Deal Diary: House Hack 4 unit Edgewater/Rogers Park

[Henry Lazerow]

Just closed this personal acquisition and happy to share the deal progress on here as I rehab the units, etc. I bought it off the MLS for $425,000 with a $12,500 closing credit = $412,500 net using the 5% down Home Possible Program. All four units are 2br's I estimate my top two units will rent $1050-1100 each (mild renovations) and the rehabbed bottom two units $1200-1250 each. Bringing gross rents to $4500-4700. Very high cashflow!

My rehab budget is $52,000 just using cash vs rehab loan as much easier/was a stronger offer this way. Scope of work: Adding in unit laundry to all 4 units. Bottom two units doing new gutted kitchens/bathrooms, paint, new stainless-steel appliances. The top two units are in ok shape and I plan to just do new paint, re-glaze the tubs/sink, put in nice wall tiles on kitchen/bath backdrops doing work myself to save money.

Something I always like to point out to investors when searching for properties is that a lot of MLS buyers don't view these 2-4 units as much for cashflow and actually passed on this one because the units are small/dated but from my experience these size units have an even stronger demand when priced cheaper than market average rents. I ran a tester advertisement using low quality photos with a dirty dish filled kitchen and marked up walls at $1050 saying in unit laundry and being a 2br in that neighborhood got 7 replies within 5 hours on HotPads. This is only .6 miles west of Loyola's campus. I may try out AIRBNB for one of the units also.

The bad: The tenants have all been there for 8-15 years and are only paying $595 a month per a unit…I know crazy right! The owner was a very nice elderly man and did not want them to get kicked out right away with the under-market rents so he let them all sign a 1 year lease ending 5/1/2020. This will potentially delay a lot of the rehabbing but I am going to try offering the tenants $500 cash to break their leases early.

Back to the 60's 

Happy investing everyone!!!