First Investment Property Analysis - Chicago, IL

[Austin Anderson]

Hello Everyone!

I'm a long-time observer and first-time poster. I appreciate all the insight and wisdom everyone has provided, and it was the motivation to push me to buy my first rental.

The Property is in Chicago, IL, specifically in the Gold Coast Neighborhood. If you're not familiar with the neighborhood, it's one of the most prominent neighborhoods in Chicago. It's an A neighborhood, where most single-family homes are over 1 million dollars, and most one-bedroom condos are 400K and up, and it's the same neighborhood as the original playboy mansion.

Neighborhood:

-Close to two Beaches

-Close Lakeshore Drive, which allows you easy access to anywhere in the city.

-Lincoln Park

-Nightlife and Restaurants

-Shopping

-Museums

-5 Minute Ride to Downtown Chicago

Property: Studio Apartment: Approximately 575 Sqft, with an open floorplan.

Laundry in Building

Price: Original Price: $187,000

Close Price: $166,000

Taxes: $1900/Yearly

Renovations:$12,000 (Includes Materials + Labor)

Includes:

Repainting of Entire Apartment and Ceiling

Updated Countertops

Patch Work

Updated Lighting and Fixtures

Updating of Backsplash and Tiles

Adding Closet Doors

Glass Partition Wall (Will be a divider between the bedroom and living space)

Rental Estimates:

Rentomoter: 1800/Monthly or 2500/Monthly with Airbnb Rentals

*The property allows Airbnb's if they are one-month minimum.

Expected ROI:

Yearly Rental: 8.5% Return

Airbnb Monthly Rental: 11.5%

Question:

1. First, is this a good deal?

2. Does anybody have any experience with Airbnb Monthly rentals? Would you recommend going the Airbnb rental route or yearly rental agreements?

3. My lease is approaching, and I was planning to live in the property for 6-8 months, so I'll be able to save enough money for another renovation, or would you recommend I rent an apartment and start making money ASAP?

*Some background; the mortgage, including Morgage payment + HOA + Taxes, come in about $1200, and similar properties rent will cost about $2,000.

Thanks in Advance!

[Michael K.]

Hi @Austin Anderson congrats on getting started. A cash flow of 600 dollars on this small of a property would be excellent. The only thing I would question is the rental data you pulled. I just took a look on the MLS. Across 160 studio rentals in the Gold Coast over the past year, the median rent was only about $1200. I only found a few that closed over $1600. I would be careful that you're not pricing the unit as a 1 bedroom. Obviously, it also depends on the condition of the apartment and since I don't know the address and have seen the interior I can't say for sure. PM me if you need help pulling comps. And best of luck!