Been investigating business opportunities for the last few years, and have recently been investigating REI and all the strategies and opportunities available. I feel with my Engineering and MBA background, this is something that really suits my skill-set and something I can sink my teeth into. Currently working full-time as a Senior Engineering Member of an engineering services company in Downers Grove, IL, and looking to get into REI on the side. My 5yr goal is to be doing REI exclusively (dreaming big!). I've got some cash, but certainly open to talk with other investors!

Have been doing some initial research into Multi-family, buy-and-hold, (>,=2 units) in the Chicagoland area (mainly western suburbs, Brookfield, LaGrange, Downers Grove, Wheaton, and the like) and found some units with potential.

Here's my current question:

I've found a property that I believe has some potential. It appears the units are below market, however with some cosmetic repairs and perhaps some capex's I feel I could increase the rent by at minimum (based on local comps) 68%.

I would offer 85% of list and estimated $20,000 in repairs/upgrades (this is probably a generous estimate - the property appears to be in good shape, basically needs a face lift).

With all these figures, including the 50% rule, financing with 20% down @ 3.5%, I come out to a profit of $262 per unit and a cash-on-cash return of 9.53%.

So, does this seems reasonable? Is it wise to project future rents? How about offering 85% of list - too high? should/could it be less (I'm leaning yes.)?

So for you Chicago investors - any comments? Anything I should be wary of?

Thanks so much!

Mike

P.S. sorry for the novel! :$

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REI in Western Chicago Suburbs

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