New to Chicago Investing

[Michael K.]

Hi Everybody.

I have lived in Chicago my whole life and know Chicago pretty well except for Chicago's South Side.

I am looking to buy a rental income property on the south side of Chicago.. In the past couple of years I ran into a few people who said they own rentals on the south side. I don't know where they have the properties, and I know the south side of Chicago can have "War Zones" and that's what I want to stay clear from.

I saw some websites that offer "Turn-Key" rental properties but it sounds fishy for someone to sell a Turn-Key rental property.. To me that's like selling a money tree.

I know the south side has high unemployment rate so renting to Section 8 might make more sense, but I don't know. There are plenty of 2 or 3 flats that are 20-50k range and need maybe 50k in work... So say I buy a 2 flat for 40k and put 30k into it, so that leaves me with 70k into the 2 flat. So I rent both units for around $1000 each that brings in $2000 gross a month on a 70k investment?

Any experience or Pros or Cons. Please let me know. 

Thank you! 

[Neil S.]

Hey @Michael K. 

@Cliff Mccue  knows what he's talking about. I am an out of state somewhat who bought a 4 flat on the South Side that I've had many problems with. If you aren't familiar with how the court system works you don't want to buy any properties with active cases. My property was tied up in court for 3 months even though I fixed all of the violations in a month. The city inspectors are overworked and there will be delays.  You will also need permits for everything which will add to your bottom line (as Cliff stated).

Once I got it through court I thought I was in the clear. Get 4 Section 8 tenants and my return on my building would be fantastic. 5 months later the property is still vacant. Section 8 renters are very picky on where they rent.

If I had to do it over again I would:

A) Not buy a property with active court.

B) Not buy a property without at least 3 bedrooms.

C) Put in high end finishings in the kitchen and bathroom. I did the minimum for Section 8 thinking if I spent more it would just cost more on the backend when I had to turn it over. That's true but then the units will sit vacant much longer.

Not that you can't succeed doing the opposite, but this has just been my experience.

The numbers can look seductive but be careful out there, if you're gonna start, start small so you get a feel for how things work out there.