Looking to invest in the Chicago area

[Kashif Khan]

Hello BP members, I am new here and have been an infrequent visitor on bp for the last year or so. I am looking for advice and guidance on how and where to invest in the Chicago area. I currently do not own any income properties. Looking to play around with $200K - $300K. With my budget, how can I best leverage my investment for income? What kind of income should someone with this kind of cash generate from investing in rental properties? I am seeing mixed information, some say buy multiple single family homes, some say buy apartment buildings. Is it reasonable to expect to take home 5K - $7K with this kind of money? What value properties should I be looking at if I have cash $200k - $300k. As you can tell, I am looking for general and specific advice/guidelines. Any and all information will be appreciated. Happy to share more if you have questions. KK

[John Clark]

"as you can tell, I am looking for general and specific advice/guidelines."
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Specifically, I say that you should avoid Chicago in general. Both the new mayor and the new City Council are ignorant of both finance and economics, and will probably introduce rent control in the near future by seeking to have the state-wide ban repealed and then imposing a local ordinance. Then you'll have massive property tax increases to pay for all the pie in the sky spending, and finally a Detroit-style cratering.

Try Texas.

[Crystal Smith]

Originally posted by @Kashif Khan:

Hello BP members,

 Looking to play around with $200K - $300K. With my budget, how can I best leverage my investment for income? What kind of income should someone with this kind of cash generate from investing in rental properties? I am seeing mixed information, some say buy multiple single family homes, some say buy apartment buildings. Is it reasonable to expect to take home 5K - $7K with this kind of money? What value properties should I be looking at if I have cash $200k - $300k. As you can tell, I am looking for general and specific advice/guidelines. Any and all information will be appreciated. Happy to share more if you have questions.
KK

If you're able to leverage other people's money (OPM), i.e. bank loan or private money, then yes you can achieve 5K to $7K per month over a period of time.  Your cash becomes the downpayment. Really doesn't matter if it's single-family homes, small multifamilies or apartments. I don't advice jumping into large apartments as your first investment unless you do it working with someone or a group that has experience. 

If you're unable to initially qualify for a bank or private money loan it's still possible to achieve your goal but it will require different strategies.  You can't purchase enough assets with only $300K of cash to throw off $60K/year ($5K per month) of cash flow.  

[Kyle D Birch]

I would disagree with John.  I have 7 doors across two properties in great neighborhoods on the south side. I acquired one in 2016 and one in 2019 and cash flow $4,000 a month. 

From what I have read, rent control is far from happening as state law prohibits it. Lightfoot would have to change that. Taxes in Chicago are cheaper and there are great neighborhoods despite what the media portrays. Of course, there are some areas to avoid, but I own and live in a neighborhood where things are better than the neighboing towns. 

I would love to connect and chat more. 

[Mike B.]

The short answer is yes. There are a few strategies you can use but the most profitable would probably be to buy a distressed 2-4 unit. Finance the property purchase and rehab through a hard money lender. When the rehab is complete, refinance with a bank. If you do it right you'll be able to pay off the hml, get all of your money back (possibly more) and do it again to another property. You should be able to achieve this using about $100k of the 200-300k that you have. See the process through first hand with a portion of the money rather than diving all in and maxing out your budget. 

[TIm Harstead]

I agree with Mike, if you have the resources to do what he is saying that would be my route as well.  The south side of Chicago is where your money will stretch the most, and some areas are great investments while some right next store not so much so you really have to do your research on the neighborhoods as much as the buildings.

[Bob Floss II]

@Kashif Khan It can be done but you need to work hard on finding properties. There is a lot of competition. Get a good team and know the good properties are off market and require networking.

[Alan Dunlap]

@Kashif Khan

Out of curiosity, have you looked at properties in Bolingbrook or nearby to get any ideas on if you can nearby , or have to invest inside the city?

[Alan Dunlap]

@Alan Dunlap

Not saying John doesn’t have valid concerns, but not everyone is comfortable investing out of state, especially while they’re beginning.

More people telling you not to invest here can help scare off some competition. Plus those in a hurry to move down south have to sell their house to someone right?

My two cents

[Kyle D Birch]

Originally posted by @Bob Floss II:

@Kashif Khan It can be done but you need to work hard on finding properties. There is a lot of competition. Get a good team and know the good properties are off market and require networking.

Hey Bob,

Brie from BP recommended me reading out to you about some zoning things. I sent your office and email last week and haven't heard back. Any chance we can connect?

Kyle Birch

[Bob Floss II]

@Kyle D Birch

I have to run right now but can I call you in the morning?