***WARNING*** Buying on he South Side Of Chicago / Turnkey

[Mark Ainley]

BP Community, I have spent a lot of time in recent weeks explaining to out of state investors the true nuts and bolts behind managing properties on the south side of Chicago.  The day to day of dealing with leasing, maintenance, City of Chicago, and the Chicago Housing Authority(CHA).  To my surprise, most investors(mostly out of state turnkey buyers) had a very different understanding of the reality of managing section 8 tenants or what the real numbers or costs end up looking like (most of them are 6-18 months after closing).

I wanted to take this opportunity to share with the BP community, mostly potential Turnkey Buyers looking in the Chicago market, that your due diligence in the buying process can make a huge difference.  I am not talking about due diligence on the property or the block(you should still do that). I am talking about your research on the PM company you will be using.  Once you close on your new investment it is the relationship of the PM you are now depending on to keep that stream of cash flow coming in for the next 5-10-15 years.

When you buy a turnkey investment property, you are buying an existing business.  If you were buying an existing McDonalds location, you would be researching the management team, the employees, their track records, etc....

***WARNING*** Do just as much research, if not more, on the PM compared to the actual property or the company selling you the property.  The success of a Southside Of Chicago Investment Property all lies on the back of the PM.  No matter how extensive the rehab, how good of a deal you negotiated on price, or how great your home inspector says the place is, your success depends on your PM managing tenants, collecting rent, keeping the place occupied, being smart with expenses, communicating well all the time, and communicating even better when there are issues.  Sounds like basic PM tasks but they are difficult to do them all well all the time so you have to find a PM that can.  

Love to hear from anyone that has an opinion on this subject!