All Forum Posts by: Edit B.

I'm looking for someone to  come by a few times a month to maintain the surrounding area, and cut any grass but thanks for the reply Sean

Does anyone recommend any great gardeners in the Sacramento area?  I've been looking around on Yelp and CL, but I usually get better recommendations on BP

@Ashley Hernandez you might be interested in joining this as well

I'm in for the 13th also

Hi Chicago BP, I'm looking for some advice from seasoned investors in Chi.  I'm currently living in Sacramento but am originally from Chicago, and have most of my family there. I have a MF property in CA & one in FL that are doing well for three reasons- cash flow, purchased with equity, and good appreciation. Any of these three have become increasingly difficult to come by in Sacramento and I feel that I somewhat missed the window, while watching. That said, its not impossible just more risk than I'm willing to take atm, in terms of  finding something with enough equity buffer to sustain a downturn. 

I'm interested in Chicago because I've partnered up with my dad who can manage the properties, and two because I feel that Chicago is a pretty diverse market which may have room for investors still in early stages.  With that out of the way here's my situation;

Capital / Financing  situation:

- $270K cash available through a HELOC

- $60K personal savings cash

-Total: $330K available in cash

-Credit;  780-800 ( same for both my dad and I)

Ideally what I'm looking for;

-All three of above; equity, appreciation, good cash-flow in preferably B/B- areas. However, based on what I'm seeing at the moment in different regions of Chicago I don't see a path to all three.

What I'm thinking about; 

Option-1; Getting into C/D areas, work with wholesalers(or MLS) to purchase two MF properties around $100-$150K, rehabbing, and renting.

Pros; Possibly easier to find property with equity, good cash flow, section 8 secured income

Cons; Significantly increased risk in terms of property damage, likely low appreciation, dealing with long eviction processes.  

Questions here; Does anyone focus on C/D zones? If so which areas of Chicago do you focus on, and why? How have you successfully handled the risk that comes with this ? What kind of CAP are you seeing here on average? What kind of purchase prices are you working with on average?

Option-2; Focusing on a C+ to B areas, one MF property, around 250-300K range, some rehab

Pros; More security, good appreciation 

Cons; Possibly less cash-flow than the above

Questions: My questions on this are more about do areas like this exist in my price range and for someone who does not have a strong presence or connections in the area, or will I have to gut or tear down a property to get a deal? 

I've spoken to a wholesaler who mentioned that wholesaling in the north neighborhoods is very difficult or ineffective. If so, is there any advice to be given here on methods of finding deals? Also, what CAP rates are people that are active in these areas recently seeing?

Any input is greatly appreciated 

Ashley, I catch your drift. In your specific case your rental income reduces all other variables to almost nothing. But you're talking $3264 monthly income on a $166k investment. Where do you find something like that if you dont mind me asking?

I'd say about 5% is where they are at right now on MLS- slightly higher in South of Sacramento, but those are mostly D areas

 I'm open on most weekends and evenings, maybe we can work on a date post July 4th?  Does the 8th or 9th(Weekend) of July sound good for anyone?

Thanks for all the helpful feedback, this put me on the right path to beginning to understand Chicago better. I stand corrected on the type of market- it looks like in general its a warm sellers market. I'm a little conditioned by living in an extreme demand area over here, and compared to this everything seems like a cold market. 

Aside from the above it looks like Chicago is more diverse in at least a couple ways. One, it seems like its very block by block, or neighborhood by neighborhood, and I'll need to do a good amount of research on very small regions within Chicago as opposed to just north,south, etc, as it is here by me. Second is taxes. A fun fact for anyone interested in CA- In California we have state legislation(Prop 13: https://www.californiataxdata.com/pdf/Prop13.pdf) preventing property taxes from increasing by more than 2% each year and it resets to 1% every time the property is sold which allows owners to estimate taxes and make more knowledgeable decisions. With this legislation local jurisdictions were no longer able to uphold their own rates. Which is why I was confused about Chicago but now I understand that different jurisdictions have different rates. 

@Van Blackman, @Brie Schmidt, @Jeff Burdick, @Elbert D. do you recommend any good regions or neighborhoods that are growing and good in terms of rental potential. By good, I mean around B areas, good CAP rates, and decent appreciation. I'll be flying down to do my own research in person but want to start by looking at them on paper.

I'm originally from Chicago, but moved out to the west after college and bought my first MF duplex in Sacramento. Sacramento investing has a lot of bonuses -taxes are pretty low(~1%), rents are high, appreciation is high, and fairly new construction. The only con at the moment is high competition, and prices have sky rocketed. So naturally I'm looking elsewhere and I still have family in Chicago.

The picture I'm getting from Chi is low appreciation, fair rents, fair prices(not a very hot market) and very very high property taxes. So my question for you guys is how do you swallow the tax pill? I'm looking at a property on MLS going for 430K being taxed at 13.9K. That, that's roughly 3.2% and unbelievable to people in other states.

Considering all of this, what is your cash flow looking like? Is it increasing/stable or declining year by year? Are rents keeping up with increasing taxes? What makes it worth it for you guys? - For me it seems like a pretty risky market,  taxes can kill cash flow and property values