How Much for A Turnkey?

Question

Simple question:  How much would a typical investor be willing to pay for a Turnkey property in a good neighborhood on the South- east side of Chicago?

Josh Sexton · Answer

You really need to look at comparable properties in that area.  The problem with valuing homes on the South Side is that are are pockets of really nice homes and pockets of really bad homes.  Also, you mentioned that this is a turnkey property which I assume means that everything is finished and rent ready.  This will obviously affect the price, as nice homes go for more than beat up homes.

Do you have access to the MLS so you can look at comps?  I don't know if it's helpful but I have a ton of properties up on my page that you may be able to use as a guideline for pricing.  We run comparative market analyses on all our units so they come in at market value.  If any of these properties are near where the one you're looking at is, the value should be pretty similar.

For what it's worth, a good quality, finished property on the South Side will generally be valued over $100k (depending on size and bed/bath count).

Cliff Mccue · Answer

What kind of shape is the property in?  When you say that the owner's deceased mom lived there the first thing I think is that is going to be dated.  Kitchen and bathroom from the 1980's.  Those types of properties sell well below market value in Chicago.  The only properties on the South Side that command the types of money that @Josh Sexton is talking about are properties that have been fully remodeled.  I invest in that area of the city so if you want to talk offline further let me know.

Brie Schmidt · Answer

@Shara Carlton - Depends on the market rents and neighborhood.  For an A/B I would be happy with 1.25% but for a C/D 2% would be my mininium

Josh Sexton · Answer

@Cliff Mccue Is right.  Our properties are all rehabbed (or had a "lipstick" rehab done on a property that was already in good shape).  If this unit is dated and needs $10-20k of work done, $55-65k might be the right offer.

Ali Boone · Answer

Well it can't hurt to offer too low. They can always counter. But to be accurate, just look at surrounding comps and see what similar properties are selling for.

Shara Carlton · Answer

I had to post twice from this crazy phone, but that gave me a chance to correct my return rate.

Shara Carlton · Answer

Thank you all for the input. Ok, Ali, I will be more specific : )

It is a beautiful 3/1 brick in the South Deering neighborhood (hyde park township). Manicured yard and even still has some fairly new furniture and appliances. The property was owned by the seller's mother who passed last year. He wants $65k for it. I want to lock it under contract, but I don't want to feel like I'm insulting the guy by offering too low, but I know I would need to have a good price to get some interest in it. I was thinking of offering $52k and marketing it at $55k which would give the buyer a 10% return based on average rent (1100/mo). Any thoughts on my offer price?

Shara Carlton · Answer

Thank you all for the input.

@Ali Boone I guess I can be more specific. Its a beautiful 3 bd brick in the South Deering neighborhood (hyde park township). Manicured yard and even still has furniture and appliances. The property was owned by the seller's mother who passed last year. He wants $65k for it. I want to lock it under contract, but I dont want to insult the guy by offering too low, but I want to be able to move it too, and I know I would'nt get too much buzz with it being priced at 65k. I was thinking 55k, which would give the buyer a 12.4% return based on the rent in that area (1100/mo). Any thoughts on that price?

Shara Carlton · Answer

Thank you all for the input.

@Ali Boone I guess I can be more specific. Its a beautiful 3 bd brick in the South Deering neighborhood (hyde park township). Manicured yard and even still has furniture and appliances. The property was owned by the seller's mother who passed last year. He wants $65k for it. I want to lock it under contract, but I dont want to insult the guy by offering too low, but I want to be able to move it too, and I know I would'nt get too much buzz with it being priced at 65k. I was thinking 55k, which would give the buyer a 12.4% return based on the rent in that area (1100/mo). Any thoughts on that price?

How Much for A Turnkey?

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