Greetings from Chicago - landish area

[Eric X.]

New member but have been lurking for many years. Been investor for around six years and a broker for 2+ years now.

Currently 29 years of age. Married no kids. Live in Naperville area. Studied engineering and worked in engineering/finance for a bit before quitting and working at home (started a few businesses in school). Family got into real estate after the crash and we have been acquiring mostly buy and hold properties ever since (23 and counting)

Technically I guess I'm a real estate broker now but I mostly do SOI deals and investor deals for myself and other fellow investors but it's mostly a fun side job that anything else.

Really looking forward to getting to know everyone and learning! Trying to absorb as much as I can.

Flipping, whole selling, commercial, and international development are all areas I'm trying to learn/improve in and learn more about.

[Account Closed]

@Eric X. Welcome to "posting" on bigger pockets. Awesome that you have joined the discussion. 23 properties is huge so kudos to you and the family.

I look forward to meeting you at networking events around the Chicagoland area.

[Brie Schmidt]

Welcome Eric! I am a buy and hold investor of 3-4 unit buildings in the city - where do you invest?

[Eric X.]

@Brianna S.

We do have a few high rise units in the loop but we mainly invest in Dupage/Will county. Lot easier to maintain when you don't have to drive hour to get to the units(especially in this weather). Don't have any multi unit buildings yet. Mainly single family, town homes, and a few single unit apartments.

@Ryan Steele

Thanks for the welcome! Look forward to meeting you as well. Seems like a lot to learn from everyone here

[Brie Schmidt]

@Eric X. - It is funny you say that. I only invest in the city because I live here and don't want to be driving all over the place. The other day *********** was trying to open my eyes on surburban investing but I just dont see it. What types of cap rates do you get if you don't mind me asking?

[Eric X.]

@Brie Schmidt

The pickings are more slim for sure but cap rates are pretty good imho. we aim for at least 12% typically which probably isn't as good as returns in the city . We try to buy units for around 70c on the dollar or better.

Note you can easily get cap rates of 15-20%+ but you would have to target units that are much older, much worse schools, and much more problem tenants.

[Brie Schmidt]

@Eric X. - we get about 12-13% here but we do buy fully rehabbed in good neighborhoods and pay market rate.

[Eric X.]

@Brie Schmidt

That way at lease you have your selection no matter how the market reacts. You do a full premium rehab or just standard rental rehab?

We typically do as little as possible except make it real clean. We almost never update unless we have to or if it takes longer to rent out than usual.

[Brie Schmidt]

well we do not do rehabs - rather we buy properties from flippers. They all have granite/ss and are usually already rented out or can be rented out very quickly.

I think eventually we would considering doing rehabs - it is just not possible right now

[Marcel Engler]

@Eric X.

Welcome to the forums. It sounds like you are doing really well for yourself! I live in Naperville as well and have just a few rental properties but am looking to grow that number over the next couple of years. BiggerPockets has been great for meeting other local investors and we occasionally get together for coffee. Let me know if you are interested and I will let you know.

[Account Closed]

I just saw your post @Eric X. about not updating. That is a curious strategy to me. I ALWAYS update. Because it rents faster and for more. Further more, updating will have to happen at some point, because it reduces the maintenance expenses and costs.

If a water heater is more than 6 years old when I buy a new place, I will replace it because it reduces the maintenance costs that usually wind up being more than the cost of a new one in those "extra" 6 years. Why not replace when the unit is being worked on. I work that into my acquisition numbers.

An older furnace, also drives up the Utility bills for tenants and they move out quicker because of it. Vacancy and Tenant turnover is the largest expense of a landlord.

We can have different views, just some of the reasons I choose to replace single pane windows and older mechanicals. If I am doing that, why not update and command higher rents, leading to tenants staying longer and renewing more.

[Eric X.]

@Account Closed I guess it varies based on location. The areas we target are good school and safe areas but they aren't premium by any means. We do update if it is extremely old/poor looking but as long as it is average we will just deep clean it and leave it.

Vacancy is almost never an issue since the area is highly desired, close to highway, shopping so we typically rent at market rent or sometimes 50$ below if they are willing to sign a multiple year lease. The way we structure our leases requires them to give us 45 days notice prior to move out and to allow us to start showing the unit least 1 once a week so we usually rarely have any gap from one tenant to the next.

We haven't had any problem tenants yet since we screen quite thoroughly but if something were to happen, I guess we would prefer it to happen in an average updated home rather than one that's completely redone.

Now if we were to start flipping, we would probably redo everything but for buy and hold in our target areas market rent, average to + average condition, seems to work well.

We have seen some renovated units in our areas and they look a lot nicer but the rental premium isn't too much of a difference and it seems they take longer to rent out. Not too sure though.

Units downtown (condo) in loop do rent out a lot faster when rennovated and for much higher price so it all depends on location.