Need advice on my first investment in Dunning area

[Raj Chris]

Hi BP Gurus / Seniors,

I am new to the REI and placed an offer for my first multi-unit property.

Here are the details.

Area: Near by Shabbona Park, Dunning

Number of Units: Legal 3

Built: 1950

Price: $455,000 ($450k (purchase) + $5k (Minor repairs: Nice to fix but not an immediate need))

Loan Type: Conventional (20% down & 2.5% interest rate)

Annual Gross Rent: $38,400 (Tenants pays Electricity + Gas)

Annual Expenses (Property Tax + Insurance + City utility): $10,000

Parking Space: 3 (Garage – 2 & Side Pad – 1)

Other details: Exterior Brick, free laundry in basement, all units occupied and it is a turnkey property.

Pros: Steps away to CTA Bus Stop; Good Elementary school (PK-8); Walkable to Shabbona Park Recreation, Restaurants and Grocery Stores; 10 mins drive to Schiller Woods; 15 mins drive to Airport & low crime to visit the property any time confidently.

Cons: Below average High School & 20 mins CTA Bus to Blue Line.

My Situation: I will be in Chicago area until next Summer and relocate to Texas. Meanwhile my plan is to setup the team and stabilize the property (its already in running condition, I just need to catchup). And if it goes well, will add another 3+ units down the line in near by area. So, it will be good if I need to hire Property Management for both properties together.

Why am I investing in Chicago if I will be moving to Texas: is that I couldn’t find any multi-unit (3+) property less than $500k in other large metro cities in east coast, west coast & south (in good & decent neighborhoods).

Now, my question: Is this wise investment based on the numbers above, selection of area (NW Chicago) and my situation of moving to other state?

Please advise.

Thank you

[Jake Fugman]

@Raj Chris It sounds like a very stable purchase based on location and rough NOI. Being w/in the city limits of Chicago will save you A LOT on taxes VS being a short distance away in Elmwood Park or Norridge. Assuming the units are at least 2 bedroom / 1 bath, you likely will be able to raise rents up from the $1066/mo average over time. 2 bed/1ba units in the area should get about $1200-1300/mo with rental grade finishes.

Whether or not its a "wise" purchase is subjective to your personal investment goals.  As long as you have a source to build up more capital for the next purchase I would say you have chose a good way to get started.  A lot of newbie investors dont have the luxury of locking up $100,000 in equity on their first multi unit.  

Good luck!