We all know about Chicago, but is it a good time to invest there? To help answer that, we asked Ray Urrutia, President of Pull The Trigger Enterprises, LTD. Ray not only has 14 year of experience in real estate, but is also an educator and mentor to investors.
Ray, tell us a little about your company.
I have been in the real estate business for approximately 14 years and in Sales and Marketing and Executive Management for 30+ years. In real estate starting in 2000 I started a company to pursue distressed properties put together a team to work with lenders on short sales; raised capital to acquire properties or wholesaled properties to investors. The skills I have learned in the disciplines of real estate I did and put into practice. We started a REI (real estate investment club) and what was born from that process was Mentoring LLC to teach real estate investing. 2000-2007.
I am also a Real Estate Broker for the past few years along with continued investing.
Pull the Trigger Enterprises, LTD was created recently and launched to coach real estate investors on the disciplines identified (16) along with marketing; business processes; critical thinking skills and providing capital. PTT is educational and provides tools and processes to identify a real estate transaction and give the student the expertise necessary to make an informative decision and the ability to ask the right questions.
Our mission is to educate and empower the beginning real estate investor and with the experienced real estate investor provide structure and systems to grow. Educate; teach the disciplines and strategies in 16 core areas. Empower; through education we will empower the real estate investor to grow organically and gain INDEPENDENCE.
We will provide resources to support the real estate investor at any level; this process will provide a mutual benefit to investor and Pull the Trigger Enterprises to enhance profits.
We are also involved in Bulk purchases and REO’s around the country.
Tell us some stats about you or your company – average close time, negotiations, how many sales/purchases made, types of properties sold or bought)
With coaching students our focus is Single Family Homes providing capital, construction management, and construction teams, legal and accounting expertise coupled with coaching. Our respective long term strategy is Multi unit’s 5-25 unit buildings.
We believe the market is $150k – $250k for flipping and for the most part this would apply almost anywhere in the country with the exception of the larger cities like Chicago, Detroit, LA or NY. The surrounding suburbs would be ideal.
Once a property is acquired our expectations is to close out in 120 – 180 days the exit strategy is a retail sale leaving the investor student with an approximate 25%-35% ROI( based on 20% invested = $40k) realizing in six months.
Do you have references our clients can call? Yes
Do you work solo, or are you part of a team? I have a team- accountant, attorney, realtor, project manager, acquisitions manager, appraiser, lender (exit) capital firm. The benefits on having a team is bringing the various skill sets to work together to accomplish more. We are currently involved in 3-5 projects a month and want to increase that to 8-10.
How experienced are you at negotiations? I am very experienced. In my career I have been involved in negotiating multimillion dollar contracts for large corporations. I am currently involved in many bulk purchases from $2M – $23M and above.
How many homes, commercial properties, land, etc deals did you close last year? 30 personally
What is your business philosophy? The benefits of any transaction must satisfy all parties involved; must be profitable; protected and mitigate risk to its lowest common denominator. We don’t know what we don’t know…
ABOUT YOUR SERVICE AREA
Tell us about your service area: Our current market area is Chicagoland, well diversified with all types of properties and values
How is the market doing? The current market is doing well in most sectors; like the country at large there is pent up demand for first time buyers and of the 55 Million come out of foreclosure some are ready to buy again.
What types of properties are being purchased/sold? Single Family and 2-4 units
What major construction projects are happening? The commercial sector developed land is being built upon with major retailers; good indication that the consumer is getting more confident with their jobs and income.
What major retailers are present or moving in? In the Chicagoland area it is Walmart; Sams Club; Overseas grocery store chains are moving in building 200,000 square foot facilities etc.
Typically, what expenses is the landlord responsible for? Trash Water and Sewer; there are tools to put the onus on the tenant through breaking down the bills based on square footage of rented space.
What is the unemployment rate? National is 6.2% the Chicagoland is a little higher at 8%
SELLING / BUYING IN YOUR AREA
What is average the purchase price? $220k
What is the average rent? $1300
What is the average time a property is on the market? Non-stressed less than 30 days if it is priced right and solid location
Is it a better time to buy an investment property for quick resale or hold onto the property long-term to rent it out? Flipping at this time; buy and hold in two years
What type of marketing do you do when listing a property? All social media; internet; post cards;
How do you keep the client informed about the progress of the transaction? If being rehabbed every two weeks along with pictures via email and Dropbox.
YOUR NETWORK / CLIENTS
Do you recommend self-managing a property or hiring a professional manager? The strategy I have always employed was that any holdings under three properties can be self-managed in the 2-4 unit range; Multi unit buildings 5+ should hire a Property Manager. Yes we do have Property managers.
What service providers do you work with/recommend? Our services run from Property Manager; Legal; Accounting; Rehab ( fully gutted); general maintenance; product suppliers; Plumbers; Electricians; HVAC; Landscapers; painters and Roofers. Our objective is to provide as much or as little support as our client needs.
YOUR ADVICE / RECOMMENDATIONS:
What is the average rehab cost to help achieve a better return? This view is determined by the type of property and its location. The examples are as follows: 1. Lincoln Park Chicago north side Acquisition is $450k needs $200K in Rehab and sells for $850k. In this example we could go high end in materials because we can realize the return on investment 2. Western suburbs acquisition is $110k rehab is $50k moderate materials and sells for $220k – $250k. As a rough guestimate I use $35 per square foot, unless I believe we can add an additional floor or rooms then my guestimate is $45-$50 per square foot.
Do you recommend self-managing a property or hiring a professional manager? In most case especially with Self Directing retirement accounts where the account holder cannot be part of the process I recommend hiring a professional management company.
What repairs or upgrades do you recommend to get the biggest “bang for your buck”? Kitchens- granite; Cabinets; sink; appliances. Bathrooms – completely gut and replace with excellent materials especially the shower/tub; tile and flooring; also if you could expand the bathroom take advantage of it.
What are you looking for during an inspection before a property is purchased? Structure; all mechanicals electrical, HVAC, Plumbing; roof and foundation
What should a client do with a property before putting it on the market? I recommend a final walk through 1. Before paying out final construction invoice 2. To insure contractor meets expectations of plan. This is where we come in and provide this expertise: Statement of Work; Waivers for next release of funds; and timeliness of completion. We oversee project as project manager.
CAN YOU TELL US A LITTLE MORE?
What about long term hold 5-10 years? These projects are Multi Unit and would require 20% participation or all cash transactions are buildings fully occupied and cash flowing. The property management and maintenance are taken care of.
What is the security of these types or any type of projects? The security is the real estate. When pursuing these projects it is always recommended to see a complete package of what the details are i.e. buy and hold; flip; term ; how much cash is needed; exit strategy; expectations of returns.
What are the various types of real estate transactions? There are 18 different type of real estate transactions and each one brings its own set of criteria and agreements along with investment requirements.
How do I determine my strategy within my retirement account? There are many factors to determine a strategy that ask questions such as; what percentage of funds available do I want to allocate towards real estate? What type of returns am I looking for? Where am I in retirement? Do I want to be aggressive or paced?
Questions for Ray:
Pull The Trigger, LTD
Phone: (630) 429-4025
Questions for an IRA Specialist:
Jaclyn M. Grella