Chicago Gut Rehab Flip & Hard Money
I am a total beginner here. Before I even start thinking about investing, I want to make sure I have a well rounded knowledge of all the moving parts as well as hear real-life experiences from other forum members.
At this point, I have a good understanding of how basic fix and flips work. What I am trying to learn is how most of this works on the North Side of Chicago. In some areas (i.e. Wicker Park, Ukrainian Village) 2 story (+basement) SFRs are available for sub $400k and sell in excess of $1M when rehabbed with high end finishes. These properties need a gut rehab.
There are 3 ways of financing these sort of deals: 1) cash, 2) hard money, or 3) mortgage. The latter is less preferable because these properties are often gone in matter of days. Does anybody have any advice on financing such a large sum? I researched Patch of Land, for example, and it appears that a $400k loan matches many of the criteria especially because the comps in the area for a rehabbed home are almost 3x the purchase price.
Obviously, it appears that a deal like that (if you can get it before it's gone) is almost too good to be true. Has anybody done such a gut rehab into a luxury high-end home? Estimating that a gut rehab like that will cost $200k, there is still over $200 left in profit after paying for the debt servicing and paying all closing costs. What are approximate costs to do such a rehab? Simply, what can I expect to pay per sq. foot for a ~4,000 home?
I realize this is a lot of questions, but I am simply trying to understand how to analyze such a deal. I believe analyzing other rehabber's deals is important in order to learn and do similar kind of deals.