How to cashflow on northside - Know the actual market rents!

[Henry Lazerow]

Having a hard time finding cashflow? A helpful trick is to completely ignore the rents the buildng comes with and figure out the actual market rents you can get. These numbers will often surprise you with a significant jump 50%+. This is a strategy I use for myself and all my clients. For example Avondale typically has 2-4 units for sale with 2/1s at $1200-1600. What you actually can get is $1800-1900 for 1/1s and $2300 on 2/1s. I usually recommend clients a pretty easy cosmetic rehab which is refinish floors, replace cabinets with modern white ones, add a white stone, new appliances, new bathroom vanity/mirror/light fixture and add in unit laundry. See below screenshots/map area.

I did a similar strategy when bought a 4 unit in Rogers Park to help myself create high cashflow. This strategy works best in the areas seeing the strongest gentrification. Some of my favorites are Portage Park, Avondale, Logan Square, Humboldt Park, Albany Park, Irving Park, the south parts of Rogers Park that boarder Edgewater/Andersonville which are getting high income renter pushover. Brighton Park, Pilsen and Bronzeville on the south side. 

Another trick is know how to run vacancy rate by area. Many of the BP calculators want you to put in 5% but this is not always accurate. On the North Side we run real life at 1-2% vacancy and run our analysis at 3%. We have tenants move in on the same day a tenant leaves by marketing the unit 45 days before lease ends.