Who's investing in multi-family in Chicago?

Question

Hey BP Family,

Who's investing in multi-units in Chicago. I will be out there the 6th to the 9th and would love to connect with anyone who is out there investing. What are the next up and coming areas over there?

John Warren · Answer

@Ceasar Rosas I just closed on a 19 unit deal in Berwyn. You are welcome to come check it out. It is a value add, so right now it doesn't look pretty as we are mid renovation.

I have toured the Broadview deal you mentioned, and it is most definitely not "turn key" lol. Broadview is a solid community though, especially if you have a management company that can handle that area effectively. PM me and I can connect with you while you are in town.

John Warren · Answer

@Aristotle Kumpis is right that Chicago can be tough on violations. In addition, most suburbs that are close to Chicago adopt the Chicago code, and many of them have their own particular style of inspecting as well that can be frustrating if you don't know what you are getting into. In many areas of the country, investors don't deal with the "point of sale" inspection that we do here where a property is inspected for code violations every time it is changing hands.

The positives to these inspections though, are that our building stock is continuing to be up kept and upgraded. As buildings change hands, electrical systems, plumbing systems, tuck pointing, roofs, windows, etc are being changed out, so over time we will maintain very good building stock compared to areas that do not enforce maintenance.

Ceasar Rosas · Answer

@Jake Fugman

Just sent you an email. If we can do 8% cap with a potential to add value that would be ideal.

@Calvin Lipscomb

That's great stuff Calvin. The reason I started looking at Chicago is because it kept popping up in the top 20 places to invest in multi-families. It's not top 5, but seems to produce decent returns where you can still purchase above an 8 cap. As you know here in our boroughs, you're lucky to get a 6 cap if even possible anymore. You can't even touch a 6 unit under a million. Don't get me wrong I love New York City investing, but right now it's appreciation play in the 5 boroughs.

Ceasar Rosas · Answer

@Mark Ainley

Thank you for your response Mark. We're looking for 5+ units, the more the better, anywhere between 300k and 700k in B/C areas. We'd like a minimum of 8+ Caps with an opportunity to add value. A couple of addresses that looked good to me were 3058 North Kostner Chicago, Illinois and 2113-2115 South 25th Ave Broadview, Illinois, even though these seem to be a bit more turnkey.

Mark Ainley · Answer

@Ceasar Rosas there are a lot of different areas and people you can get referred to but what are you looking to invest in?  2 flats in a C area with higher potential but more risk or 10-12 units that is closer down the path of up and coming.  More people will jump on here if you provide a little more detail in your goals or price points or ideal breakout of a deal you want to see.

Daniel Cullen · Answer

It's funny to hear complaints about our stringent Dept. of Bldgs. in Chicago. What I see in my travels are the 'how did that pass?' and 'I wonder who got paid off on this?' situations that pop up day after day. Companies like Profits From Rentals and Elite Mgmt. are seemingly able to flaunt health, safety, and livability issues in their properties without repercussions. Many investors feel that between their own knowledge and that of their R.E. pros they don't need a good, solid property assessment. That can be a penny-wise decision.

Michael Facchini · Answer

Both Berwyn and Bridgeview are good areas to look at for this general price point and target CAP, if thinking 5+ units.  Agree with @Jake Fugman that if you're focusing on 3-4units, the spots are Humboldt, Logan, Avondale, Irving...and even Pilsen.  Much of where I focus personally is Avondale/Logan, but lend quite a bit in the other areas and see nice deals.  I personally prefer the city and 3-4units.  Strong tenant demand, can find solid cash-flow, and steady appreciation.  Also prefer residential financing terms.  Coming from NY, I'm sure you can find some attractive deals relatively speaking!

Aristotle Kumpis · Answer

I like the cash flow in the city of Chicago. The one thing I do not like is the city inspections. In the city, the can inspect your house whenever it is vacant and fine you left and right for all kinds of things. Drywall thickness, wrong type of plumbing, etc. It can end up costing your lots of money so just make sure you know the city rules and regulations before you buy there. Or at least make sure you work with someone who does know these things.

Ceasar Rosas · Answer

@John Warren @Jake Fugman @Weston Harding

Just wanted to thank John and Jake for taking the time out to meet with us when we were in Chicago this past week. Looking forward to getting into the Chicago market. Weston, thanks for getting us into Kostner and we'll make sure to make that meetup the next time out. Anyone looking to invest in Chicago should definitely contact these guys.

Ceasar Rosas · Answer

Thanks Calvin for the advice. We have spoken to a few lenders as well. We have a sizable enough downpayment and have considered using hard money to do something similar. We also have investors that have funded our flips that are looking to invest with us as well. We ultimately want to do syndications, but are looking for the 1st 2 properties to have a model/example of what to expect. We should definitely meetup for some coffee and talk.

Who's investing in multi-family in Chicago?

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