. Meaning, I specialize in taking what is existing marrying it with what my clients envision and providing results which are both functional and appeasing. I provide full interior and exterior design services and partner with architectural, mechanical and structural consultants to offer a full range from idea concepts through rebuild. From as simple as color choices to a full gut and rebuild. If have a Chicago Bungalow, Grey/Brownstone, Row House, Four Square or a no-style that you want to reclaim, repurpose and rebuild; whatever your vision is, I will bring it to life.
Detailed description
• Historical research & design adaptation
• Master planning, programming & space analysis, conceptual & schematic designs, design development, construction & specification drawings, interior design.
• Color and Materials Selection
• Furniture and Lighting Selection
• Specification Writing
• Color Consultation
• Art/Accessories selection & placement
• Partnering with architectural, structural and mechanical consultants

Prepping the Property for Rehab

4/30/2017

Now that I had closed and taken possession of the property (2-Jan 2016) and before I could begin designing and doing any work on the property I must first make it safe and issue free. In this case, its mold remediation. As mentioned in my earlier blogs this property sustained heavy damage due to the neglect of the bank not winterizing the property by turning off the heat and allowing the pipes to freeze and burst. Before beginning any designing, permit application and construction I had to get rid of the mold. I got several bids for the work assuring that they were licensed to abate the mold and could provide a document of certification when complete. I decided on a firm that would remove everything and anything that had mold on it or in it, in addition to any wet surfaces. This meant a total demolition of the basement and areas of the kitchen and living room. With white contamination suits on the team removed all affected areas. Since it was the middle of January and the building had no heat I had to do something temporarily to heat the building and dry it out. The old boiler system was trashed and all the radiators were rendered non-functional when the pipes froze. Upon recommendation from the mold remediation team I secured a Heating /AC contractor that dealt with theses situations. He installed a high energy efficient furnace in the basement. Since there was no existing duct work to the 1st and 2nd second floors walls and stairwells were opened up to allow the heat to circulate through the whole house and dry it out. In addition, 3 large commercial dehumidifiers ran for two weeks to remove any moisture. While the heating and drying process was going on the remediation team cleaned all affected areas with bleach and mold killing agents. Once the house was heated, cleaned and allowed to thoroughly dry the team then sealed the entire basement and other affected areas with a sealer similar to an oil based stain killer but one used for areas that had been affected by mold. We were now ready to move forward with the design, construction drawings and application for permit.

The Auction Process

4/12/2017
Much like looking through any of the online real estate listings i.e. Zillow, Redfin, Trulia, you do the same with the online auction sites. In this case Xome. I sorted through the inventory and saved several properties to my dashboard as favorites. I could set alerts and read thru the auction companies’ process for bidding on a property, get additional info and request a showing; pretty much all the things I am able to do with any real estate company. Please note, that not all properties are available for viewing. Also, this was a cash deal, where as some properties can be financed. This is how I found the Albany Park property. The Xome auction company uses realtors to represent their properties and their contact info is on the property information sheet as shown below.

I scheduled several site visits and saw the property. After running my fix n flip formula, I signed up for the auction to bid on the property. There is a fee refundable if you are not the successful bidder and forfeit-able if you do win the bid and do not follow through with the purchase. Next, you wait for the auction dates, which usually last several days long. As the bidding commences you can bid at any time and are able to see the most current and highest bid. You bid in larger increments until it nears the auction end time when it decreases. I bid on the Albany Park property right up the auction end time and a bit over my dollar limit. Once I was deemed the successful bidder I received instructions on next steps including the closing date and location, where to wire funds and what to bring to the closing. I won the bid on December 16, 2015 and closed on January 2, 2016. I must admit that this was an easy closing, not what I expected. The following are some screen shots from the auction.

Buying It

3/21/2017
When considering how much I should pay for a property I use the following formula. This formula tells me what I should pay to realize a profit if sold in the current market and, or at any future sale prices. While this formula is based on what the current market will bear it can also be used as a guideline if purchasing long term. For the Chicago Bungalow, I am considering buying, I estimated that I would have to hold it for up to 18 months which included the time it took to rehab and sell.
I begin by researching if the property had been listed on the MLS, as not all distressed properties are. If so, what was the asking price, who owns it (private, bank, trust etc.), how many days on market etc. This information gives the clues as to why it has not sold. In the case of the Bungalow it was priced too high given its condition and the changing popularity of Albany park.
My spread sheet:

A little explanation on my spread sheet. This formula was used to decide on what to offer for the property. This indicates an estimated price to pay of $202,950. With the online auction fees, I paid $218,400, $15,450 over that price. The comps for the area back in 12/2015 indicated a sale price of $527,000. Based on indications of the future market i.e. demand vs. supply, the level of rehab intended, and the recovery of the markets from the reductions in foreclosures and short sales I chose to risk the increase on the purchase price. The costs per sq.ft are the cost to rehab per sq. ft. On next week’s blog, I will tell you about the auction process.

Finding a distressed property.

3/7/2017
There are many ways to find distressed properties from MLS listings, word of mouth, auction house/ sites, obituaries, to county records and many more, a discussion for another time. I found my property on line in an auction house, www.xome.com. My search page looked like this.

Among the many properties that I was following the property I chose to pursue was a foreclosed Chicago bungalow in the Albany Park neighborhood. After a high-level review of the property details on location demographics and other like properties in the area, potential rehab costs, and the resale market I scheduled a site visit (December 2015). In the case of this property I was able to see it several times before it went up for auction, not always the case in these types of properties. In many cases site visits of distressed properties are limited if available at all.

Apparently when the bank foreclosed on the property it neglected to winterize it (assumed prior to winter 2014/2015) till after freezing temperatures burst pipe(s). The building sustained the usual pipe burst succumbing the building to overall destruction, deterioration and the obligatory mold. The eaves were inhabited by squirrels and the dining room sported a waterfall during rain storms. While making the decision to purchase the property I assumed that I would do a total gut/ rehab. My main objective was to rehabilitate the front exterior not changing any of the architectural lines while doing a full interior rehabilitation, re-purposing as much as possible, restore the look and feel of the period while opening the first-floor space, increase and improve the second-floor use of space, and include all the modern amenities. From this assessment, I pulled together the costs on what to base my bid limit on; cost to rehab, cost to sell etc. and the topic of next week’s blog.

Considerations for Purchasing a property,

2/28/17

I want to begin by sharing my understanding of what I mean by a distressed property. It can be any building or property that has been foreclosed on, or a short sale, or vacant, or in a trust, or an estate sale, or just plain run down or owner must sell, or any combination of each; you get the point. For me a distressed property has two important elements. First, the combination of the sale price, cost of rebuild and the resale market, and second, it’s significance. So, to begin with and most important is the “return on investment” commonly referred to as ROI; will it have return value after completion? In other words, will it make money if I sell it when done? This could be in the form of immediate resale, or increased value for financing, or increased cash flow, or for future updated value. The second element for me is more personal, the property’s significance. Does the property have historical value and, or is it architecturally interesting, or is it located in a changing area and, or is it in a neglected neighborhood seeking change and, or does it qualify for housing grants, or is it just different? Why significance? It’s my passion that drives me to bring back life to the old; holding true to the principle of reclaiming, repurposing and rebuilding by facing the challenge and restoration of the art form in it, “form follows function” while having fun.

Buying a distressed property in the City of Chicago

2/21/2017

Introduction: I begin writing these blogs to tell the story of my experience in buying a distressed property. While I have done multiple rehabs in the past this was my first full rehab in the City of Chicago. I have owned property in Chicago that required minor repair and rehab prior to this project, but nothing as big as a full house rehab (rebuild). Because of this I was very mindful of the reputation Chicago had for its building codes and permitting for rebuilds (rehab, construction). In all honesty, I was apprehensive, nervous and just plain scared. In addition to this I was buying the property in an online auction, another first; not the auction but the buying the property on line. So why am telling you this? Many people either want to do something like this but shy away from it because of all the horror stories they have heard or experienced or they just don’t know where to start. I wish there had been something like this on my journey through this project, telling me in a real-life story, from beginning to end, with all the ups and downs including their feelings, responses and observations along the way. That is what I hope to accomplish with this line of blogs; is to share my experiences for those who may be considering buying a distressed property and rehabbing it or already own a house and are looking to fix it up. I hope to make theirs and hopefully your journey a little easier. So, for the next many weeks I will tell you the story and share pictures and videos of the project; welcoming your feedback, questions and the sharing of your experiences.