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!!!

[Henry Lazerow]

Thanks @Sean Graham. I think all of Rogers Park is on the way to gentrification but the first to fully go will be the furthest south and east parts. It's funny when going down Clark St up to Devon Ave has trendy bars/coffee shops and suddenly North of there the retail is barely gentrified it's moving more and more north though every year. The area just West of Howard Red Line used to be rough area and now it's got some nice restaurants I just did a 3 unit house hack client there and numbers worked where they are living almost completely free.