Chicago Investing / C/D Areas Chicago / Risk Involved
Hi Chicago BP, I'm looking for some advice from seasoned investors in Chi. I'm currently living in Sacramento but am originally from Chicago, and have most of my family there. I have a MF property in CA & one in FL that are doing well for three reasons- cash flow, purchased with equity, and good appreciation. Any of these three have become increasingly difficult to come by in Sacramento and I feel that I somewhat missed the window, while watching. That said, its not impossible just more risk than I'm willing to take atm, in terms of finding something with enough equity buffer to sustain a downturn.
I'm interested in Chicago because I've partnered up with my dad who can manage the properties, and two because I feel that Chicago is a pretty diverse market which may have room for investors still in early stages. With that out of the way here's my situation;
Capital / Financing situation:
- $270K cash available through a HELOC
- $60K personal savings cash
-Total: $330K available in cash
-Credit; 780-800 ( same for both my dad and I)
Ideally what I'm looking for;
-All three of above; equity, appreciation, good cash-flow in preferably B/B- areas. However, based on what I'm seeing at the moment in different regions of Chicago I don't see a path to all three.
What I'm thinking about;
Option-1; Getting into C/D areas, work with wholesalers(or MLS) to purchase two MF properties around $100-$150K, rehabbing, and renting.
Pros; Possibly easier to find property with equity, good cash flow, section 8 secured income
Cons; Significantly increased risk in terms of property damage, likely low appreciation, dealing with long eviction processes.
Questions here; Does anyone focus on C/D zones? If so which areas of Chicago do you focus on, and why? How have you successfully handled the risk that comes with this ? What kind of CAP are you seeing here on average? What kind of purchase prices are you working with on average?
Option-2; Focusing on a C+ to B areas, one MF property, around 250-300K range, some rehab
Pros; More security, good appreciation
Cons; Possibly less cash-flow than the above
Questions: My questions on this are more about do areas like this exist in my price range and for someone who does not have a strong presence or connections in the area, or will I have to gut or tear down a property to get a deal?
I've spoken to a wholesaler who mentioned that wholesaling in the north neighborhoods is very difficult or ineffective. If so, is there any advice to be given here on methods of finding deals? Also, what CAP rates are people that are active in these areas recently seeing?
Any input is greatly appreciated