Chicago section 8 Triplex deal? $189k - $43k gross

[Account Closed]

Hi guys,

I'm looking at a deal in Chicago. It is a newer triplex (2008) at 1344 S. Karlov Ave in Chicago. The one caveat is that these are all section 8 tenants, which I have never done before. I know some people scare away as I've heard all the horror stories but I'm just looking at the numbers & the area.

Here are my numbers

Price: $189,000

Monthly Rent: $3682

Maintenance: $150/month

Management: $368/month

Taxes: $300/month (Don't know how accurate this is in the city of Chicago)

Insurance: $100/month

Landscaping: $100/month

Utilities: $300/month (owner pays water)

Total Expenses: $1318/month

Mortgage: $$859 (5.5% w/ 20% DP, 30yr)

NOI: $1,505/month

Cash on cash: 41% (assuming 3% closing costs).

Cap: 15.07%

GRM: 4.28

To me this seems great, but also too good to be true. Anyone know the area? Is this in a war zone?

Thanks!

[Cliff Mccue]

@Chad Hart There is nothing wrong with section 8. It requires more work than having a house rented to the family in the suburbs but a lot of the section 8 problems can be alleviated with proper screening. You just can't take the first person that qualifies. If you are going to invest out of state in an area like Chicago, you will need a good leasing agent that knows how to screen and a good property manager.