Chicagoland Fix & Flip Investors

[Samuel Pavlovcik]

BP Community,

I'm looking for some advice from local Fix & Flip investors working in Chicagoland (suburbs), or even downtown Chicago. I want to learn more about how to find a good Residential Property. What type of things do you look for as far as location, price, schools, taxes, etc. and what makes a property a "Good Find". I am a Local Architect who specializes in Residential Remodeling and have a lot of experience working with various municipalities within about a 50 mile radius of Chicago, so I believe I have a good understanding of what to look for a far as the structural integrity and necessary upgrade/work for the properties to be flipped, but I know there are a lot more factors to consider in addition to the construction side of the Fix & Flip.

Thanks in advance!

[Crystal Smith]

Originally posted by @Samuel Pavlovcik:

BP Community,

I'm looking for some advice from local Fix & Flip investors working in Chicagoland (suburbs), or even downtown Chicago. I want to learn more about how to find a good Residential Property. What type of things do you look for as far as location, price, schools, taxes, etc. and what makes a property a "Good Find". I am a Local Architect who specializes in Residential Remodeling and have a lot of experience working with various municipalities within about a 50 mile radius of Chicago, so I believe I have a good understanding of what to look for a far as the structural integrity and necessary upgrade/work for the properties to be flipped, but I know there are a lot more factors to consider in addition to the construction side of the Fix & Flip.

Thanks in advance!

When we first got started we were concerned about location, price & schools but soon realized we were over analyzing things. The one number that defined all of that is Average Days on Market. Naturally the lower, the better. Which then led to something interesting, finding ourselves in areas that some would not consider "good locations" but the average days on market were low enough where we could still make our numbers. For those families, the schools were good enough. As we move up in value where the profits were much higher the days on market were higher because the inventory of people to buy at those price points was less. Good schools are important but Average Days on Market is the statistic to monitor.

Enough sales activity within a one-mile radius- We were working on a flip in Orlando Florida. Great neighborhood and we had 3 sold comparables to justify pulling the trigger. We lost our shirt on the deal. Why? Those 3 comparables were the bulk of the sales activity within a one-mile radius. By the time we finished our renovation, those comparables were too old to use & there wasn't enough sales activity for an appraiser to justify giving us what we wanted & buyers with good agents wouldn't offer what we needed. Our rule of thumb now- We want to see lots of sales activity including pending sales because the pending sales may become our comparables once we're complete. 

One rule of thumb is to buy the ugly house on the nice block. Sometimes in Chicago, if you can afford it, a good find is a block with nosy neighbors & you've bought 2 or 3 of the ugly houses & the block captains become your security for those homes. And what also makes it a good find- All the homes are basically the same, which means the in & out renovation becomes a cookie-cutter. One crew working 3 homes. It's been a long time since doing that.

A small home with good bones (which you as an architect would understand) surrounded by homes that are much larger may be a great find if the home can be expanded at a reasonable cost. Example: Turning a 2 bedroom 1 bath home into a 5 bedroom 3 bath with a full dormer and finished basement. But it still goes back to making sure there's enough sales activity to support pulling the trigger.

We use to do a search in the MLS for Mold. We loved those homes & thought they were great finds as long as they were located in areas with lots of sales activity. Functionally obsolete homes are also great finds as long as we could knock down walls and open it up (right in the architect's wheelhouse)

I guess our rule of thumb for a "Great Find" is a home located in an area with enough sales activity (sold and pending sales) that our probability of success is high. That's kind of the bottom line.