All Forum Posts by: Matt Lyons

I have been investing in the western IL area for about 7 years now and have looked at Rockford MANY times and have yet to pull the trigger... here is why:

1. Property Manager: you will find it very hard to find one that is willing to take on more property, hard to find a good one, and the price will not be great...I had six properties lined up and called 5 property management companies and none were looking to take on more at that time...the area is rough

2. The tenant pool is not good.  One property I looked at the owner had to carry a gun to collect rents!  Literally it was the only way he felt safe..lots of late or no pay people and lots of crime

3. There is really no "good" section...there is REAL bad and PRETTY bad and not AS bad areas and that is it

And finally, IL is  not the best state for landlord rights.  I am not saying NOT to invest in IL, but if you have the option of 49 other states, looking for a fair state and good cash flow you can do much better.  For example, I own on both sides of the Mississippi river...rents are about the same in IL and IA but property taxes are 1/3 in IA...less taxes at the same rental rate means MORE MONEY!

Two tons that LOOK great on paper that I would not invest in are Rockford, IL (or Freeport as it is just as bad and next store to Rockford) and Clinton IA (where I own a 14 unit building I would be happy to sell to you that cash flows great and is an honest pain in the butt)...so on paper the Clinton property looks great, but in actuality it is not good: City is horrible to landlords, tenants have lots of issues paying, it is like Rockford where you feel it is the nicer part of town and then realize there is no nice part

I would suggest you look at Iowa (anywhere but Clinton unless you want my place!), Missouri (not St Louis but west of there like Fulton, Montgomery City, COlumbia and so forth, or Indiana.. all three will give you similar rents with much less taxes and look OUTSIDE the big cities, the smaller towns tend to still have people that come from farming communities and understand they actually owe rent, they can fix a lot of their own issues and even if they are late they tend to know they need to pay

@Joshua Simms

Keep this in mind: literally EVERYTHING around you was invented/made/put together by people no smarter than you are.... you can literally do whatever you want in this world so if you want to buy a place then buy a place!

I would start with a 4 unit and do an owner occupied loan. Rates are awesome and as long as credit is decent you should qualify fine and be able to move quick

Get prequalified

Start looking

Buy a place

Really is that freaking easy... people spend tons of time figuring things out and fail tk take action... freaking do it!

If you still want to think about things listen to BP podcasts they are awesome and you can see how easy it is

Also pick the right bank... if one says no go to the next, I have learned it is all about finding the right bank for what you want to get done

@John C.

It is legit and it is real. I have bought four deals through a great wholesale company with no issue and was super happy with end result.

That said there are tons of books and seminars and honestly I would not spend money on any of it. There are also some pretty crappy wholesalers out there as well

I love DealMachine. It’s an app that lets you drive by a property and get contact info for the owner or send them a mailer. Depending on how you set things up you may not need more than this approach to find motivated sellers

You can also look into the We buy Ugly homes company is sort of like a wholesaler with more to offer.

You may want to look into their system as it is legit and has a lot of help available and likely able to Sba fund a franchise as well (maybe)

Fully renovated and rented.  Generates $1925 per month and tenants pay main utilities.  No issues just selling due to partnership dissolution.  Price is $175,000.  Again no issues no problems, located in small town but close to bigger towns for work and so forth.  Easy to rent and easy to run

So, for the past 3 years I have been investing in real estate.  MANY family members and friends constantly ask me questions and want to join me or do what I am doing and want my thoughts and opinions.  I love people and this industry but I always hit them with ONE QUESTION immediately:  What do you WANT from Real Estate?  The answer to that question should help to focus on what you should be doing.  Just saying "I want money" is NOT an answer.  Do you want cashflow, do you want tax breaks, do you want a job, do you want appreciation.... Get a CLEAR picture of what you want first and foremost, THEN you can ask others how to best get there, until you have that picture how can you decide what path to take.  I want to go somewhere is not near specific enough...should you take a boat, plane, walk, car, train... 

Once you know WHAT YOU WANT from Real Estate, then you will know what to ask... that is the first step any newbie should make.

@Jay Hinrichs

Like with Greg I agree with much of your post!

One thing I will chime in about (I too am stuck inside) is that from a property tax standpoint IL is third worst in the nation and TX is fourth! That is offset in TX by no state income tax so it is better than IL for sure but taxes are too high in both states.

I invest for cash flow primarily so here is the formula I use:

I leverage bank financing with 20% down. I need to get that down payment back in 36 months or less in free cash flow.

What I take into account is the following: Principle, Interest, taxes, insurance and any known and set expenses

I do not take into account vacancy or repairs (I realize they will both be there and hurt that 36 month rule but my return will still be over 25% annually.

Example: I buy a place for $100k and put $20k down. After I pay my set bills as listed above this place has to give me cash month of at least $560, giving me my money back in 36 months or better

I have been able to find this cash flowing property in TX, IL and IA so far and all have been solid investments to date

@Greg H.

I will start by saying I agree with you! My comment on regulations were not meant for state regulations but for housing codes and neighborhood codes and so forth

I will clearly say this “Illinois is horrible” great pizza and good people but it ends there! The state is a bankrupt nightmare

What I meant by Texas regulations is that if you are a newbie (which the guy posting said he was) don’t assume you know anything about that state till you go there and look around. Too many new investors say “I should invest in Nashville or Austin or any other hot market”. They find a place and have no clue next store is a run down trailer. I have looked at places in Texas that were awesome but the block they were on had horrible shacks which in many states would not have been allowed.

Also, I LOVE TX in almost every way.... the issue with Texas in my opinion is that within 10 years it will be horrible. If you look at where people are coming from it is IL and CA the two worst tax states we have. Eventually they will corrupt and ruin one of the best states we have. I believe you are already seeing this in Austin (huge regulation and limits on air BNB and they now allow bums to put up tents anywhere they want... classic California move)

I love Texas and I agree there are some great areas and buys to be had.... but I think it is foolish to google “hit markets” and think it is easy especially to get started there... I was trying to caution a newbie into looking further and fully understanding a state and an area since they are all different

@Peter Thirawankanok

I have invested in both IL and TX for flips and passive income. The issue with Texas right now is it is a VERY hot market and there are TONS of wholesalers. There are also a lot of fix and flip guys that do both a good and bad job. I would not suggest buying anything in TX without seeing it and the area. They don’t have regulations like IL... I looked at one place that was fixed up and it seemed great. When I went there the entire block was shacks... another place was fixed and looked great in photos but when I saw in person it sucked.

When investing in hot markets the prices are inflated.

My suggestion is to stick with the midwest.... prices are more stable and cash flow can be great. You will give up some on appreciation and fix and flips may not be as big of a profit but it is far safer... I like IA and I have found deals in IL, but for those you need to look hard and I would stay out of the real crappy areas (unsafe areas)

I am out of St Charles IL and own 34 doors at this point. One single family and one 12 unit, the rest all between 2-4 units. Most in rural IL near 39 and 88 so to speak. I own one place in Holcomb about 15 minutes south of Rockford. I looked hard at Rockford about 3 months back and ended up walking away. The area cash flows really well so if that is your goal and you have the ability to micro manage properties it might make since. But if you want appreciation, easy tenants that are not tough on apartments and smaller issue I would not advise going there. Your property will never be worth more than what you paid in that area and tenants can be rough there as well. Lots and lots of nightmare stories. Also management companies are very hard to come by, most in that area are not taking on new properties and if they do only in certain areas.... it’s a math thing: 10% of $1000 rent is not worth all the hassles for them because there are a lot of hassles out of that area
happy to discuss anything and everything anytime

There is a park for sale in Rochelle and it is FSBO as the owner is pretty old. He would $450k and it does cash flow. I am just not sure the deal is right as it is pretty run down. Let me know if you want the owners name and number, as of a few weeks back it was still for sale