Investors FAQ
Q: I do not know much about real estate investing, is it a difficult process?
A: AG 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 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 is one of very few markets with an ample supply of 2-4 multi-family units 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 on 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 remaining balance for the investor.
Q: Why multi-unit properties and not single family homes?
A: To maximize your monthly cash flow, it’s better to buy one building with multiple sources of rental income. If you buy a single family it’s inevitable that you will have vacancies, and during this timeframe you would be paying out-of-pocket every month to cover your debt service until the home is leased. AG offers multiple tenants in one building for the lowest chances of vacancy, ensuring that you have continuous debt service coverage as we’re sourcing new tenants if the need should arise.
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 AG 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. 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 AG can select the best possible location for the highest overall investment return.
Q: Why doesn’t AG have “higher end” looking rental properties?
A: We ensure that our properties are both structurally and cosmetically sound. 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: 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: Most clients do not view their rental property prior to closing. 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. AG 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: How do I see available investment properties?
A: Visit our website and click on investment properties.
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.
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.
Q: How do I get started?
A: Speak with a AG representative by calling 312.627.9200 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, they provide you with superior customer service. Choosing to go with an out of state bank as your lender it could cause delays because they are unfamiliar with our investment market.
Q: Can I finance 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. First, we encourage you to research your own options and select what works best for you.
Q: What if I want to go to the bank for a loan?
A: There are hundreds of investor loan programs for purchasing rental property. Down payments can range from 20% to 30%, with interest rates ranging from 4.5%-9%. 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: The typical closing costs range from $3,000 to $5,000 depending on the purchase price.
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 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 AG 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 layout a plan to put you on the fast track to financial freedom. Contact a AG representative by calling 312.627.9200 to get started.
Property Management
Q: Who manages the property?
A: Our affiliate, JustProperty works diligently each and every day to make sure the maintenance and repair needs are met for our tenants. ERM is staffed with experienced property managers on call 24-7 dedicated to AG’s buyers and tenants.
Q: What is your tenant screening process?
A: We have a four step process to screen our prospective tenants. The process entails a credit check and verification income, criminal background check, court recorded judgments/evictions, verification of employment and previous landlord check.
Q: How do you ensure a low vacancy rate?
A: We renovate for resale, not rental purposes. We redevelop the property to a condo apartment quality, using high end finishes versus rental grade quality finishes. As a result, AG 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 AG tenants typically reside in your investment properties?
A: Tenants sign a one year (12 month) lease. 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: 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; while good tenants are rewarded with excellent customer service from our staff.
Q: Do you have a way for me to monitor the existing current status of my rental properties?
A: Absolutely. We utilize among the best property management software Appfolio allowing access to monthly reports.
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.
Q: Why would a prospective tenant want to rent a PFR 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.
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 a month that would cover any major issues (roof, water heater, appliances, etc).
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.