Company Description
This property is a fully renovated original Greystone Triplex with spacious living areas, hardwood floors and an inviting backyard. It's located in an A.I. recommended neighborhood of Chicago less than a mile away from shopping and public transportation. It's right off the expressway and 7 minutes from Oak Park or a 12-minute ride to or from downtown.
Unit 1: Rented for $1,350 and the tenant is on a one year lease until 01/31/2023. The tenant is currently delinquent. Lofty is providing a full rental credit for $1,350/month.
Unit 2: Lofty is providing a full rental credit for $1,350/month. This unit is currently vacant and waiting on the turn estimate.
Unit 3 (Basement): Lofty is providing a full rental credit for $1,050/month. The unit has been turned and will be listed back on the market for rent in September, 2022.
The maintenance reserve has been increased from 5% to 7.5% to account for the following
Two of the furnaces are fully functional but nearing the end of their lifespan. Likely have to be replaced in the next 5 years or sooner
Roof is due for re-coating soon
The following issues have already been repaired:
Chimney mortar joints have been repaired by seller
Bricks on west side of the building have been repaired by seller
Updates:
Update 3/18/2022: The Property Manager has informed us that the refrigerator in Unit 1 of 3834 W Polk St has broken down and has been replaced. Based on the original governance survey all investors completed after their first token purchase, 63% of token holders voted to follow the Property Manager's recommendation for any immediate repairs. The work has been approved and completed. The total cost of the new refrigerator is $1,037.30 which has been taken out of the maintenance reserve.
Update 4/4/2022: The Property Manager is recommending to make two repairs in Unit 2 of 3834 W Polk St which are estimated to cost in the range of $396.50 - $543. These repairs include fixing a damaged door and repairing the bathroom wall tile. Based on the original governance survey all investors completed after their first token purchase, 63% of token holders voted to follow the Property Manager's recommendation for any immediate repairs. These repairs will be taken care of immediately and the funds will be deducted from the property's maintenance reserve.
Update 5/4/2022: The Property Manager has informed us that the mailbox for this property is damaged and needs to be replaced. The cost of a new mailbox for all 3 units is $818.80 total. These funds will be taken from the Maintenance Reserve of $29,625. 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. Once a new mailbox is installed, an arrangement will be made with USPS to approve the mailbox.
Update 5/10/2022: The Property Manager has informed us that their vendor has provided another option for the mailbox replacement and it is less expensive. The new mailbox will cost $504.59 compared to the original cost of $818.80. The vendor will be installing three individual mailboxes and each mailbox will have new keys for the tenants, new labels, and will be mounted on the fence.
Update 6/21/2022: The tenant living at 3834 W Polk St Unit 3 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. This will be put up for a governance vote and the results will be tallied on Thursday, June 23rd.
Update 6/23/2022: The tenant living at 3834 W Polk 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 made contact with the tenant, and the tenant informed them that they would pay this month, but were unable to give a firm date for payment. Per protocol, the PM issued a 5-day notice. The tenant then got back to the PM and informed them that they had filed for bankruptcy and will be unable to pay. Once bankruptcy has been filed, any legal proceedings that are already in progress, such as a notice of eviction, must be stopped. The Property Manager suggests the tenant knew what they were doing when they filed bankruptcy and listed the property as a creditor. Because of this, the PM has advised that the tenant could legally remain in the unit for months, even years at worst. We will not know what the next steps are until the PM gets the bankruptcy notice this week or next. Once we receive an update, you will be notified immediately.
Update 6/25/2022: This past week there was a governance vote on whether to offer the delinquent tenant living in Unit 3 cash for keys, or to start the eviction process immediately. Token holders voted to offer the tenant cash for keys, but before the Property Manager was able to make the offer, the tenant informed the PM that they would be vacating the property voluntarily on 6/30 and will drop the keys off with the Property Manager. Because of this, there will be no need for cash for keys or an eviction. Once the tenant moves out, the PM will perform a move-out inspection and make any necessary repairs in order for the unit to be put back on the market for rent again.
Update 6/27/2022: Due to the highly unusual circumstances with the tenant living in Unit 2, who has declared bankruptcy and may be able to legally stay in the property for a year without paying rent or being evicted, Lofty will be providing a full rental credit for this Unit 2 until a new lease is signed.
Update 6/29/2022: This property does not have an adequate number of electric meters in order to pass the city compliance. There should be 4 electric meters and there are only 3. Because there are only 3 electric meters, the power being used for the common area lights is being charged to the basement tenant. Moving forward, actions will be taken by Property Managers, prior to closing, to ensure that properties are fully compliant with city regulations, E.g., walking the property in person to confirm everything is up to standards. ComEd (Illinois Utility Company) has stated that there are several repairs that need to be completed prior to them installing a 4th meter in the building. The repair scope is attached and the total cost is $6,325. The Property Manager received 3 separate bids and is recommending this bid, which is also the least expensive. 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. $6,325 will be taken from the maintenance reserve which will be replenished via 10% of the monthly rent until it is full again.
Update 7/12/2022: 3834 W Polk St has failed a random inspection by the City. Lofty will be paying for the required repairs out-of-pocket as well as providing a full rent credit for Unit 3 until it is leased again. We are doing this because there have been various preventable issues with this property. Processes are now in place to hopefully prevent these issues from occurring with other Lofty properties. When we launched this property in December, 2021, the previous Property Manager did not walk this property to make sure it was compliant with the city. This is now a requirement with the new PM, HomeRiver Group, before properties are able to be listed on our marketplace. We have asked the PM to provide estimates for each of the proposed repairs in the document below. The PM stated they will provide legal counsel to attend a hearing regarding these violations. Once we receive more information on this matter, you will be notified immediately.
Update 7/14/2022: The tenant living in 3834 W Polk St Unit 2, who declared bankruptcy last month, has made a partial payment of $1,001.05 towards July rent. Their rent is $1,350/month. The Property Manager has reported the partial payment to the bankruptcy lawyer and is working with them on a plan of action. Lofty will continue to provide a rental credit for this unit until the rental income is up-to-date. The PM also performed a move-out inspection for Unit 3 and found that the tenant left a mattress, furniture, and a lot of trash, upon move-out. A trash-out service is required in order for the field inspector to get the move-out report and write up a turn estimate. The cost for removing the trash is $747.50. Once the move-out repairs are complete, this unit will be listed on the market for rent. Lofty is currently providing a rental credit until this unit is leased out. The tenant in Unit 1 is also late on their rent and has promised to pay by 7/15. Once a new update is available, you will be notified immediately.
Update 7/20/2022: Update 1: The trash out has been completed for the Basement Unit for $747.50. There is a security deposit of $1,050 that fully covers this. The field inspector will return to complete a turn service estimate. The Property Manager was made aware that the stove and fridge are missing which will need to be replaced. Replacing the appliances will be a Capital Expense, adding value to the home. The first bid to replace the appliances is $1,738.88. The PM is currently waiting on another bid at which point they will make a recommendation on which option to choose. Update 2: The tenant in Unit 1 owes for the current month and has a past due balance that is more than 1 month's rent. The tenant had promised to pay June rent on 7/15 and July rent on 7/29. No payment has been received as of today. Lofty will be providing a full rental credit for this unit until the tenant is up to date on rent or a new lease is signed, due to the preventable issues this property has faced. Based on the recent governance survey for rent delinquencies, the winning vote for this property is to offer the tenant cash for keys equal to 50% of the monthly rent ($675) to vacate immediately. If the tenant declines, the PM will offer them cash for keys equal to 100% of the monthly rent ($1,350). If the tenant vacates, the Property Manager will look to increase the rent for the next lease. Update 3: The PM has received the bankruptcy information for the tenant in Unit 2 and as well as more details on a repayment plan for this case. The PM advised the tenant's bankruptcy attorney that extending the payment plan too far out would not be favorable for the creditor. The PM will propose a 6 month and 12 month payment plan option for the past due balance of $4,670.45. Part of the repayment plan will require the current rent to be paid on-time on the first of the month. A 6 month payment plan will be an additional $779 monthly and a 12 month payment plan will be an additional $390 monthly. The attorney did not have objections to a 6-12 month repayment plan, but ultimately it is up to the tenant on what she can afford. The PM is also waiting on more details from the attorney on what actions can be taken if the tenant fails to or is not able to keep up with the payment plan.
Update 7/22/2022: The trash out has been completed for Unit 3. A field inspector has completed the move-out inspection and wrote up the turn service estimate. The total cost for turn service is $4,093 and will take 4-6 weeks to complete. These funds will be deducted from the maintenance reserve. As mentioned previously, Lofty will be providing a full rental credit until this unit is leased to a new tenant.
Update 7/27/2022: The tenant in Unit 1 has made a payment and brought down their balance to $1,457.50, which is just over one month's rent of $1,350. The tenant recently had a death in the family and fell behind on rent as a result. The tenant promised to pay July rent on 7/29 and will pay August rent on 8/12. Based on the recent governance vote on how to handle rent delinquencies, the Property Manager will be offering the tenant Cash for Keys if they do not pay July and August rent by 8/12. The first Cash for Keys offer will be equal to 50% of the monthly rent ($675). If the tenant denies this offer, the PM will offer the tenant 100% of the monthly rent ($1,350) to vacate the property immediately.
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 9/7/2022: Unit 1: The tenant has fallen behind on their rent due to losing both their mother and daughter in the past two months which has caused a financial burden. Lofty is currently providing a full rental credit for this unit. We have decided to also waive the tenant's full rent for September ($1,350) because of these recent tragedies, to help them catch up on their balance. You will continue to receive full rental income for this unit moving forward. The tenant made a payment of $1,460 towards their outstanding balance on 8/31, and the Property Manager is working out a payment plan with the tenant to pay off the remainder of their balance. The payment plan includes a $1,350 payment on $1,350 payment on 9/23, a $500 payment on 9/27, and a $1,037.50 payment on 10/7. The tenant will be caught up by mid-October and should be making on-time payments moving forward in November.
Update 9/9/2022: The turn services have been completed for this unit. The Property Manager is waiting on a QC inspection to ensure all work has been completed by the vendor. The PM will post the property for rent once the unit passes QC. The PM estimates they should have the unit listed by the end of next week. The target market rent for this unit is $1,050 - $1,075. The previous rent was $1,050. Lofty is currently providing a full rental credit for this unit until a new lease begins.The turn services has been completed for the property. The PM is waiting on a QC inspection to ensure all work has been completed by the vendor. The PM will post the property for rent once the unit passes QC. The PM estimates they should have the unit listed by end of next week.
Update 10/5/2022: Unit 2: The tenant, who previously declared bankruptcy, has informed the Property Manager in writing that they have vacated the unit. The PM will change the locks and write up a turn estimate to market for a new tenant. The PM advised that typically turn over costs will be higher than normal with non-paying tenants.
Update 10/18/2022: Unit 3 (Basement): This unit has been listed for rent and the Property Manager had several showings last weekend. They have not received any applications as of yet. The target rent for this unit is $1,075. This is a $25 increase over the previous lease and includes a $500 move-in fee.
Update 10/20/2022: A heavy trash-out is required in order to complete the move-out report and write the turn estimate for this unit. There are a number of items left behind by the tenant including furniture, mattresses, and trash in the cabinets, refrigerator, and closets. The trash-out will include vendor labor, a 20-yard dumpster rental, and a street permit to park the dumpster on the street. The total cost for the trash out is $1,071.80. These funds will be deducted from the Maintenance Reserve which will be replenished via 10% of the cash flow until it is full again. A security deposit of $1,350 will be forfeited and applied towards the tenant's balance.
