Frequently Asked Questions
Q: I do not know much about real estate investing, is it a difficult process?
A: Chicago Turnkey Rentals, LLC has made the process of investing in residential real estate extremely simple. We maintain a level of transparency that most investment companies do not, and we work with you every step of the way. You do not have to be fluent in real estate in order to own your own rental property!
Q: Why invest in a city that I do not live in, and why Chicago?
A: Because the cash flow numbers work. The rent in relation to the purchase price of the home is quite high in comparison to other parts of the country. Not to mention, the Chicagoland area continues to experience exceptional appreciation in rental prices. Chicago has an ample supply of single-family homes that include both high rents and low acquisition prices.
Q: What is an affordable rental property?
A: Just because you can afford the purchase price of the property does not make it affordable! You need to ensure that you are purchasing a quality piece of property; if you are constantly spending money out of pocket to own your property, and you experience negative cash flow it is no longer affordable. All of our properties are considered affordable because the money generated from the monthly rental income covers all of your expenses and leaves substantial positive cash flow for the investor.
Q: Multi-unit properties vs. single-family homes which is best?
A: Chicago Turnkey Rentals, LLC offers both property types and both cash flow very well. .
Q: How do I know what property to select for my investment(s)?
A: With our turn-key investment program we will identify the right property for you based on the return on investment. We select properties based on your investment requirements and availability. Essentially, we buy in a box, and sell in a box; we purchase, renovate, and lease properties with very little variance.
Q: How does Chicago Turnkey Rentals, LLC determine if a property is located in a quality neighborhood?
A: We make sure to have a hands-on approach when selecting our properties. Every property is inspected more than once in order to determine the neighborhood quality and typically Chicago Turnkey Rentals, LLC already owns and/or manages multiple properties nearby. Our field agents drive by each property during different times of the day to determine the level of activity, traffic, noise, etc. This neighborhood data is collected and reviewed thoroughly so that PRF can select the best possible location for the highest overall investment return.
Q: Why doesn’t Chicago Turnkey Rentals, LLC buy “high end” condo rental properties?
A: We are not interested in buying high-end properties as they rarely have a high return on investment. Financially, our properties make sense; the monthly rental income generated covers the expenses and still provides s strong, monthly cash flow.
Q: What kind of repairs does Chicago Turnkey Rentals, LLC make to its properties?
A: Regarding repairs to our properties, here is a summary of the repairs we make:
Exterior: Tuckpointing, Porch repairs; Roof/Chimney repairs with silver coat; Garage repairs; Concrete sidewalk repairs; Window repair and/or replacement
Mechanicals: All new plumbing with new water heaters; Boiler heating system replaced with forced-air furnaces/ductwork; Electric services upgraded to 100amp, typically new panels and meter bank; Rod out sewer lines and repair any damaged pipes; Install laundry services in the basement
Interior: Gut rehabbed kitchen with new 36” kitchen cabinets, new granite countertops, new sink, new faucet, GFI’s, and ceramic tile backsplash; Install new black appliance package (stove/refrigerator) in the kitchen; washer, dryer, dishwasher, and garbage disposal are excluded due to maintenance expenses to you as owner and not requested by prospective tenants; Gut rehabbed bathroom with new vanity, sink, faucet, mirror, light fixture, toilet, tub, shower rod, decorative tile surrounds, GFI’s, and shower hardware; Install and/or repair hardwood flooring; Install new ceramic tile in kitchens, bathrooms, and hallways; New interior and exterior doors; New light fixtures; Install and/or repair walls, ceilings, and trim; New outlets, switches, and plate covers
Q: How many tradesmen does Chicago Turnkey Rentals, LLC work with during construction?
A: Chicago Turnkey Rentals, LLC has dedicated tradesmen working full-time year-round working on our properties. Currently, we maintain a minimum of 50 tradesmen that include construction managers, project managers, electricians, architects, plumbers, HVAC professionals, landscapers, masonry tradesmen, painters, and carpenters. PFR stands above the rest performing major renovations on the majority of all properties available for sale on our website. A freshly rehabbed property with all new mechanicals is less cost to the new owner with deferred maintenance and better longevity.
Q: Should I hire a property inspector?
A: Yes, we will encourage you to hire a property manager in order to maintain confidence and transparency throughout the entire process.
Q: Do I have to see the property before I close on it?
A: We encourage our clients to visit Chicago and view their properties prior to closing however many of our clients purchase unseen. All information on our web site is validated through third-party professionals there is little information that you cannot find out from your own home. However, our door is always open to investors who would like to view their rental property first hand, and we would encourage you to check out some of the local highlights as well!
Q: How long does it take to own my first investment property?
A: Typically 45 to 60 days to purchase with a 30-year fixed loan and much sooner for cash buyers. Chicago Turnkey Rentals, LLC consistently buys and sells properties every month – we have your investment property in inventory now.
Q: What is your recommended time frame to buy and hold a property?
A: Our investment properties are designed for a medium (4-5 years) to a long term (10+ years) hold.
Q: I already own properties can I still qualify to buy more?
A: Yes. Our lenders can loan up to 10 residential properties per person in the household for well-qualified buyers. If you are married, each adult member of the household can purchase up to 10 properties although most lenders cap between a range of 4 to 10 per person.
Q: Will my investment property be leased at the time of closing?
Generally, properties are leased at the time of closing. However, there are rare cases when that is not possible; properties are always leased within 60 days of completion of construction and guaranteed in writing by Chicago Turnkey Rentals, LLC.
Q: How do I get started?
A: Speak with a Chicago Turnkey Rentals, LLC representative by calling Henry Torn 1-(847) 254-8894 to determine your personal goals and get pre-qualified with one of our preferred lenders
Purchasing Property
Q: Can I use my own local bank, or do you have preferred lenders?
A: We strongly urge each and every one of our investors to use our local, preferred lenders. They understand working with investors, investment properties, understand our market, and are very familiar with our company. We have established strong partnerships with them and because we consistently feed them new business and they will provide you with superior customer service. Choosing to go with an out of state bank as your lender could cause delays because they are unfamiliar with our investment market.
Q: Can I finance a rental property with my retirement account?
A: Yes—and we are happy to assist you in this process. With most retirement programs, you have several options to choose from. We suggest calling Henry Torn 1-(847) 254-8894 to speak with a Chicago Turnkey Rentals, LLCrepresentative to discuss the various options.
Q: What if I want to go to the bank for a loan?
A: There are hundreds of investor loan programs for purchasing a rental property. Down payments can range from 20% to 30%, with interest rates ranging from 5%-7%. The requirement for investor loan programs vary, some are strictly based on your credit score, while others consider the needs of credit-challenged investors but require larger down payments or higher interest rates.
Q: What if I can pay for my property in cash?
A: If you plan to purchase with cash or a line of credit that is secured by another asset, there are no loan costs involved for you.
Q: What are the approximate closing costs?
| A: | Lender Admin Fee: | $900 |
| Appraisal Fee: | $650 | |
| Credit Report Fee: | $30 | |
| Interest Before Closing: | $200 | |
| Title Insurance: | $1,800 | |
| Recording Fee: | $150 | |
| Transfer Taxes: | $1,000 | |
| Escrow Fee (6 months) | $2,250 | |
| Sub Total: | $5,680 | |
| Minus Tax Proration Credit | -$1,680 | |
| Total Estimated Closing Costs | $4,000 (other lender fees or reserves may exist) |
Q: How does closing work in Chicago?
A: In Chicago, licensed real estate attorneys handle most closings. They attend to everything from acquiring title insurance to working with lenders to coordinate the closing. The only difference with closing with an attorney versus a title company is that you will receive more personal attention!
Q: Can I work with Chicago Turnkey Rentals, LLC if I don’t qualify today to purchase an investment property?
A: Yes. We work with the best credit counselors, attorneys, and lenders in the market place that can help repair blemishes that restrict ownership of our investment properties. Our team of professionals will clearly lay out a plan to put you on the fast track to owning investment properties. Contact a representative by calling (815) 478-3784 to get started.
Property Management
Q: Who manages the property?
A: We currently work with one property management company that works diligently each and every day to make sure the maintenance and repair needs are met for our tenant. Our property management companies are staffed with experienced property managers on call 24-7 dedicated to Chicago Turnkey Rentals, LLC‘s buyers and tenants.
Q: How do you go about attracting tenants?
A: We use a number of different resources to attract tenants. Online marketing sources include Trulia, Craigslist, Backpage, Google, Domu.com, and our own websites. We also welcome referrals from existing tenants, host local block events and partner with the Chicago Housing Authority for Section 8 tenants. Lastly, we work with over 5 different leasing agencies that specialize in sourcing Chicago tenants. By utilizing all of our available resources we are able to ensure a steady stream of prospective tenants.
Q: Am I the owner/landlord responsible for compensating any Leasing Agent or any marketing to attract tenants?
A: The tenants pay a non-refundable move-in fee equal to $750 for apartments located in Chicago and for suburban houses we collect a security deposit for at least equal to one month’s rent.
Q: Do you require a “Security Deposit”?
A: Yes we require security deposits for all single-family houses especially the houses located in the south suburbs of Chicago. These cities include South Holland, Dolton, Hazel Crest, Country Club Hills, Matteson, Richton Park, Lansing, Calumet City, and Markham, etc.
Q: What is your tenant screening process?
A: We use sophisticated software to screen our tenant’s background, eviction history, criminal, and credit score. We also verify their employment, income, personal references, previous landlord tenancy, onsite visits of current residency, and if applicable verify government assistance program participation, such as Section 8 or SSI.
Q: How do you ensure a low vacancy rate?
A: We renovate for resale, not for rental purposes. We redevelop the property to a downtown condo apartment quality, using high-end finishes versus rental grade quality finishes. As a result, Chicago Turnkey Rentals, LLC commands a high demand for our finished unit versus our other available units in the same location—assuming rents are comparable.
Q: How long do Chicago Turnkey Rentals, LLC tenants typically reside in your investment properties?
A: Tenants sign a one year (12 month) lease to start however most of our tenants stay at least five years. We strive to maintain a high retention rate of our tenants, although the typical lease in our market place is one year. Our rehab quality is among the best in the market and we maintain our buildings to the highest of standards with excellent customer service. We view our tenants as family and want to make their stay with us very comfortable so they never leave.
Q: Does your Property Manager or team check on the properties regularly?
A: On average, we visit each unit quarterly to address maintenance issues, rent collection, and/or tenant questions. We also inspect buildings twice a year, generally at the start of winter and spring. This equates to approximately one visit every 3 months, or 4 per year on average.
Q: What is the procedure for a tenant to communicate a problem/request repair?
A: Tenants are issued a tenant handbook that addresses popular scenarios, from snow removal to who to call in an emergency situation. Tenants contact us via phone, email, or fax of which our staff enters the problem/work order into our Software system. The ticket is tracked until completion and billed to our client(s) if necessary. Monthly emails go out to all tenants about weather-related issues.
Q: Who provides the repair service request? Are they employed by you or a subcontractor?
A: Repair requests are originated by employees and completed by employees of Chicago Turnkey Rentals, LLC or its property management company. We have a full staff of property managers, maintenance staff, project managers, and landscapers.
Q: How am I notified if a maintenance request has been fulfilled, as well as any other communication between myself, the owner, and you, the Property Management Company?
A: 1) Any maintenance item that costs more than $350 to repair will require owner approval. One of our staff members will contact the owner for permission to complete the repair.
2) At the owners’ request, a report can be generated at any time to show all maintenance work orders performed. Most of our owners do not want to be bothered with minor issues such as changing light bulbs or fixing stopped up toilets.
Q: How do we handle a problematic tenant?
We follow a strict methodology for rewarding good tenants and eliminating bad tenants. The process entails quick evictions for noncompliant tenants or in most cases relocation assistance; while good tenants are rewarded with excellent customer service from our staff.
Q: What is your procedure for working with a tenant who pays their rent late, or does not pay rent?
A: 1) On the 6th of each calendar month tenants are contacted and a five-day notice is served by our property managers
2) If payment arrangements are not made by the 10th of the month with our Property Manager, then on the 11th of the month our administrative staff tries to make contact with the tenant to ascertain any issues or reasons for non-payment. If no contact is made by the 15th we contact the owner and make recommendations to start the eviction process. Typically by this time we know if the tenant is going to pay, if not we make arrangements to move them out to avoid the eviction process. Uncooperative tenants will be evicted unless the owners instruct us otherwise. Most Tenants that pay late are reward by not having them pay late fees, this is to assure rent is paid on time the following month.
Q: What is your procedure to start the eviction process and what should I realistically expect?
A: The eviction process typically takes 60 to 120 days to complete. The cost is between $950 and $1,200 and is handled by in house and with the property management company. We only need owner approval to start the process and from that point forward our professional staff will handle every detail including re-renting the vacant after the eviction. Approximately 80% of our tenants are government-guaranteed HUD (Section 8) tenants therefore we rarely have to evict tenants from our buildings.
Q: Will I need to pay out of pocket in the event of eviction of the tenant? How much should I realistically expect to pay out of pocket in the event of an eviction?
A: The cost is between $950 and $1,200 with the first payment always $950 which is forwarded to our Attorney, Gary Mages, for filing, legal, and court fees. We recommend our owners hold in reserve a minimum of 4% of the gross rents collected for situations like this. For example, if the gross rents are $2,200 per month x 4% = $88 per month reserved. According to our market research and track record, the average tenant stays in their rental for at least two years, so assuming the owner has one eviction every two years the owner would have $2,112 in reserve, which is sufficient to pay the eviction cost and cover the lost net rental income until the unit is re-rented.
Q: What happens if the tenant does not renew their lease? Do I pay extra to find a new tenant?
A: If the tenant vacates at the end of their lease, typically our property managers will know in advance, giving our staff ample time to source a new tenant to coincide with the existing tenant moving out shortly thereafter. The cost to find a new tenant is typically one month’s rent and often times less.
Q: Do you clean up or make any necessary repairs to the unit once the tenant moves out? Will that cost me out of pocket?
A: Yes there will always be a cost to repair the unit once a tenant moves out. We recommend a minimum of 4% of the gross rent collected be reserved in anticipation of this event. Our cost to repair units is very low because all of our maintenance staff are full-time employees which minimizes the expense to the owner. The typical cost can range from $2000 to as high as $4,000. However, the average is usually less than $2,000.
Q: What are the pros and cons of having a market-rate tenant versus a section 8 tenant?
A: Little difference between the two—investors will see that financially they are the same over a one year period of time however Section 8 is government guaranteed which is why 80% of our tenants are HUD guaranteed.
Q: Why would a prospective tenant want to rent a Chicago Turnkey Rentals, LLC property, versus a different rental property?
A: Due to our high quality finished units and professional property management services there is a high demand to reside in our properties—allowing us to be more selective of the tenants. Currently, we have over 100 tenants on our waiting list.
Q: What happens if I run into a problem with a major expense?
A: By consistently maintaining the property it will add years to the protection of the home. For those investors looking to have additional security, we would recommend purchasing a home warranty, with an estimated cost of $65 dollars per month that would cover any major issues (roof, water heater, appliances, etc). In the event a major expense arises, our property managers will repair at our cost basis which will always be less than hiring any outside resources to make the necessary repairs. ?
Q: How much does property insurance cost, and what does it cover?
A: Property insurance can vary from property to property. The average cost is $1,200 annually/$100 monthly, with a $1,000 deductible and $1,000,0000 liability protection. Insurance is a function of property location, credit, rental history, and other variables so the cost of insurance can range however the range is usually minimal.