Trader in chicago needs advice

[Brian C.]

I have zero experience in the real estate industry but would like to start immediately. Would like to start with a 200k investment, do I buy a couple 4 flats? a million dollar commercial property with 20 percent down and a nice cap rate? or even partner with other investors and look at 20 plus unit commercial properties? Ive been a trader for 15 years so I understand risk more than most and willing to go forward. Thank you

[Cliff Mccue]

There isn't one way to skin a cat. I think before you spend that 200k you need to decide what level of commitment you want to make to RE investing. Is it strictly passive, then commercial might be the right way. Are you looking to be more active then maybe residential might be the right way. It is just a matter of personal preference.

[Account Closed]

@Brian C. ,

Cliff has some good points. The first thing I will say is that now that you have posted the money you have available, you will be contacted by about a million people on here. Not only do you have to get your due diligence on the properties and deals, but more importantly on the people you may work with. That is CRUCIAL. BP is a great resource, but there are always people that aren't necessarily who they claim to be, or aren't as honest as we would want.

Then you need to not only educate yourself, but find your risk level you feel comfortable with. Come up with some realistic ideas of return you would want on that investment. Rather than put it all into one property, why not develop a plan to keep the funds rolling buying property after property and building a portfolio that will net you the largest return rather than going one and done?

Again, Cliff has it, what level of involvement do you want? If little, you will need to truly evaluate those you want to work with.

GO BLACKHAWKS!!

[Brian C.]

Well thank you for your advice and I dont mind being proactive on properties but once again, I dont know where to start. Lets just say chicago north side which is the area im targeting, you can buy a 4 flat from anywhere from 300k to 1 million. West side of chicago, you could prolly find 10 to 25 units in the same range.

I need more information if outside property management is the way to go.

Other thoughts im having is why cant I look at foreclosures, in the 500k and above markets, and send offers at 50 cents on the dollar, Ive been told I have about a 10 percent chance of success in that way,

[Account Closed]

The foreclosures won't go that low, simply because of competition, If you want to do some flips and build that money then turn it into passive investments you can do that. Nothing says you have to stay in Chicago itself. I see you are from the South Burbs. There are possibilities out there as well that have double digit cap rates.

Obviously education of the types of deals that are available seems to be what you need. Might I suggest sitting down with someone that has been investing for at least 5 years. Someone that has survived all market types (down, up, buyer, seller, etc)

[Brian C.]

Alright for sake of conversation on flips, which everyone seems to be doing now a days. What are you looking for in condition and price? Also location, are flips done in poorer neighborhoods? Can I look at craigslist, realtor.com zillow I want to see some examples of good homes that are for sale, that would be smart to buy and rehab. Thank you for everyones help so far, Im learning as I go

[Account Closed]

I am not mainly focused on Flips.

[Account Closed]

Forgive me for pointing this out, if you want someone to show you good deals so you can do? Why wouldn't they just do the deal themselves without showing you the deal and you making the money?

[Brian C.]

its no different than me teaching someone how to trade for a living, no offense but you make it sound like people in general are cynical in nature

[Dion DePaoli]

Brian,
With your background, it might be a more productive conversation here to back into what might be attractive to you rather than trying to fish. You have 200k, you are simply not sure of the asset but I am guessing you have notions of investment horizon and return and any other limiting criteria. In addition, how actively do you want to manage the asset or be involved, will help too. Bringing those ideas to light will get you opinions on the sub class of the assets such as residential or commercial along with fix and flip or hold for yield and commentary along with management of the same.

[Brian C.]

Your right and to be more clear, regardless of what I decide to purchase I will not manage at all, I will either bring in a property management company or hire someone on, for upkeep and leaseholds.

Some of the problems im having, remember im in a major city and not really looking for a rehab

Lets say a 4 flat going for 400k with gross receipts of 3k a month, I dont see that as a wise investment,

Im seriously considering hard money lending but once again dont know much about it, but if someone is intersted by all means contact me and we can work something out

[Account Closed]

As a former HML I wouldn't recommend it to someone just starting out that doesn't want to manage. You will be hunting down the borrowers and having to collect.

Avoiding rehab? My question is, if rehab forces appreciation and provides a larger return, if you willing to hire on a Property Manager, why not a project manager for the Rehabs?

I agree, that rather than fishing, giving what you hope to return on your investment, might be a better way to get information.

[Brian C.]

ideally I would like to be around 20 percent on annual return, but I might be reaching a little

[Account Closed]

I believe that could be possible. Just depends on your level of comfort with the Risks involved in certain aspects of investing.