All Forum Posts by: Alex Heifetz

Hi there,

I am soon to visit several markets where a handful of turnkey providers will lead tours of the neighborhoods they operate in, their renovations in progress, and their finished product.

In doing so, I hope to get a feel for the quality and legitimacy of their business and market. While I am primarily approaching it as a precursor to due-diligence on any one specific property,  I will have the chance to survey plenty of them.

With that in mind, where would you recommend my focus be on the visit? Which areas of the renovations should be the most scrutinized?  What about the market as a whole? What are the things that can be seen only while only the ground?

Before proceeding in any manner, I also plan to speak with multiple, unrelated PMs in the area to get a consensus on vacancy rates, maintenance rates, and the likelihood or unlikelihood of appreciation in addition to shopping around for a quality PM. 

Thanks for your time!

@Michael L. 

I did not end up making a move on that property. In the end, I was uncomfortable moving forward without have seen the property or toured the neighborhood and surveyed the market first hand.

To that end, I am in the process of visiting Chicago among other cities to decide where I may be making my first investment.

Thanks again to everyone for your time and insight.

Thank you both @Eric Y. and @Mike B. for weighing in. Neither of you sounds hopeful on the long term appreciation prospects for the 60637 area. The prospect of a building forgotten by the rising tide (read: Mike B's line on a $30K building) is not at all encouraging. Are there other micro-markets in Chicago with similar price points and rosier long term appreciation outlooks?

Alternatively, are there any who would disagree based on your on-the-ground experience( @Mark Ainley , @Brianna S. @Wendell De Guzman @Jonathan Pliszka ) that this area is in fact posed for long term growth?

I was drawn to Chicago both for its attractive entry points (Cash flow) and its world class status (appreciation) and hope to understand your collective thoughts on eventual, long term, positive economic growth in Park Manor/Greater Grand Crossing. Thanks!

@Mark Ainley

@Mark Ainley

@Mark Ainley

@Mark Ainley

@Mark Ainley The tenants in place are both section 8, and their share of the rent is less than $100 between both units. How was your experience with this population been? The property is on the high end of the 6000 block. Would you say the neighborhood has been getting better, getting worse, or remained unchanged in the last several years? What about its potential for long term economic growth or long term gentrification?

@Brie Schmidt Thanks so much for your quick response. I did use the Cook County Property Tax Portal to find the tax figures ($2,587 in 2012; $2,625 in 2013). What would you expect a comparable property to run in taxes a little to the north?

Although the property is in the Hyde Park township, the seller has identified the neighborhood as being Park Manor/Greater Grand Crossing. Is your impression of this area similar? I understand that the Chicago market is very block by block, so I will be relying on the seller's selection of worthy neighborhoods. They select areas to operate based on the immediate proximity to schools/mass transit/churches and a general feel for the area. In this case, there is a church a block away. They have also just purchased a 2 flat two houses down, which seems encouraging and indicative of the turnkey company's belief in the neighborhood.

I can only hope that this property would perform as yours all ready have. Thanks again for your tempered advice, and congratulations on the continued success.

@Wendell De Guzman Thanks for your words of caution as well. It is the unaffected advice of people who live the work, people like you, who make this community so valuable.

My tax figures came from the County website, so I am surprised they raised as many eyebrows as they did. What would you estimate they came in at? And what is your take on the Park Manor/Greater Grand Crossing neighborhood?

It is also my understanding that the rent insurance policy you mentioned was just discontinued by AON, as of Feb 28 2014 (link below). Both of the tenants in place at this property have their housing secured through section 8, so all but $79 of the monthly income comes from the federal government. Nothing on the biannual renter's inspections has raised any alarms with these tenants, who have been living there for ~five months.

The seller reports that rents may increase to $1885 (up $150) after the next rent review, increasing the CCR. Still, you seem skeptical. Do you think I could do better while maintaining a limited level of involvement in the day to day operations from afar (California)?

Again, I completely agree: seeing is believing. I do plan to fly out, survey the property, and arrange for an independent inspection. As accessible as the data is, it represents only a portion of the neighborhood's or property's story.

http://www.aonrentprotect.com/sites/Rent/Pages/Home.aspx

Hello BP!

I am a first-time out of state turnkey investor currently in talks over this South-side Chicago 2 flat in the Hyde Park township (60637 zip code).

Could anyone who actively invests in the are please weigh in? I would like to hear some impartial opinions both on the legitimacy of the numbers and on the prospects for long term appreciation. Macro economic indicators suggest that Chicago is a ripe opportunity, but I want to be sure that long term gains would percolate down to this region of the south side.

Alternatively, could anyone who has had positive or negative experience with Chicago turnkeys please offer your thoughts?

To generate these figures, I combined the seller's proforma numbers with research of my own. I have also increased the seller's vacancy, maintenance, and property maintenance estimates from 4%, 4%, and 8% to 6%, 6%, and 8%.

Thanks!