Multi-family in rural Southern Illinois?

Question

Hello all!I'm a programmer looking to get into real estate. The property I'm currently considering is a 4 unit that I would house hack (unless I can get away with not). I've run some numbers in the BP rental calculator and it says that I'd have a cash flow of $538 using the 50% rule. I would be living there to satisfy the terms of the FHA loan I would need, so my actual cashflow would be ~0 for a year.My Question This property is in a small college town and I'm wondering how I would find out my vacancy rate as well as what I might be able to charge after some rehab work. I know this is question depends on many factors, but any insight would be appreciated. If you would like to help, but need more info please let me know what info you need.

Zane Belden · Answer

Ya, do what John Van Uytven did ;)

Joshua Atteberry · Answer

@John Van UytvenNice to meet you! I currently have a house that I bought last year with a USDA loan. I am having some work done right now that should increase the value and possibly allow me to refinance with a conventional loan so that I can rent it out. The only reason I would live in the 4 plex is to get an FHA/203k loan since I don't have the 20%+ down. Ideally I wouldn't have to live there, but it seems like the quickest way for me to get into the game.Where do people go to find an apartment in your town?I've looked at Craigslist and didn't see much. I'll checkout Facebook and the local paper.Also how many places are there for rent in the local area.After driving around a bit I noticed a few apartment complexes and the school has some student housing. There are a few houses to rent on the MLS (currently during the school year). I will need to investigate further. How would I know if there is more supply than demand?How close are you to campus?About half a mile.Do students want to actually live there?I think I could make it a desirable place for students that would prefer a little seclusion. I'll have to see the inside of the property to make a more informed decision.Thank you for your reply! Any pointers are much appreciated. If you would like to see the listing I'd be happy to show it to you.

James Syed · Answer

Actually I am about 1 hour away from you. Just checked it.

James Syed · Answer

Joshua Atteberry Welcome to BP, a great place to network. Vacancy rate is probably 8-10% in your market as per my research. I hold a managing broker license and also perform property management about 2 hours away from you. Hope it helps.

John Van Uytven · Answer

Hi @Joshua AtteberryAlways happy to see another Southern Illinois investor on here.If the calculator says you would make $0 because you live there. You still have to live somewhere, unless you know someone willing to let you live with them for free.Either you are paying (or not paying) yourself, or you are going to pay a few hundred to someone else to rent from them.Where do people go to find an apartment in your town?Craigslist? Facebook? Local Paper?See what is being offered there.Also how many places are there for rent in the local area.How close are you to campus?Do students want to actually live there? I went to school at EIU, students had places they wanted to rent, even though it might have been a little farther away.Then honestly compare the different units AND their layouts.An awkward layout can kill people wanting to rent a place.What is your competitive advantage compared to the other local rentals?Do you or your competitors offer laundry hookups or an onsite laundry room?

Zane Belden · Answer

Joshua Atteberry I know the property you're taking about. I went to college there and had a friend that actually lived in that property. I wonder if you could get a contractor who specializes in foundation repair to do a walk through with you and give you a bid. Then request to have this paid by the seller. If there foundation issues are serious then the seller knows they will have a hard time selling so they may take you up on the offer. On the plus side, once renovated, I think that place would be very easy to keep full with the college students.

John Van Uytven · Answer

@Joshua AtteberryProbably good you passed on itI just offered on a duplex, then found out it had foundation issues.I readjusted my offer to include fixing the foundation. The owner has not contacted me about the new offer.

Joshua Atteberry · Answer

Hey Denny,The property I looked at was in Lebanon. I don't make it down to Carbondale much. The place needed a little more work than I was wanting to do for a first investment property. There was some structural issues.

Denny Robert · Answer

@Joshua Atteberry did you end up putting an offer on the property? Are you looking in Carbondale? Just curious. I grew up in Southern Illinois and am interested in seeing what opportunities there are in the college towns.

Zane Belden · Answer

Joshua, Welcome to BP! I'm new to BP but have been investing for a couple years now. I'm also from southern IL. Just thought I'd say hey and let you know I'm here if you want to bounce ideas off of me. All the best, Zane