Company Description
7656 S Colfax Ave
This property, built in 2008, is a 9 bedroom 6 bathroom Triplex located in an A.I. recommended neighborhood of Chicago. It’s comprised of (3) 3 bedroom 2 bathroom units with approximately 1,150 square feet of living space per unit.
The in-unit improvements include: New kitchen cabinets, granite counter tops & mosaic tile backsplashes, hardwood floors, brush nickel faucets, SS appliances, bathrooms, light fixtures, ceiling fans, and individual HVACs.
Unit 1: Tenant is delinquent. Lofty providing full rental credit. See "Updates" below for more details.
Unit 2: Tenant is delinquent. Lofty providing full rental credit. See "Updates" below for more details.
Unit 3 has a CHA voucher and is paying $833/month (CHA pays $271/month and tenant pays $562/month). They have lived in the property since 04/01/2016. They are currently on a month-to-month lease. The Housing Authority has approved a 12-month lease renewal for this unit at $950, a $117 increase from the current rent. The tenant portion remains the same at $562. The new lease will start on 8/1.
Updates:
Update 4/20/2022: The Property Manager has recommended a few repairs for Unit 1 that will be completed within the next week. Based on the original governance survey all token holders completed after their first token purchase, 63% of token holders voted to follow the Property Manager's recommendation for any immediate repairs. This repair involved replacing the sink cabinets that had rotted and allowed for rodent infestation. A new faucet has also been installed. These repairs total $889.07 and will be taken out of the maintenance reserve for this property. Repair Invoice
Update 4/29/2022: The resident living in Unit 2 at 7656 S Colfax Ave has cancelled their HAP (Housing Assistance Program) Agreement with the CHA (Chicago Housing Authority) which has caused the unit to go into abatement, meaning the government is not paying for a portion of their rent anymore. Now that the HAP contract has been cancelled and the CHA will no longer make any payments on the account, the tenant is responsible for the rent in full. The tenant has not made a payment for April as well as their portion for last month either. Because of this, the Property Manager hired a process server to deliver the notice of non-rent payment. The tenant has not responded to the notice of non-rent payment. Per the original governance survey, token holders elected to wait 4 weeks before taking action. Now that this time has passed, the PM is recommending offering the tenant Cash for Keys (paying them to leave immediately) and if they don't accept, they recommend starting the eviction process immediately. This will be put to a governance vote which ends on May 3rd, 2022.
Update 5/3/2022: The resident has accepted the first cash for keys offer of $545. They have informed the Property Manager that they will need until the end of the month to find storage for their belongings, as they've lived in the property for 10 years. Once the resident moves out on May 31st, the PM will perform a move-out inspection and assess any potential repairs that need to be made before the Unit is ready to be rented again.
Update 6/3/2022: The tenant living in 7656 Colfax Ave Unit 2 has informed the Property Manager that they will need until June 14th before they're able to move out. They were originally supposed to move out on May 31st per the last property update, but they have informed the Property Manager that they have kids in school and have only been able to gather their possessions over the weekend. They have lived in the unit for 10 years and their belongings are scattered according to the PM. The eviction process in Chicago can be 8+ months in some cases, so the PM has recommended to give the tenant a few extra weeks to gather their belongings before moving to an eviction. 7542 Colfax Ave Unit 2 is still being repaired and we are waiting on an updated ETA on when those repairs will be completed, at which point the unit will be marketed for rent again. The PM originally told us it would take 4-6 weeks starting in early May. There is water leaking into the upstairs unit of 7656 Colfax Ave Unit 3 through the roof and causing paint to fall off and the ceiling to wear.The gutters will need to be cleaned, caulking used to seal, and the roof will also need to be repaired (one year warranty). The total cost is $3,317.75 which will be taken from the maintenance reserve. The maintenance reserve will be replenished with 10% of the cash flow until it is full again. Repair Invoice.
Update 6/25/2022: 7656 Colfax Ave Unit 1 sustained damage due to a broken water heater in Unit 2 while the tenant in Unit 2 was out of town for a few days. As a result, there is now damage to the ceilings, floors, and electrical in Unit 1. The tenant initiated a CHA complaint inspection and the unit failed & was placed in Abatement status. The total cost of these repairs is $7,475 which will be taken out of the maintenance reserve. There may be additional repairs following these initial repairs which are being made immediately to cure the Abatement. The PM confirmed there is mold as a result for the leak. The PM is sending us receipts and photos so expenses can potentially be recouped with an insurance claim.
Update 7/15/2022: Lofty is currently providing full rental credits for Unit 1 and Unit 2 at 7656 S Colfax Ave because of the ongoing issues with these two delinquent tenants. There are new processes in place with Property Managers to hopefully prevent these types of issues from occurring in the future. Unit 1: Following the water heater leak in 7656 Colfax Ave Unit 1, the unit was deemed uninhabitable by the Housing Authority and rent has gone into abatement as of 7/1. The tenant was supposed to move out per the Housing Authority and the PM posted a notice to vacate. The tenant has not been cooperative in vacating the unit so that the PM can start working on the repairs. They have asked for $4,000 in Cash for Keys, but the PM recommends not to offer this as the tenant has moving papers and the Housing Authority should approve new placement by next month. The insurance adjuster was also able to access the unit and assess damages from the water heater loss event. Once we receive this assessment, you will be updated right away. Unit 2: The tenant did not vacate at the end of June as promised. Tenant was offered Cash for Keys back in May, which was initially accepted, but then the tenant backed out of it. The tenant has been served a 120-day notice to vacate back in April and the PM can not start the eviction process until the notice expires on 8/31.
Update 7/18/2022: We have received a proposal and photos for the roof repairs that were completed on 6/23. The property may be entitled for a reimbursement of $3,317.75 (minus the $1,000 deductible) through insurance as an insurance claim has been opened for the repair. Insurance claim number DW3251998. The photos and scope of work has been sent to the adjuster for review. The tenant owes rent for the current month and has an overdue balance that is more than 1 month's rent. Based on the recent governance survey for tenant delinquencies, the Property Manager will be offering a payment plan subject to their discretion. The PM reached out to the tenant and they've made an additional payment bringing down the balance to $562, which is the tenant rent portion for July.
Update 7/26/2022: The Housing Authority has approved a 12-month lease renewal for this unit at $950, a $117 increase (14%) from the current rent of $833. The tenant portion of the rent remains the same at $562. The new lease will start on 8/1.
Update 8/1/2022: Unit 3: The Housing Authority (CHA) approved a 12-month lease renewal for this Unit at $950/month. This is a $117 increase (14%) from the current rent of $833. You will see an increase in your Cash on Cash return from 7.28% to 7.44% starting today. Unit 1: (Lofty is providing a full rental credit for this Unit). The mold abatement has been completed for this unit following the water heater leak described in a previous update. All of the tenant's personal property that they're keeping has been moved into one room. As it stands, one bedroom & the hallway have the most damage. Whichever walls, baseboards, trim, and doors can't be salvaged will be cut out and/or replaced. The doors, quarter round, all baseboards, and half of the walls need to be cut out. The linen closet also needs to be rebuilt. The insurance adjuster has been updated on the status of the work and we are waiting for them to revisit the home and write up the estimate.
Update 8/11/2022: Unit 1: (Lofty is currently providing a full rental credit for this unit). The field inspector was able to get inside the unit and write up a scope of work to repair and restore water damage in the unit. The Property Manager is working with the vendors to get an estimate together and will be sending it over shortly. The insurance adjuster has not been out to the property to complete their estimate. We will submit the estimate for the work to the insurance adjuster once we receive it. The PM will look to increase the rent once this unit is leased again. Unit 2: (Lofty is currently providing a full rental credit for this unit). The Property Manager has confirmed that the utilities for this unit were shut off on 7/29. In Chicago, the PM can deem the unit abandoned if the utilities have been shut off for 32 days. The PM believes that the tenant has vacated the property due to this. The PM will continue to monitor the utility activities and can start turning the unit on 9/1. Unit 3: (Lofty is currently providing a full rental credit for this unit). The tenant currently owes for their rent portion for July and August. The tenant promised to pay July's rent on 8/24, however they are unsure when they can pay August's rent. The PM will reach out to the Housing Authority in hopes that this will encourage the tenant to submit their payment sooner. The PM believes that the neighbors in the units below have influenced the tenant's recent change in behavior. The PM believes the tenant will turn things around once these neighbors have moved out of the building.
Update 9/27/2022: Unit 2: A move-out inspection was completed by the PM following the trash out. The turn estimate includes the following: Full paint in the unit (walls, door, and trim) and color change in the bedrooms. Mildew treatment in Bedroom 2 prior to painting. Replace expired fire extinguisher. Repair/stain kitchen cabinet drawers that are damaged by grease/dirt spots. Balancing all doors and/or tracks. Remove and install new caulking for bathtub and shower. Lock change for unit door and mailbox. Basic make ready: replace batteries and/or smoke detectors as needed, check drains/plumbing, replace air filters, replace lightbulbs, replace door stops, replace missing/damaged light covers, and replace damaged outlet covers. Replace missing laundry door. Heavy Cleaning. The total cost of the repairs is $6085.88. These funds will be deducted from the Maintenance Reserve which will be replenished via 10% of the cash flow until it is full again.
Update 10/20/2022: Unit 1: The Property Manager received a report that the unit was broken into and the water heater was stolen. The maintenance crew secured the unit and are working on getting estimates to replace the water heater. The turn service technical repairs have been completed. The painters completed a walk-through of the unit and requested an additional change order of $1,380 to paint the ceilings and to complete the color match for the existing colors. The Property Manager revised the proposal and advised that the ceiling can be wiped down instead of painted. The PM recommends to change the paint on the walls to a neutral color instead of attempting to match the colors. The total cost to paint the unit with a neutral grey color is $690. These funds will be deducted from the Maintenance Reserve which will be replenished via 10% of the cash flow until it is full again.
7542 S Colfax Ave
This property is a 10 bedroom 3 bathroom Triplex located in an A.I. recommended neighborhood of Chicago. It’s comprised of (2) 3 bedroom 1 bathroom units and (1) 4 bedroom 1 bathroom unit with approximately 1,500 square feet of living space per unit.
All of the units and building were completed renovated in 2016 and 2017. The in-unit improvements include: Kitchen cabinets, granite counter tops & mosaic tile backsplashes, new engineered hardwood floors, brush nickel faucets, GE appliances, bathrooms, light fixtures, and ceiling fans. The capital improvements include: new electrical service with GFCI’s, plumbing, new windows, HVAC, trim, doors, and new porches.
Unit 1 has a CHA voucher and is paying $1,210/month (CHA pays $804/month and tenant pays $406/month). They have lived in the property since 11/01/2017. They are currently on a month-to-month lease.
Unit 2 has a CHA voucher and is paying $1,175/month (CHA pays $1,037 and tenant pays $138/month. They have lived in the property since 01/15/2018 and their lease was extended to 01/31/2022. After this lease ends, the tenant will begin a month-to-month lease.
Unit 3 is paying $1,200/month and is on a 1 year lease from 07/01/2021 - 06/30/2022.
These properties have a 7.5% maintenance reserve instead of the typical 5% maintenance reserve. This additional maintenance reserve covers the following repairs which will take place within the next year (non-urgent). Both repairs are for 7452 S Colfax Ave.
New roof re-sealing layer - $6,900
Spot Brick & mortar tuck pointing - $10,000
Potential remediation of moisture damage to floor of Unit #2 - $3,500
Updates:
Update 5/2/2022: The resident in Unit 2 has vacated the property without giving notice to the Property Manager. The Property Manager has since walked the unit with their contractors and have told us that the unit requires $5,705.88 in repairs in order for the property to be able to be listed on the market for rent again. The timing for these repairs is estimated to be 4-6 weeks to complete. This also includes the quality control inspections that are conducted on the work once the vendors have confirmed completion. Based on the original governance survey all token holders completed after their first token purchase, 63% of token holders voted to follow the Property Manager's recommendation for any immediate repairs. The daily rental income for this unit will stop today and will restart once the unit is occupied again.
Update 7/21/2022: Update #1: Unit 1 has passed quality control and is now rent ready. The Property Manager will market the unit for $1,300/month, a $125 increase (10.6%) from the previous lease. Update #2: The cleaning crew was onsite to clean the common area of the building and noticed a sewage smell in the building. The found that sewage water was backed up in the basement. The scope of work will consist of hydro jetting the main sewer line and the sink line, cleaning the basement, and camera the sewer line to make sure it's flowing property. Based on the original governance survey all token holders completed after their first token purchase, 63% of token holders voted to follow the Property Manager's recommendation for any immediate repairs. The total cost for repairs is $2,185. These funds will be taken from the maintenance reserve which will be replenished with 10% of the cash flow until it is full again.
Update 7/27/2022: The tenant in Unit 1 has told the Property Manager that they currently have moving papers in hand. The PM is working on convincing the tenant to stay, but the tenant has expressed that they want something new. The moving process with the Housing Authority takes around 30 days to approve. The tenant will still be living in the Unit through August, and the housing voucher will be paid for September if the tenant has still not found a new place. We are waiting on the PM for target rents if the tenant moves out.
Update 8/18/2022: Updates on 7542 S Colfax Ave Unit 1: The tenant previously told the Property Manager they wanted to move out, but they have now decided to stay. They have renewed their lease for 12 months at $1,246, a $36 increase from the current rent. The Housing Authority has approved this increase and will continue to pay 100% of the rent. The new lease took effect on 08/01/2022. You will receive rent back-pay at this increased rental rate from 08/01/2022 - today. The tenant also reported two broken windows on the property. The windows have been boarded up and the vendor will remove the sashes and take them to their shop to replace the broken glass & refill the argon for the double paned windows. The total cost of repairs is $1,265. These funds will be deducted from the Maintenance Reserve which will be replenished via 10% of the cash flow until it is full again. The PM confirmed that the broken windows were likely due to crime in the area and were not a result of tenant damage.
Update 9/1/2022: Unit 2: The tenant moved in today and has officially started their new lease. The tenant is a market rent tenant and has signed a 12 month lease at $1,300/month. This is a 10.6% increase ($125) over the previous rent of $1,175.
Update 9/20/2022: Unit 2: The new tenant moved in on 9/1 and reported that the refrigerator and freezer are not working, and there is leak a coming from the bottom of the refrigerator. A vendor was sent to troubleshoot the issue and also found that the the refrigerator needs both gaskets, a drawer, and a shelf for the door. The Property Manager recommends to replace the refrigerator and received an estimate. The estimate includes delivery and set-up of the new refrigerator and hauling of the old refrigerator. The cost to replace the refrigerator is $1019.64. These funds will be deducted from the maintenance reserve which will be replenished via 10% of the cash flow until it is full again.
