Company Description
This Duplex is a fully occupied & newly remodeled grey-stone 2-unit building with astounding ceiling heights and spacious living & dining room areas.
It’s located in an A.I. recommended neighborhood of Chicago with convenient distance to the Medical District, Rush Hospital, University of Illinois at Chicago and Little Italy.
Unit 1: Tenant is on a payment plan. A full rental credit is being provided for this unit.
Unit 2: On the market for rent at $1,400/month. A full rental credit is being provided for this unit.
Notes from inspection report:
Windows will need to be changed in around 5 years.
Basement windows are the property’s original windows. The inspector suggested adding glass back windows or a window gate for security.
Updates:
Update 3/28/2022 - The tenant requested a new light fixture in the basement for $236 and token holders voted to accept this request.
Update 6/11/2022 - Two windows must be replaced in Unit 1 and Unit 2 of 3031 W Flournoy St which cost $460 and $629.28 to replace, respectively. These funds totaling $1,089.28 will be taken from the maintenance reserve of $15,250 and the maintenance reserve will be replenished with 10% of the cash flow until it is full again.
Update 6/22/2022: The tenant living at 3031 W Flournoy St Unit 2 was on a payment plan in order to keep up with rent, and they're now 4 weeks behind on their payment plan. Payment plans are common in Chicago, as evictions tend to take 6-8 months to complete. The Property Manager has reached out multiple times via phone, text, and in-person, starting the first day after the missed payment, with no responses from tenant. They have also served a 5-day notice to vacate. Based on 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 vacate the property) and if they don't accept, evicting them immediately. A governance vote will take place and the results will be ready on Friday June 24th.
Update 6/25/2022: The voting results are back for the governance vote on whether to offer the tenant living at 3031 W Flournoy St Unit 2 cash for keys or to evict them immediately. The winning vote is: Offer the tenant $700 (50% of the monthly rent) to vacate the property immediately. If the tenant does not accept, offer $1,400 (100% of monthly rent). If the tenant does not accept, start the eviction process immediately. This decision was voted on by 1,057 tokens out of 1,453 total tokens which is equal to 72.7% of the votes. The Property Manager has been notified of this decision and will be taking action immediately.
Update 6/25/2022: A technician was onsite for a work order at 3031 W Flournoy St and while there, they noticed that the AC in Unit 2 had a leak in the line set and has no freon. Unit 2 will need a pressure check leak repair and at least 6 pounds of 410A. The total repair cost is $925. 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 recommendations for any immediate repairs. $925 will be taken from the maintenance reserve which will be replenished via 10% of the monthly rent until it is full again.
Update 6/30/2022: The tenant did not accept the first Cash for Keys offer ($700) per the previous governance vote, and has informed the Property Manager that they will pay their rent in full by the end of this week. If the tenant does not pay by the end of this week, the PM will then present the second Cash for Keys offer ($1,400). If the tenant does not accept this offer, the PM will then proceed with an eviction.
Update 7/8/2022: The tenant living in Unit 2 has voluntarily vacated the unit without the need for Cash for Keys or an eviction. The Property Manager will complete a move-out inspection and send over turn estimates to start marketing this unit for a new tenant.
Update 7/21/2022: Update 1: The tenant in Unit 2 left furniture and trash in the unit upon move-out. The trash out has been completed for $1,374.25 which will be taken from the maintenance reserve. There is no security deposit on hand for the unit. We are waiting for the Property Manager to confirm collections processes after move-out & remedies for token holders. The field inspector also completed the move-out inspection. The work requires full paint, repairs on the trim, doors, windows, and electrical outlet repairs. The total cost of turn services is $3,961.10 which will be taken from the maintenance reserve. The Property Manager sent the tenant a Demand Letter for final payment and the account will be sent to a collections agency if the account is not settled within 30 days, in order to reimburse token holders for the delinquent rent payments. Update 2: The tenant in Unit 1 owes for the current month and has a past balance of $4,223.90. Lofty will be providing a full rent credit for this Unit because of the late notice on these delinquencies, due to a communication lapse in our system. There are new processes in place with Property Managers to hopefully prevent these types of issues from occurring in the future. Based on the recent governance survey for rent delinquencies, the winning vote for this property is to send an eviction notice immediately. The PM will start with issuing a 5-day Notice to Vacate. Chicago requires notices to be served in person by a processor and the fee is $95. The eviction attorney requires a $1,500 retainer. The fees are a $750 flat fee and the remainder is applied to court costs, sheriff service, process service, and eviction sheriff costs. Any unused funds will be returned. The average eviction takes 6-9 months in Cook County to get to the point where the sheriff executes the eviction.
Update 7/27/2022: Governance Vote for 3031 W Flournoy St Unit 1: (Lofty is providing a full rental credit for this Unit until the monthly rent is paid in full again) The tenant was out of work for a few months and recently got a better paying job. They paid $1,500 towards their balance today and brought it down to $2,723.90 (2 months rent). The tenant promised to make another payment this week and the PM is currently waiting on the tenant to confirm how much they will pay and the date they will pay this week. The PM has already informed the tenant that a 5-day notice is in motion and the next step is eviction. The tenant expressed that they cannot lose their home and are working to get current on the rent. We informed the PM that eviction is the route that token holders want to take on this, per the recent governance survey on tenant delinquencies. However, the PM advised that evictions take 6-9 months in Chicago and will take even longer if the court date falls in the winter months, as tenants cannot be kicked out during freezing weather. The PM recommends offering Cash for Keys first to see if the tenant will accept it. Click the "Vote Now" below to vote on whether you'd like to offer the tenant Cash for Keys first or if you'd prefer to file an eviction immediately. Moving forward, there will be a governance vote for all tenant delinquencies in Chicago instead of moving immediately to eviction. This is because evictions in Chicago typically take 6-9 months compared to the other Lofty markets which typically take 2-3 months for evictions to complete. The winning vote will be determined by a Supermajority of 60%+ and the results will be sent to all investors in Lofty Holding 3031 W Flournoy Street LLC on Friday, July 29th once the voting period ends.
Update 7/29/2022: The governance voting results are back for the vote on whether to offer the tenant Cash for Keys or to evict them immediately if they do not make a rent payment by 8/1. The winning vote is: Cash for Keys – Offer the tenant $675 (50% of monthly rent) to vacate the property immediately. If the tenant does not accept, offer $1,350 (100% of monthly rent). If the tenant does not accept, start the eviction process immediately. This decision was voted on by 2,478 out of 2,655 tokens which is equal to 93.3% of the total votes. The Property Manager will be contacting the tenant on Monday, 8/1, regarding the payment. If no payment is received by end of day, they will be offering the tenant Cash for Keys.
Update 8/8/2022: A full rental credit is being provided for this unit. The tenant made an additional payment of $700 towards their balance last week. Because of this, the Property Manager will not be moving forward with cash for keys per the previous governance vote. The tenant recently got a higher paying job and the Property Manager has worked out a payment plan with them to bring them current. The payment plan will be bi-weekly payments of $1,350 and the tenant will be current by 9/23. This will cure the total balance of $4,723.90 which includes all fees for rental collections (late fees, notice fees, and processing fees) as well as August and September rent. If the tenant misses a payment, then the Property Manager will move forward with cash for keys.
Update 8/15/2022: The turn services are almost complete. The Property Manager is requesting an additional change order for the make-ready turn. The total cost of the additional services is $1,910.30. These funds will be taken from the Maintenance Reserve which will be replenished via 10% of the cash flow until it is full again. The unit is tentatively scheduled to be ready by August 22nd. The target rent will be $1,400. A rent increase is not likely as this the market rate for same size unit types in the area.
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 9/10/2022: The Property Manager has completed the QC inspection and has started marketing the unit for rent. There was a delay with scheduling the QC inspection, which is the reason the unit wasn't listed for rent sooner. The target rent for the unit is $1,400 and a rent increase is not likely as this is the market rate for same size unit types in the area. Lofty is providing a full rental credit for this unit until a new lease begins.
Update 10/6/2022: Unit 1: The tenant is caught up with payment plan for rent through September. Tenant owes a balance for the current month. Tenant promised to pay by end of the week. Unit 2: The Property Manager received a few rental applications but they did not meet the minimum income requirements. The property has been marketed for 3.5 weeks with no approved applications. The PM will lower the target rent from $1,400 to $1,350. Property: The turn crew reported structural safety concerns as the railings and floor boards for the porch on the 2nd floor are weak. They advised that someone could fall through if they leaned on the railing on the left side and are unsure on the condition of the 1st floors porch area. The PM sent a vendor to assess and they recommend to replace the porch system is it it beyond repairs. The scope of work will includes: Replace the existing open wood porch system. Existing porch roof remains as is, if work will be needed to the roof or roof structure or the lookouts it will be extra. No finishes the existing roof are included. All lumber will be pressure-treated southern yellow pine, no painting, staining or sealing is included and no electrical work is included. The estimated cost for replacing the system is $17,250. The PM confirmed that wood deck structural work will require permits and a licensed contractor as the City heavily monitors this type of structure due to fall safety hazards/liability. The PM recommends to revisit a maintenance plan for the wood structures in the Spring when exterior conditions are more dry. A second vendor denied the job and will only complete a full replacement. The vendor provided additional feedback that all of the railings are loose or coming apart and most of the support beams are dry rotted and all of the floor decks need to be replaced, as the city would see it as unsafe if they were to inspect it. The vendor quoted the cost to repair existing structure would be $20k and to build a new one is about $25k. The vendor advised a new structure is best. The PM is working on getting a 3rd vendor out as quickly as possible.
Update 10/19/2022: Update 1: The tenant made a partial payment of $850 and owes a balance of $587.90 for the current month. The tenant also informed the Property Manager that they will be vacating at the end of this month because they cannot afford the rent. Their lease ends on 11/30 and the tenant will be responsible for rent until the end of the lease. However, the PM advised that it is unlikely that the tenant will pay given their payment history. The PM will run a rent analysis and provide a target rent shortly. Update 2: The Property Manager received an application for a tenant with a Housing Voucher for a 2-bedroom apartment and the maximum rent approved with CHA is $1,150. The Property Manager recommends to accept this voucher because leasing traffic for this unit has been slow and will slow down even more as the weather gets colder. If the applicant and voucher is accepted, the rent will be a $250 decrease from the previous lease. The tenant will pay a $500 move-in fee. Update 3: The Property Manager obtained a second estimate to repair the exterior stair and porch structure. The vendor proposes the following: Replace the railings around the porch. Replace the wood that supports the stairs on the second floor. Reinforce and fix the floor support of the first and second floors with suitable screws. Replace posts that support railings, and paint the entire porch.. The total repair estimate is $10,005. The first repair estimate was $17,250 per the previous update. The PM is currently waiting on one more bid before making a recommendation on which estimate to accept. Update 4: The front gate is hanging off the hinges and poses a safety hazard for pedestrian traffic. The repairs require: Remove the mailbox. Remount the gate. Weld and paint to match. Reinstall mailbox on the gate. The total cost of repairs is $787.75. These funds will be deducted from the Maintenance Reserve which will be replenished via 10% of the cash flow until it is full again.
