A Newbie Investor in a Hot Market (Chicago Southside)

[Alyse Moore]

Hi Everyone!

I'm a newbie that's unfortunately looking to buy in a hot market. I live in the south suburbs in Chicago, however I'm looking to house hack my first property, a 3-4 unit buildng, in the city of Chicago--the southside. My goal is to get into areas like Grand Boulevard/Bronzeville, East Woodlawn, etc for a few reasons:

I work downtown and am looking to get closer to my job. These are fairly safe neighborhoods, still somewhat affordable (in my price range), great rents, decent potential appreciation, will have the likelihood of attracting the type of tenants i'm looking for, etc.

I've been searching since January and lost a couple deals to cash buyers. I've been approved for conventional, fha, fha 203k and have hard money lined up if I need to use it but I prefer to use financing from a financial institution for my first deal. From my experience so far and talking to other investors, there are a ton of cash buyers in the chicago market, especially the southside in the particular areas I'm looking to get in.

My question to anyone who has experienced being a newbie in a hot market would be how did you overcome it, and find your first deal without compromising your criteria? How long did it take you to find your first deal? Should I start studying fix and flips and do that to generate some cash for the 3-4 unit? 

[Michael Facchini]

I am very familiar with 3-4 units and the neighborhoods mentioned.  Right now it's hyper-competitive in most neighborhoods of Chicago for this property type.  Often you'll land above asking price and you'll need a strong preapproval to compete against cash-buyers.  You might even need to look at closing in 15 days, so as to act like a cash-buyer.  Larger earnest deposits can help as well. It really comes down to getting in front of the right properties quickly, coming in with a strong offer (in various respects), and having a solid preapproval.  Are you working with an agent right now, and are they tapped into the multi-family market of these neighborhoods?