Prospective Chicago Investor: Feedback on this Analysis

[Dinardo Rodriguez]

Hello folks!

After my research, I concluded that I want to purchase my first duplex/triplex in the Chicagoland area through an FHA Loan. I'm looking to begin the search for a property a year from now (December 2022/January 2023). I know a big part of real estate investment is being able to spot and analyze a deal and wanted to get feedback on my analysis of the following property.

For context, I'm new to real estate investing and looking to connect with other Chicago investors. These figures vetted these numbers on the Bigger Pockets calculator as well and got a similar result, but wanted to share on the forum to get additional feedback on any additional line items/nuances particular to Chicago: 

Property is a duplex (each 3 bed, 1 bath) in Little Village and listed for $249,900

Down payment (FHA Loan @ 3.5%): $8,800

Closing Costs: $7,494

Monthly Income: $1,200 per unit (so $2,400/month)

Monthly Expenses: $2,370 (see below for details on expenses) 

1. Assuming 30yr mortgage at 3.8%, mortgage: $1,124/month
2. Property taxes (2.1% for state of IL): $440/month
3. PMI (FHA Loan): $104/month
4. Insurance: $150/month
5. CapEx (5% of rents): $120/month
6. Vacancy (5% of rents): $120/month
7. Repairs (8% of monthly rents): $192/month
8. Maintenance (5% of monthly rents): $120/month

Based on these numbers my conclusion is that this wouldn't be a good deal since cashflow is barely positive. However, with some tweakings (slight TLC o increase rents a bit or lower purchasing price) it could be a good first deal. For the people that live in Chicago or are familiar with the area. How does this analysis look? Is there anything that is overestimated/underestimated? Am I thinking about these analysis correctly? Open to all feedback and again looking to connect with folks as I get started on this journey!

Many thanks, 

[Nate Grabner]

Like @Henry Lazerow, the standard bigger pockets calculators aren't great for Chicago. I recommend the one from the Straight Up Chicago guys instead as its more Chicago specific - https://www.straightupchicagoi.... 

Your water prices are also going to vary based on if its metered or not. Unmetered are always higher and the city currently isnt installing meters due to lead concerns. For a 2 flat I'd ballpark at least $215/mo unmetered

You also mentioned doing some TLC to raise rents. If you're wanting to rehab anything more than painting that also takes time and you'll want to have funds saved up for those upfront vacancies. If you can do it yourself you save on contractor costs, but you also take longer and risk losing another month rent. Your first mortgage payment isnt due until a month after closing, so you have a little grace there but you'll still want to have everything lined up to hit the ground running for any work you want to do. 

I bought my first house hack this past March and am happy to answer any questions and help you avoid some of the mistakes I made.