Slim pickings in Chicago

[Natasha Richardson]

I’ve been searching for a 4 unit turn key house hack in Chicago in my price range since September and haven’t found not one that cash flows or the ones that do flow is so minimal it’s not worth it. I’m pretty sure my analysis is correct using the 1% rule etc. but just wanted to see if anyone else out here is looking for something similar in Chicago and having the same results. Maybe I’m doing something wrong?

[Tom Shallcross]

Hi @Natasha Richardson.  Chicago can be tough to cashflow but there are definitely opportunities.  First step is to hone in on specific areas.  Chicago is made up of 77 community areas and 200 neighborhoods.  Some will have cashflowing properties, and a lot will not.  Some you'll want to straight-up avoid.

I personally have my best cashflowing properties outside the city in Glenwood and there seems to be more options in the Southern Suburbs.   There are also areas of the city I love like Pullman but you need to be careful as the neighborhoods change on a block-by-block basis.  @Ibn Abney runs the Southeast Chicago meet-up and it would probably be worth your time to join the next meeting on 12/22 if interested in speaking with other Chicago investors for that area. 

If you're strictly looking at the MLS offerings I would strongly suggest networking and reaching out to the many Chicago wholesalers on BP so you can expand your search with off-market deals.

Lastly, the 1% rule doesn't necessarily work in all areas due to the insanely high Cook County taxes.  Run your numbers on the BP calculator with the actuals to validate.  

Feel free to reach out with any questions and hopefully this helps!

[Brie Schmidt]

@Natasha Richardson -  Where exactly are you looking and within what budget?  Maybe your expectations are not in line with what the market delivers.

It has been really slow since August, we had a great week and then it has been trickling in since.  

[Natasha Richardson]

@Tom Shallcross Thanks Tom. I will look into the meetup, that’s a great suggestion. I actually live in the Pullman area now but haven’t looked over here. I’ve focused on other neighborhoods on the south and west side but have been thinking I need to look outside of the city. I’ve also used the BP calculator and another tool from rentzend but I see the same results. Negative cash flow.

[Natasha Richardson]

@Brie Schmidt Hi Brie. Thanks for you response. I will PM you more details.

[Natasha Richardson]

@Tom Shallcross I also have only been looking at the mls and working with a realtor so I’ll check out the whole sale options

[Bob T.]

"turn key house hack"  does this mean property is already rehabbed and you will live in one, correct?  don't know your area or your numbers but maybe you can remove the "turn key" does it look better?

[Elbert D.]

@Natasha Richardson your definitely not going find a turnkey MFH that cash flows in chicago. Why is that? Well from my experience from just looking at the MLS for the past year and a half anything that is rehabbed on the MLS that is a MFH is usually overpriced. Running the numbers on these houses I seen, the cash on cash return sucks at around 2-5%. If you truly want a cash flowing MFH your going have to look off market and hopefully the seller is willing to go down in price(because many sellers are asking for market value for their properties) and you can pick up a MFH for less than 50k(roughly) in a decent area. Depending on the number of units the rehab is going be kinda pricey if done right by a decent general contractor and handy men. The bathroom and kitchen of course are going probably need the most work excluding the HVaC and windows. Which are usually not well kept in MFHs. Basically your going have to spend money on rehab. Don't let any of these crooks try to con you of money and make them stick to a schedule. It's really hard to find people that do good work and stick to a schedule, it's a few out there that take their business serious.

Another solution is to consider moving to northwest Indiana. There is some good areas that cash flow well and the landlord laws are much less liberal compared to Illinois. Not sure where in Chicago you work but Indiana is just another idea to think about. If you want to explore options obtaining a MFH.  Hopefully in 2019 more balance will be restored to market everywhere.

[Natasha Richardson]

@Bob T. Correct. I wanted to find one already rehabbed/renovated and I’d be living in one of the units. Most of the properties that are available that aren’t turn key need serious work and I was advised as a first timer to find something that’s already updated.

[Natasha Richardson]

@Elbert Dockery thanks for the detailed response. That’s exactly what I keep running into with the numbers, nothing really makes sense as far as the returns so now I am looking to the suburbs and northwest In is on my list. I work downtown currently and live on the far south east side. Im looking for a couple meetup groups now to start networking more because I’m not sure how to go about finding off market deals. This is going to be my first property and I didn’t want to get into rehabbing a place but I’ve read about the 203k option so I know some details on how to get started on that. I’m extremely detailed oriented so trust me no contractors will be getting over on this lady 😉

[Lane Kawaoka]

@Natasha Richardson

My friends have not have a good run in chicago. Google some scam turnkey in chicago.

[Natasha Richardson]

@Lane Kawaoka only thing I found were some companies falsely advertising what is actually turn key and most out of state investors fall victim to this. I live here for one and secondly I’m not making the assumption that I won’t need to do any work and just collect rent checks. Not sure if this is what you were referring to but that is all I found on google. Thanks for your reply.