All Forum Posts by: Yusuf Salloum

Hi Matt, curious if you got any feedback on this post.

@Albert Plawinski I own a 3 unit property in the North Lawndale area. I would echo Ibn Abney, the crime varies significantly from block to block.

Making money in the neighborhood primarily comes down to the quality of the property you own and the type of tenants you have. 

The homes are old, approx. 100 years or so. That being said some of the homes have been well maintained. Others have been gut rehabbed by qualified contractors, and others were shoddily put together by investors looking to flip without much concern for the durational quality of the property beyond a short window. Any run of the mill property inspector might not truly take the time to point out all the little flaws in such a property. Being really discretionary at this phase of your search will make a world of difference between capturing those attractive yields or continuously spending your rental income on improvements. 

Secondly, the quality of tenants is huge.  As Ibn Abney mentioned Sec. 8 tenants are plentiful. However there are also non Sec. 8 tenants with decent income in the area that you can rent to. I have rented to both types and I regularly find both types of tenants interested in the area. However screening them properly is critical. Not just the standard background/income/asset check, but an unexpected visit to their current residence will give you first hand exposure to what they live like. 

I agree that owner occupied buildings make a big difference. There are some on the street where my property is, and those owners definitely care about their properties. Their front and backyards are always very well maintained and they don't attract unsavory characters to the neighborhood. 

Also...any recommendations on property managers. I don't have the time to self manage the property. I'm currently looking at Lett's property management and Paper Street Realty but I'd like to find a vendor with lower fees. They both charge ~7% of rent and hourly rates for all contractor work on the property. Of course there is a surcharge if they have to utilize external contractors.

@Ashley Pimsner, interesting to hear that. I'm actually just north of 16. The property I bought is between 16 and 15 just west of Homan. It's definitely a rougher part of town, but fortunately the street I'm on is relatively safer (basing this on shootings maps). 

I appreciate the recommendation on exterminators. I went with a national branded company with local franchises...utterly useless. Next I brought in a local guy and he seemed to know what he was doing, but the mice were not interested in his poison. There was so much food available courtesy of the tenants the mice didn't bother eating the poison. To date, the best thing that has worked for me are traps baited with peanutbutter. The mice can't resist the peanutbutter. Ultimately I need a qualified contractor to examine the outside of the house and patch up holes by which the mice are coming in. 

Hi all,

I'm a new real estate investor looking for perspective from folks with more experience in renting to Sec 8 tenants. I did a lot of reading in 2016 and decided to take the plunge in late 2017. I started in affordable housing because from what I've gathered a lot of successful investors start in this space. 

I bought a 3 unit property in the far West Chicago area (North Lawndale). The neighborhood is pretty rough, but not as bad as other parts of Chicago with regular murders. The property grosses about 3600 fully rented. My mortgage/taxes/insurances comes out to about 1250 a month. After the water bill ($150/month) and general maintenance (est. $500-600/month) the place should net about about 40% of gross rents. I didn't factor in property management fees since the contractor I work with doesn't charge me a monthly fee. He just charges for the work he comes out and does.

While that all sounds nice and dandy on paper, reality has been a bit harder. One tenant moved out 2 months after I bought the place. Her unit needs about $1,000 in work to get it ready for the next tenant so I'll miss out on at least two months of rent. There's also been a mice issue that will not go away. I'm not trying to treat the property like a Ritz Carlton but I can't have tenants threatening to call the city if I don't get rid of the mice problem. 

I'm looking for some advice from folks with experience in Sec. 8 properties and West Chicago more generally. I underestimated a couple things going into the deal:

- The nature of the tenants:  they are rough on the property, will do anything to dodge their portion of the rent but will always complain when there's an issue. 

-The wear and tear on capital assets: The furnace, water heater, washer and dryer, and oven are all abused. Given the cost of these items my goal is avoid replacing them for as long as I can.

Would love to hear more from folks on how they deal with unruly tenants, and their strategy on maintaining profitability in Sec. 8 investing. I don't think the property will appreciate more than 1-2% a year so for me cash flow has to be solid to make this worthwhile. 

Lastly would appreciate any perspective on the far west side of Chicago. From what I can tell there is some gentrification happening. It's definitely not as nice as Humboldt Park, but I hope North Lawndale can get there in time. The demographics of the Chicago land area aren't great given the stagnant population, so I don't know if there will be any real impetus for gentrification in this part.

Thanks all

That insurance cost is quite low. Does your property have a flat roof? 

If so, what insurance vendor are you using, if you don't mind me asking? 

I'm looking to invest in the Chicago area and I've been rejected from a couple vendors due to the properties I'm looking at having flat roofs.

@Patrick Senas

Hey Patrick I'm based in Chicago and I'm also looking for cash flowing properties. I'll keep you posted on any names and best practices based on my experiences.

@Jake Rittenhouse Congrats on closing the deal on your first purchase!! I'm also looking to buy an investment property in the Chicago area and would love to hear more about your experience. The city is huge so I'm curious how you went about identifying which area you wanted to purchase in.