Company Description
This property is a fully occupied & gut renovated Triplex located in Chicago, Illinois. The seller put $255k in renovations into the property from 2020-2021.
All apartments are occupied by CHA (Section 8) tenants and CHA pays over 75% of the rent for all of the apartments.
Apartment 1:
3 bedrooms / 1 bathroom
Rent: $1,940
CHA pays $1,479; tenant pays $461
Lease from 06/07/2021 - 06/06/2022 (now month-to-month)
Rent increase from $1,940 to $2,500 to be submitted to CHA
Security Deposit: $0
Apartment 2:
4 bedrooms / 2 bathrooms
Unit is currently vacant
Apartment 3:
4 bedrooms / 2 bathrooms
Rent: $1,915
Lease from 06/10/2021 - 06/30/2022 (now month-to-month)
CHA pays $1,493; tenant pays $422
Rent increase from $1,915 to $2,950 has already been submitted to CHA. Awaiting approval.
Security Deposit: $0
Tenant submitted move-out papers and has told the Property Manager they will be moving out soon (9/26/2022)
If all of the rent increases are approved by CHA at the full requested increase, the Cap Rate will be 14.5%.
If all of the rent increases are approved by CHA at half of the requested increase, the cap rate will be 11.8%.
Note: CHA can approve the full increases, partial, or none at all.
The maintenance reserve has been increased from 5% to 7.5% to account for repair costs due to CHA compliance inspections.
Refer to the 'Documents' tab above to view the following information plus much more:
Purchase Agreement
Renovations & updates
Inspection report
Inspection report repairs
BPO Appraisal
HouseCanary report
The LLC documents will be uploaded to the 'Documents' tab once the property is fully funded and closed.
Updates:
Update 8/18/2022: The Property Management fees have been reduced to 5.7% due to a new National Partnership Agreement between Lofty and the Property Manager, HomeRiver Group.
Update 9/20/2022: We are currently waiting to hear back from the Property Manager (PM) regarding the CHA rent increases approvals for all 3 units. At this point, none of the rent increases have either been approved or denied by CHA. An exterminator was sent to the property to treat the building for a pest issue. While visiting the property the vendor informed the PM that there is a mice problem at the property. The vendor recommends to treat the entire building on a monthly routine to control the pest control issue. The PM also recommends to have treatment plan in place. The cost is $175 per month. These funds will be deducted from the Maintenance Reserve on a monthly basis until the issue is remediated. The PM has confirmed that the tenant in Unit 2 voluntarily moved out on 9/12. The tenant had issues with the previous seller and the PM was not able to convince them to stay, even after the new change of ownership. The PM will complete the move-out inspection and send a turn estimate to market the unit for a new tenant. The PM will be able to confirm market rent for this unit after they inspect the unit. You will continue receiving daily rental income for this unit until a new lease is signed. These funds will be deducted from the Vacancy Reserve.
Update 9/26/2022: The tenant living in Unit 3 has moving papers in hand and has told the Property Manager (PM) they will be moving out soon. They could not give a firm move out date. The Housing Authority denied any pending rent increase requests for both Unit 2 and Unit 3 as they both had moving papers in hand. Once new tenants move in to both units, the Property Manager will reach out to the Housing Authority to submit rent increase requests again. The tenants at the building reported and sent evidence to the PM that the former tenant of Unit 2 has been returning to the property and dumping excessive trash on the property. The tenant also turned on all the valves causing a leak at the property. The PM suspects that the former tenant still has a key to the common area and gained access to the building that way. The PM will change the locks for the common area and the former tenant will be charged back for the damages they caused to the property. The PM is currently working up a turn estimate. The property is located in an opportunity zone and Section 8 tenants will have to be placed here for Unit 2 & Unit 3 to get the maximum rent. The target rent is $1950-$2050. Once the new tenants move in, a rent increase request will be sent to the Housing Authority.
