All Forum Posts by: Demetrius Davis

@Eric Gardiner MLS has been my main source, but you're right, I may find better success through direct marketing.

@Elbert D. I haven't considered flipping in Indiana or Milwaukee. Are there areas you'd suggest within those markets?

I've flipped two properties this year, with the most recent one sold in mid-September.  I was excited to line up my next deal, but after speaking to my agent I learned that the market has hit a strange slowdown throughout Chicago.  Suddenly, nearly no one is showing up for open houses, and many agents are reporting that they're getting few if any calls on their listings.  Also, prices for distressed properties have increased significantly, as banks are trying to get top dollar for their foreclosures.  Labor costs have increased significantly too.  So now we have higher investment costs and the potential for slow resale or depressed resale prices.  I've begun digging into research and am seriously considering shifting my strategy back to buy and hold, as I fear the window for flipping may be over.

I'm interested in knowing how other investors are thinking about approaching the Chicago market as we end 2017 and prepare for 2018.  Is the flipping market in Chicago done?  Is this the end of the cycle?

Hi Paul.  Interesting strategy.  It seems like a great idea, but of course condos have their down sides that multi-units don't share.  In every condo building there are factors related to the rentability of your unit that are out of your control.  I have been part of a scenario where owners were outvoted by other owners who wanted to limit unit rental to 2 years at a time.  That is my major concern about building a portfolio with lots of condos.  But as long as you have an exit strategy, you should be fine.

Thanks everyone for the insight and perspectives! You're what makes BiggerPockets so valuable! Since my original post 8 months ago, I have been able to pick up two new properties. One of them is a townhome on the south side of Chicago. My agent contacted me while I was traveling back to Chicago during the Christmas holiday. One of her clients low-balled the seller, causing them to get offended and refuse to consider any further offers from that buyer. My agent sent me the video walk-thru and I submitted a full price offer within hours. Decisiveness and good relationship with my agent helped get that deal done. Also I did not haggle with the seller, given the history. The numbers worked very well at their asking price. There was no need to get greedy. After reviewing the HUD after closing, I saw that the seller's net was less than $2000. I then understood why she was offended by the other person's low-ball offer. She was older, had lived in the home for 20 years, and the prospect that she would have to owe money to sell her home was insane.

The second deal I acquired since the original post is a 2/1.5 duplex condo in the Kenwood area of Chicago. It's in a historic mansion on Drexel Blvd and 2 blocks from the Obama's house. I offered $4k above asking price and $20k earnest money the day that it went back on the market. Previous offers fell through likely because $7k in past due and special assessments were due. Also, over 30% of the units were 60-days or more delinquent on assessments. The property had a $100k spread between asking price and ARV and it needed mostly cosmetic updates. I knew that even if I had to spend $20k cleaning up my assessments and a few of the neighbors', I would still make a handsome profit. Additionally, since I was going in all-cash, I could offer seller financing to a potential buyer if HOA assessment delinquencies presented a problem with bank financing. We just placed this flip on the market yesterday, so we'll know how it all plays out in the next few months. My major lessons on this one are: Be aggressive when you spot a good deal; If you can go above asking price and still make the deal work for you, do it; Consider offering large earnest money deposits to show that you're serious (I viewed property before delivering earnest money).

I am completing my second Chicago, Bronzeville flip, and while doing some reflecting yesterday, I realized what will be the two most important pieces to meeting my short-term goals. They are deal-flow and funding. There are clear paths to securing funding, however deal-flow is a murky, unclear, by-chance element. I've gotten good deals thus far by staying maniacally tuned into the MLS, setting alerts, etc. However, it is not a science, and lacks sufficient agency for my taste. My goals require a steady flow of good deals in my target areas.

Has anyone been able to tap into a good REO pipeline, especially in the Chicago market? What did you do to find it? Have you been able to connect directly with banks or servicers?

Thanks @Mari Fair! Welcome to Chicago. Donald Douglas of A.R.C.H. is my electrician, plumber, and HVAC guy. Very reliable. Never overcharges. If you'd like his contact info, please send me a colleague request and I can inbox it to you. Thx

@Shawn Ackerman I agree with your zig zag theory wholeheartedly!

@Jen V., I would start looking at other neighborhoods, as the ones you mentioned are likely already overrun by investors.

@Jeff Dulla thanks for your post! I am interested in learning more about this. 

@Dhru Das thanks for your insight. I've decided to steer clear of Calumet City for now.