All Forum Posts by: Justin Ericsson

last point tonight is I have 379 unique investors that have bought properties from me here in chicago... I just looked up how many live in California and the number surprised me. I have 223 out of 379 (59%) that live or work in California. Reason why is they can't buy anything close to my Chicago numbers in their back yard! Something to think about! 

Another interfering fact is I have only 5 clients in Phoenix, 0 in Colorado, and 1 in Las Vegas. Not sure why but I'm guessing the price points are substantially less than California. 

This post is for Bob...

$1900 gross rent for $150k over ten years is $228,000 gross income investing 20% upfront on $150k here in chicago which is $30k in cash to make $228k in income over 10 years. $228k divided by $30k is 760% which is 76% per year.  

Now let's compare to California for example ...

To buy $1900 a month you have to spend around $500k in California x 20% down payment is $100k. $228k divided by $100k is 228% over 10 years or 22.8% per year. For the same house in chicago I can buy 3x as many California houses in today's market therefore dollar for dollar my gross income for 10 years is $684k investing $100k in chicago. So how much equity must my California rental grow in 10 years to Make the same income on only 1 house in chicago? The answer is $684,000 minus $224,000 which equals $460k over 10 years. I'm not a math expert but that means I have to double the value of a california rental property (appreciation) to match the current rents of my chicago house. Personally I have never seen such an investment that increases 10% per year for 10 straight years. Food for thought! The saying is you make all your money on the buy and it either makes money day 1 or not. In all fairness I'm also saying you can in fact make lots of money in California ... You just need 3x more cash and credit to match what I do in chicago without government guartanteed income. I chose to own 3x more houses and still have equity appreciation potential at 1 to 2% per annum. 

Chris ... Did I mention I sell highly upgraded investment properties for $150k that bring in $1,900 a month and the rents are government guaranteed from HUD? Can you show me another market with something better in the 3rd largest city with B market Classification? I'm asking not to throw any body under the bus... I really want to know if there is another market that fits the bill that I can exand into?

Chris,

If you get little or no cash flow for 5 to 10 years I will always beat you on appreciation. Here is why:

1) every month I'm paying down my debt using my cash flow and can pay extra towards my debt and still make more money vs waiting for future appreciation

2) rents in my area have gone up for 80 years now

3) my rental income is subsidized by HUD so your tenants over time will not pay consistently when they lose their Job, get disgruntled, have a bad day lol

4) the rental income I get is 2x more per dollar invested therefore I more than compensate for higher appreciation but I have advantage of 1 to 3 above

Summary my IRR is guaranteed you are gambling on both your tenant and local market. My income is guaranteed and is tied to the federal government not local market.

Not trying to slam you here just saying most people don't look at the bigger picture and when factoring all variables Chicago will beat any A market every time.

Amy,

Late to the forum on this post but always go for cash flow there is no subsidy to positive cash flow each month!

Larry... I say yes look at my website to compare it's a pretty big difference!

Hi Trevor... Take a look at chicago... My website address is profitfromrentals.com we have great opportunities here. Take care!

Roy,

I highly recommend chicago and the Chicagoland suburbs. I sell for example large 4 bed single family homes that get HUD guaranteed rent at $1900 per month that I sell for $145k. These are B market locations in south suburbs. Take a look.

Henri I have done about 800 apartments in class C and make millions doing it here in chicago. Here is how to do it in any market 

1) block must I repeat must be desirable for the area (one or two vacant buildings and no bad elements)

2) good property management (treat your tenants like hotel guests)

3) buy well high yield for higher risk

4) solid construction with lots of upgrades keeps tenants long term. I have granite, hardwood floors, upgraded kitchens / baths which creates waiting lists 

5) if available rent section 8 only tenants with jobs. You get more rent If the voucher holder is employed and they take better care of your property 

That's all you need to do to make money in C markets. Hope this helps!

I agree with Jay make as much money as possible and find a solid 15% yield rental with professionals on your first buy (above $100k purchase). Once you have been a landlord for 6 months to 2 years work on number 2+. I would recommend saving your cash flow for down payments which accelerates your acquisitions. When ready to buy turnkey-reviews.com is great place to find professionals in addition to BP