New and Looking for Advice

Batavia, IL · Member since 2023 · 7 posts · 2 votes

Hello everyone,

My name is Jared and I am new to the forum. I have a background in Healthcare Revenue cycle. I am very analytical, goals and numbers focused. We live outside of Chicago and are preparing to purchase our first rental property. Unfortunately, we started this journey a bit late, so some of the common recommendations, like house hacking, don't make sense for us right now. My wife is a former property manager, so we have a leg up, but she is currently a fulltime mom to a wild 4 and 7 year old. In the coming years she will have much more time to dedicate to managing, but we don't want to wait. We want to jump in. Looking for any advice to ensure the first purchase goes well. In the future, we may be able to take more risks, but would like the first one to be more positioned for success.

1. Should I buy local. My local market is more expensive, but we would be present. If not local, what markets would you recommend I research?

2. For a first purchase, with very limited skills, how much rehab work is too much in order to add value? Should I avoid a rehab project and just take lower cashflow as a start?

3. How do I rise and repeat quickly? I have a down payment available for a modest purchase, but cashflow alone wouldn't replenish that quick enough to purchase again within 1-2 years.

4. How should I be using metrics to validate opportunity? I have built some spreadsheets to show cap rate, cashflow, cash on cash, expenses, total cash outlay, debt servicing, and net operating income. Am I missing anything? Are their industry benchmarks I should be set as goals for each metric?

5. Any books, articles, or podcasts you think I should start reviewing now?

Thank you for any help you can offer.

Jared

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Matthew Irish-JonesBusiness Member

Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes

HI Jason,

1. Yes always buy local when you can. If you can't buy local every agent on here has a great pitch as to why their market is the best. My advice is find a great team and they will beat the market.

2. If you are going to out source the entire thing to someone that knows what they are doing, it can be done. We have newer investors use the BRRR method through our company. If you are going to go at it alone and figure it out as you go... DON'T. Any amount of renovation is too much. You should buy turn key. Local, small contractors can be as bad as local, small property managers and used car salesmen. There is just too much that can go wrong no matter how smart you are. Renovations rely more on experience than intelligence.

3. BRRR method is really the only rinse and repeat method, but it also adds a lot of risk, so you have to weigh the two. I have done both BRRR and long term slow portfolio building. The latter is safer, has less headaches, and after every 7 years you can refinance and keep building. The BRRR is faster, more risky, more exciting, and has way more moving parts. High risk, high reward.

4. IN this order... Grade: Location, asset condition, returns. You need a grading form for these three categories and they should be weighted. Most investors are hyper focused on returns. If you ignore the first two you will end up in a D class property with the promise of 20% returns when absolutely everything goes right... which it never does.

5. Everything on BP is a good start. Read their publications, spend time on this site... and remember... the people you choose as vendors are more important than the property you choose to invest in. The right property with the wrong people and you are upside down. The right people... and you won't end up with the wrong property because they will make sure you steer clear of bad investments.

Good luck!

Irish Jones Realty4.947 Reviews

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Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
3y
@Jared Swiecicki
OK, that's a lot of questions. A few recommendations:
-stay local
-go to REIA meetings, network, talk about your goals, meet other humans
-do not buy a property just to have a rental. be patient. RE is not going anywhere.
-rehab is going to depend on your budget, the time you have available, and your goals. there's no way to answer this without knowing more
-check out The Rental Income Podcast with Dan Lane. lots of in depth, accessible interviews with small and intermediate landlords
Hope this helps
Feel free to ask follow ups
2 Reply
Travis TimmonsPro Member
Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
3y
The best time to plant an apple orchard was 20 years ago. The second best time is today. We bought our first property when our kids were 4 and 6, so I can relate. My best advice is right where your head is - the purpose of your first property is to get to your second property as fast as you can. That's either going to be through really good cash flow or renovating a dump to force appreciation and refinance to get money back out. Both of those are hard but not impossible.
On the cash flow side, my thought would be to find a drivable Midwest market for long or medium term rentals - something like Saint Louis, Des Moines, Indy, Milwaukee. You could even look into something like Springfield, Bloomington, or Champaign if you have a lower budget (I grew up in Central IL, which is why I bring those up - nothing special about those markets but they pencil from day 1). They won't appreciate all that well but it gets you in the game and would probably cash flow better than larger markets. If you are open to the idea of a short term rental, I think that there are a number of markets in Michigan and Wisconsin that have a lower entry point and would do well.
If you have the stomach and budget for renovating, I'd recommend staying local.
Both of those have their challenges and are easier said than done. We've done short and medium term rentals at a distance and have nothing to sell. Feel free to shoot me a message if you think that I could be helpful.
1 Reply
Justin Hammerle
Realtor · Providence, RI · Member since 2022 · 404 posts · 262 votes
3y
BP is arguably the best podcast for free content anywhere, I would go through as many espisodes as you can. A good book that I found helpful outside of BP is the Millionaire Real Estate Investor by Gary Keller.
1 Reply
Matthew Irish-JonesBusiness Member
Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
3y
HI Jason,
1. Yes always buy local when you can. If you can't buy local every agent on here has a great pitch as to why their market is the best. My advice is find a great team and they will beat the market.
2. If you are going to out source the entire thing to someone that knows what they are doing, it can be done. We have newer investors use the BRRR method through our company. If you are going to go at it alone and figure it out as you go... DON'T. Any amount of renovation is too much. You should buy turn key. Local, small contractors can be as bad as local, small property managers and used car salesmen. There is just too much that can go wrong no matter how smart you are. Renovations rely more on experience than intelligence.
3. BRRR method is really the only rinse and repeat method, but it also adds a lot of risk, so you have to weigh the two. I have done both BRRR and long term slow portfolio building. The latter is safer, has less headaches, and after every 7 years you can refinance and keep building. The BRRR is faster, more risky, more exciting, and has way more moving parts. High risk, high reward.
4. IN this order... Grade: Location, asset condition, returns. You need a grading form for these three categories and they should be weighted. Most investors are hyper focused on returns. If you ignore the first two you will end up in a D class property with the promise of 20% returns when absolutely everything goes right... which it never does.
5. Everything on BP is a good start. Read their publications, spend time on this site... and remember... the people you choose as vendors are more important than the property you choose to invest in. The right property with the wrong people and you are upside down. The right people... and you won't end up with the wrong property because they will make sure you steer clear of bad investments.
Good luck!
Irish Jones Realty4.947 Reviews
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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
3y
@Jared Swiecicki what specifically did your wife as a PM? SFR or MFR?
How will her previous experience translate to your current goals?
Recommend buying the first one local, so you learn the most and minimize mistakes.
Rehab work is where you can find a motivated seller and actually create equity and cashflow! But, if you're not handy, then you can quickly get in over your head and lose thousands.
[email protected]248-209-6824
Logical Property Management4.9458 Reviews
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Wale LawalBusiness Member
Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
3y
@Jared Swiecicki
Just make sure to consume contents here as much as possible and feel free to ask any questions you may have. We are here to help each other grow.

Get as much knowledge and experience as possible and find a mentor.

Join real estate investment clubs.

Get in touch with a local agent or investor and shorten your learning curve and save you a lot of headaches as they tend to understand the market better.

All the best!
[email protected]832-776-9582 Podcast Guest on Show #469
NETWORTH BUILDERS5236 Reviews
Website View Page
1 Reply
Mike D'ArrigoPro Member
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
3y
@Jared Swiecicki You've asked a lot of good questions. I'll try to respond to your points in the order you made them.
1. Personally, I would not invest in your local market. Illinois has very high property taxes and is not a landlord friendly state at all. These are deal breakers in my opinion.
2. Unless you get lucky and find a great deal, you're generally going to have to do a fiar amount of rehab to add value. A paint job and carpeting won't add a lot of value.
3. You could consider the BRRRR strategy but that is difficult and risky from out of state. You might want to consider short term rentals which can double your cash flow if done smartly and in the right areas. Don't think that you have to do STR's in vacation or resort towns. Any market that has a high number of visitors can be a good potential. I like Kansas City for that reason. KC has over 30 million visitors a year.
4. This is probably the most important question. Define your goals and strategies. Real estate wealth doesn't come from cash flow alone so looking at cash on cash doesn't give you the full picture. You want to look at total income and equity return and not just short term. Look at long term returns over at least 5-10 years. Having said that, markets that have strong economic and demographic trends such as population growth and job growth in addition to good cash flow will give the best long term returns.
Hope this helps.
1 Reply
Crystal SmithPro Member
Moderator
Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
3y
Quote from @Jared Swiecicki:

Hello everyone,
My name is Jared and I am new to the forum. I have a background in Healthcare Revenue cycle. I am very analytical, goals and numbers focused.  We live outside of Chicago and are preparing to purchase our first rental property. Unfortunately, we started this journey a bit late, so some of the common recommendations, like house hacking, don't make sense for us right now. My wife is a former property manager, so we have a leg up, but she is currently a fulltime mom to a wild 4 and 7 year old. In the coming years she will have much more time to dedicate to managing, but we don't want to wait. We want to jump in. Looking for any advice to ensure the first purchase goes well. In the future, we may be able to take more risks, but would like the first one to be more positioned for success.
1. Should I buy local. My local market is more expensive, but we would be present. If not local, what markets would you recommend I research?
2. For a first purchase, with very limited skills, how much rehab work is too much in order to add value? Should I avoid a rehab project and just take lower cashflow as a start?
3. How do I rise and repeat quickly? I have a down payment available for a modest purchase, but cashflow alone wouldn't replenish that quick enough to purchase again within 1-2 years.
4. How should I be using metrics to validate opportunity? I have built some spreadsheets to show cap rate, cashflow, cash on cash, expenses, total cash outlay, debt servicing, and net operating income. Am I missing anything? Are their industry benchmarks I should be set as goals for each metric?
5. Any books, articles, or podcasts you think I should start reviewing now?
Thank you for any help you can offer.
Jared

1. Your local market of Chicago should be 1st on the list in my opinion.  Markets to research that aren't local- Indiana (Part of Chicagoland but not local); Milwaukee; St. Louis area

2. Regarding purchasing a property to rehab- you make the comment "with very little skills" which suggests that you may be considering doing work yourself. Considering a rehab is fine- Doing work yourself is not fine. Have professionals do it. Regarding taking a property with lower cash flow- If a value add is available that provides you with higher cash flow before you find a property with lower cash flow then you take the value add. Regarding purchasing a property with low cash flow- only do it if there is some kind of tax break or there's a large potential for appreciation.

3. The way to rinse and repeat is to purchase, renonvate, rent and refinance pulling as much of your cash out of the deal as possible.

4. The metrics we use to evaluate an opportunity include our hurdle rate (ROI); Can we get meet our return in 5 years or less; & we measure risk.

5. I recommend you read Rich Dad Poor Dad and find a local cash flow game to play.
312-681-7487
1 Reply
Mitchell Roadruck
Lender · Northwest Indiana · Member since 2021 · 55 posts · 26 votes
3y
Quote from @Jared Swiecicki:

Hello everyone,
My name is Jared and I am new to the forum. I have a background in Healthcare Revenue cycle. I am very analytical, goals and numbers focused.  We live outside of Chicago and are preparing to purchase our first rental property. Unfortunately, we started this journey a bit late, so some of the common recommendations, like house hacking, don't make sense for us right now. My wife is a former property manager, so we have a leg up, but she is currently a fulltime mom to a wild 4 and 7 year old. In the coming years she will have much more time to dedicate to managing, but we don't want to wait. We want to jump in. Looking for any advice to ensure the first purchase goes well. In the future, we may be able to take more risks, but would like the first one to be more positioned for success.
1. Should I buy local. My local market is more expensive, but we would be present. If not local, what markets would you recommend I research?
2. For a first purchase, with very limited skills, how much rehab work is too much in order to add value? Should I avoid a rehab project and just take lower cashflow as a start?
3. How do I rise and repeat quickly? I have a down payment available for a modest purchase, but cashflow alone wouldn't replenish that quick enough to purchase again within 1-2 years.
4. How should I be using metrics to validate opportunity? I have built some spreadsheets to show cap rate, cashflow, cash on cash, expenses, total cash outlay, debt servicing, and net operating income. Am I missing anything? Are their industry benchmarks I should be set as goals for each metric?
5. Any books, articles, or podcasts you think I should start reviewing now?
Thank you for any help you can offer.
Jared

Hey Jared,
Congratulations on taking the first steps to buy an investment property. I would consider investing in Indiana or Wisconsin. IL heavily favors tenants. Im not sure where exactly you are located but IN is not that far of a drive from anywhere in Chicagoland. I would also recommend hiring someone to do any rehab work. They will do the work better and faster. If you dont have the cash on hand to hire work out, focus on finding something more turn key. As far as rinsing and repeating quickly you can look to use hard money if scaling quickly is your goal. Consider scaling on a slower timeline though. That will give you a chance to get your systems and processes in order. As far as questions 4. & 5. I would recommend reading "Real Estate by The Numbers".
1 Reply
Jared Swiecicki
OP
Batavia, IL · Member since 2023 · 7 posts · 2 votes
3y
Quote from @Drew Sygit:

@Jared Swiecicki what specifically did your wife as a PM? SFR or MFR?
How will her previous experience translate to your current goals?
Recommend buying the first one local, so you learn the most and minimize mistakes.
Rehab work is where you can find a motivated seller and actually create equity and cashflow! But, if you're not handy, then you can quickly get in over your head and lose thousands.

She managed condos and townhouses in Chicago and the surrounding suburbs. She has done both onsite/fulltime management as well as portfolio management. Often her portfolio was 100s of individual doors. Obviously shifting from owner occupied multi-family dwellings to rental would be a change, but we both believe with some advice and insight from others, her skills can translate more quickly than if we had no property management experience.
0 Reply
Jared Swiecicki
OP
Batavia, IL · Member since 2023 · 7 posts · 2 votes
3y
Quote from @Mitchell Roadruck:

Quote from @Jared Swiecicki:

Hello everyone,
My name is Jared and I am new to the forum. I have a background in Healthcare Revenue cycle. I am very analytical, goals and numbers focused.  We live outside of Chicago and are preparing to purchase our first rental property. Unfortunately, we started this journey a bit late, so some of the common recommendations, like house hacking, don't make sense for us right now. My wife is a former property manager, so we have a leg up, but she is currently a fulltime mom to a wild 4 and 7 year old. In the coming years she will have much more time to dedicate to managing, but we don't want to wait. We want to jump in. Looking for any advice to ensure the first purchase goes well. In the future, we may be able to take more risks, but would like the first one to be more positioned for success.
1. Should I buy local. My local market is more expensive, but we would be present. If not local, what markets would you recommend I research?
2. For a first purchase, with very limited skills, how much rehab work is too much in order to add value? Should I avoid a rehab project and just take lower cashflow as a start?
3. How do I rise and repeat quickly? I have a down payment available for a modest purchase, but cashflow alone wouldn't replenish that quick enough to purchase again within 1-2 years.
4. How should I be using metrics to validate opportunity? I have built some spreadsheets to show cap rate, cashflow, cash on cash, expenses, total cash outlay, debt servicing, and net operating income. Am I missing anything? Are their industry benchmarks I should be set as goals for each metric?
5. Any books, articles, or podcasts you think I should start reviewing now?
Thank you for any help you can offer.
Jared

Hey Jared,
Congratulations on taking the first steps to buy an investment property. I would consider investing in Indiana or Wisconsin. IL heavily favors tenants. Im not sure where exactly you are located but IN is not that far of a drive from anywhere in Chicagoland. I would also recommend hiring someone to do any rehab work. They will do the work better and faster. If you dont have the cash on hand to hire work out, focus on finding something more turn key. As far as rinsing and repeating quickly you can look to use hard money if scaling quickly is your goal. Consider scaling on a slower timeline though. That will give you a chance to get your systems and processes in order. As far as questions 4. & 5. I would recommend reading "Real Estate by The Numbers".

Thank you Mitchell. I will pull that book and start reading. I am currently read "Rich Dad Poor Dad" and "How to invest in real estate."
WI is probably closer to us than IN. Do you have any specific markets you think I should be reviewing?
You are one of a couple of people that told me to focus on building slower. I think that is great advice. It is easy to be swept up in all the content emphasizing speed, but my end goal is to be successful at this.
0 Reply
Jared Swiecicki
OP
Batavia, IL · Member since 2023 · 7 posts · 2 votes
3y
Quote from @Crystal Smith:

Quote from @Jared Swiecicki:

Hello everyone,
My name is Jared and I am new to the forum. I have a background in Healthcare Revenue cycle. I am very analytical, goals and numbers focused.  We live outside of Chicago and are preparing to purchase our first rental property. Unfortunately, we started this journey a bit late, so some of the common recommendations, like house hacking, don't make sense for us right now. My wife is a former property manager, so we have a leg up, but she is currently a fulltime mom to a wild 4 and 7 year old. In the coming years she will have much more time to dedicate to managing, but we don't want to wait. We want to jump in. Looking for any advice to ensure the first purchase goes well. In the future, we may be able to take more risks, but would like the first one to be more positioned for success.
1. Should I buy local. My local market is more expensive, but we would be present. If not local, what markets would you recommend I research?
2. For a first purchase, with very limited skills, how much rehab work is too much in order to add value? Should I avoid a rehab project and just take lower cashflow as a start?
3. How do I rise and repeat quickly? I have a down payment available for a modest purchase, but cashflow alone wouldn't replenish that quick enough to purchase again within 1-2 years.
4. How should I be using metrics to validate opportunity? I have built some spreadsheets to show cap rate, cashflow, cash on cash, expenses, total cash outlay, debt servicing, and net operating income. Am I missing anything? Are their industry benchmarks I should be set as goals for each metric?
5. Any books, articles, or podcasts you think I should start reviewing now?
Thank you for any help you can offer.
Jared

1. Your local market of Chicago should be 1st on the list in my opinion.  Markets to research that aren't local- Indiana (Part of Chicagoland but not local); Milwaukee; St. Louis area

2. Regarding purchasing a property to rehab- you make the comment "with very little skills" which suggests that you may be considering doing work yourself. Considering a rehab is fine- Doing work yourself is not fine. Have professionals do it. Regarding taking a property with lower cash flow- If a value add is available that provides you with higher cash flow before you find a property with lower cash flow then you take the value add. Regarding purchasing a property with low cash flow- only do it if there is some kind of tax break or there's a large potential for appreciation.

3. The way to rinse and repeat is to purchase, renonvate, rent and refinance pulling as much of your cash out of the deal as possible.

4. The metrics we use to evaluate an opportunity include our hurdle rate (ROI); Can we get meet our return in 5 years or less; & we measure risk.

5. I recommend you read Rich Dad Poor Dad and find a local cash flow game to play.

Thank you Crystal. I will look at those markets. I am currently reading "Rich Dad Poor Dad" so I am glad to hear I am already absorbing the right kind of content.
Appreciate the insight on rehabing and cashflow. I think it might be able me spending time looking for the RIGHT deal. As long as I am being proactive and allowing the numbers to tell the story, I shouldn't be afraid of passing on ok to look for good.
0 Reply
Mitchell Roadruck
Lender · Northwest Indiana · Member since 2021 · 55 posts · 26 votes
3y
Quote from @Jared Swiecicki:

Quote from @Mitchell Roadruck:

Quote from @Jared Swiecicki:

Hello everyone,
My name is Jared and I am new to the forum. I have a background in Healthcare Revenue cycle. I am very analytical, goals and numbers focused.  We live outside of Chicago and are preparing to purchase our first rental property. Unfortunately, we started this journey a bit late, so some of the common recommendations, like house hacking, don't make sense for us right now. My wife is a former property manager, so we have a leg up, but she is currently a fulltime mom to a wild 4 and 7 year old. In the coming years she will have much more time to dedicate to managing, but we don't want to wait. We want to jump in. Looking for any advice to ensure the first purchase goes well. In the future, we may be able to take more risks, but would like the first one to be more positioned for success.
1. Should I buy local. My local market is more expensive, but we would be present. If not local, what markets would you recommend I research?
2. For a first purchase, with very limited skills, how much rehab work is too much in order to add value? Should I avoid a rehab project and just take lower cashflow as a start?
3. How do I rise and repeat quickly? I have a down payment available for a modest purchase, but cashflow alone wouldn't replenish that quick enough to purchase again within 1-2 years.
4. How should I be using metrics to validate opportunity? I have built some spreadsheets to show cap rate, cashflow, cash on cash, expenses, total cash outlay, debt servicing, and net operating income. Am I missing anything? Are their industry benchmarks I should be set as goals for each metric?
5. Any books, articles, or podcasts you think I should start reviewing now?
Thank you for any help you can offer.
Jared

Hey Jared,
Congratulations on taking the first steps to buy an investment property. I would consider investing in Indiana or Wisconsin. IL heavily favors tenants. Im not sure where exactly you are located but IN is not that far of a drive from anywhere in Chicagoland. I would also recommend hiring someone to do any rehab work. They will do the work better and faster. If you dont have the cash on hand to hire work out, focus on finding something more turn key. As far as rinsing and repeating quickly you can look to use hard money if scaling quickly is your goal. Consider scaling on a slower timeline though. That will give you a chance to get your systems and processes in order. As far as questions 4. & 5. I would recommend reading "Real Estate by The Numbers".

Thank you Mitchell. I will pull that book and start reading. I am currently read "Rich Dad Poor Dad" and "How to invest in real estate."
WI is probably closer to us than IN. Do you have any specific markets you think I should be reviewing?
You are one of a couple of people that told me to focus on building slower. I think that is great advice. It is easy to be swept up in all the content emphasizing speed, but my end goal is to be successful at this.

Both good reads! I read rich dad poor dad once a year.
I am not familiar with WI but I would think it’s more landlord friendly than IL. Connect with a Wisconsin agent and pick their brain. It’s always helpful to find someone who actually has their own investment properties as well.
0 Reply
Jared Swiecicki
OP
Batavia, IL · Member since 2023 · 7 posts · 2 votes
3y
Quote from @Mike D'Arrigo:

@Jared Swiecicki You've asked a lot of good questions. I'll try to respond to your points in the order you made them.
1. Personally, I would not invest in your local market. Illinois has very high property taxes and is not a landlord friendly state at all. These are deal breakers in my opinion.
2. Unless you get lucky and find a great deal, you're generally going to have to do a fiar amount of rehab to add value. A paint job and carpeting won't add a lot of value.
3. You could consider the BRRRR strategy but that is difficult and risky from out of state. You might want to consider short term rentals which can double your cash flow if done smartly and in the right areas. Don't think that you have to do STR's in vacation or resort towns. Any market that has a high number of visitors can be a good potential. I like Kansas City for that reason. KC has over 30 million visitors a year.
4. This is probably the most important question. Define your goals and strategies. Real estate wealth doesn't come from cash flow alone so looking at cash on cash doesn't give you the full picture. You want to look at total income and equity return and not just short term. Look at long term returns over at least 5-10 years. Having said that, markets that have strong economic and demographic trends such as population growth and job growth in addition to good cash flow will give the best long term returns.
Hope this helps.

Thank you Mike. Long term returns wasn't a metric I had on my tracker. I will look for a way to incorporate that.
Jared
0 Reply
Jared Swiecicki
OP
Batavia, IL · Member since 2023 · 7 posts · 2 votes
3y
Quote from @Wale Lawal:

@Jared Swiecicki
Just make sure to consume contents here as much as possible and feel free to ask any questions you may have. We are here to help each other grow.

Get as much knowledge and experience as possible and find a mentor.

Join real estate investment clubs.

Get in touch with a local agent or investor and shorten your learning curve and save you a lot of headaches as they tend to understand the market better.

Al
Thank you Wale!! I really appreciate the comment about being here to help me grow. I am honestly blown away by how many people jumped in to give advice and how no one tried to push me in any directly.
I am already in touch with the real estate agent that sold me my current home. That individual is also an investor with their family, so I am hoping her insight will help me advance.
Hope Texas is treating you well. I have read that market is doing very well.
Jared
0 Reply
Jared Swiecicki
OP
Batavia, IL · Member since 2023 · 7 posts · 2 votes
3y
Quote from @Nicholas L.:

@Jared Swiecicki
OK, that's a lot of questions. A few recommendations:
-stay local
-go to REIA meetings, network, talk about your goals, meet other humans
-do not buy a property just to have a rental. be patient. RE is not going anywhere.
-rehab is going to depend on your budget, the time you have available, and your goals. there's no way to answer this without knowing more
-check out The Rental Income Podcast with Dan Lane. lots of in depth, accessible interviews with small and intermediate landlords
Hope this helps
Feel free to ask follow ups

Thank you Nicholas.
Very helpful, especially the "cool your jets" sentiment. I will work to find the right deal for me and my family.
0 Reply
Mike D'ArrigoPro Member
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
3y
Quote from @Jared Swiecicki:

Quote from @Mike D'Arrigo:

@Jared Swiecicki You've asked a lot of good questions. I'll try to respond to your points in the order you made them.
1. Personally, I would not invest in your local market. Illinois has very high property taxes and is not a landlord friendly state at all. These are deal breakers in my opinion.
2. Unless you get lucky and find a great deal, you're generally going to have to do a fiar amount of rehab to add value. A paint job and carpeting won't add a lot of value.
3. You could consider the BRRRR strategy but that is difficult and risky from out of state. You might want to consider short term rentals which can double your cash flow if done smartly and in the right areas. Don't think that you have to do STR's in vacation or resort towns. Any market that has a high number of visitors can be a good potential. I like Kansas City for that reason. KC has over 30 million visitors a year.
4. This is probably the most important question. Define your goals and strategies. Real estate wealth doesn't come from cash flow alone so looking at cash on cash doesn't give you the full picture. You want to look at total income and equity return and not just short term. Look at long term returns over at least 5-10 years. Having said that, markets that have strong economic and demographic trends such as population growth and job growth in addition to good cash flow will give the best long term returns.
Hope this helps.

Thank you Mike. Long term returns wasn't a metric I had on my tracker. I will look for a way to incorporate that.
Jared

Jared, keep in mind that wealth is built over time with real estate. I think if you compare the income and equity returns in year 10 the first year, you'll find it is staggering. By looking at just year 1 cash flow which is a common mistake, you're not getting the real picture. Think of real estate as a 4 legged stool where returns consist of cash flow, equity through mortgage paydown, appreciation and depreciation write off. Cash flow makes up only about 1/3 of total returns on a typical rental property.
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Dave Skow
Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes
3y
@Jared Swiecicki- thanks ....try buying a primary residence / local / with minor rehab needed ...this will allow you to get your foot in the door and begin learning the ropes
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Ryan Klamer
Real Estate Agent · Kernersville · Member since 2023 · 17 posts · 6 votes
3y
Hi Jared!
So as your starting out I think you should keep it simple! I can't stress that enough! Yes buying property is a huge commitment. Since your new this is what I would recommend.
First: Lean on your experts find a good agent in the area you are wanting to purchase in. A good agent can connect you with all the resources you need, lenders, lawyers, contractors ect... You were asking about whether you should purchase local or not. I would recommend doing what your comfortable with. A lot of people feel much more comfortable knowing their investment property is closer to them.
Second: Since your newer I would HIGHLY recommend looking for a good deal on something move in ready or with very little rehab work but at the end of the day it is your choice. You sound like you are very busy with a full time job and family so it sounds like it would make more sense for you to find something you do not have to sink a ton of time into rehabbing.
Lastly: When you rent out this property think of it in terms of this example: "If I buy a property move in ready for 150k with a 20% down payment and finance the 130k at a 6.6% APR for 30 years my mortgage will be around this ball park ($900-$1000 per month) You want to position your rental to where you can cash flow at least $200 per month. Your doing several things when you accomplish this scenario. Most importantly you are building EQUITY in this property. Lets say you own this property for 2 years you have cash flowed $4,800 not very exciting right? On the flip side your property has most likely appreciated while the mortgage has been getting paid down and it has not costed you a thing. Now you are in a great position to:
A: Sell this property and hopefully have a wonderful check written to you while avoiding that pesky capital gains tax because you have held the property for 2 years.
B: Continue renting it out and building equity in the home.
If you go with option A then now you have much more real estate money to play with in the year 2025 and you can rinse and repeat the above strategy. Hope this helped! reach out to me if you have any more questions
Thanks and good luck
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Alecia LovelessPro Member
Member since 2019 · 3k+ posts · 2k+ votes
3y
@Jared Swiecicki Hi Jared, I’m not sure how close you are to Chicago proper but my furthest property is about 40 minutes away. So while it’s still local it’s not right in my backyard. I’m not sure if going a little bit further away might help you get more bang for your buck. This does mean when I’ve got an issue I have to get a team member out to service the problem but so far so good. I bought a nicer property so haven’t had too many issues.
My concern for going out of state has been that I haven’t found the deals other people are posting about. Every where I’ve looked the deals seem worse than what I’ve got at home so I’ve decided to stay local and self manage. BP has a really good book on long distance investing but I can’t think of it right now. If you go to the bookstore you’ll find it.
Best of luck!
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Jared HottleBusiness Member
Real Estate Agent · Cedar falls IA Waterloo, IA · Member since 2020 · 902 posts · 549 votes
3y
Look to househack each year for the next few years. A duplex would be great but a single family with a kitchenette and bathroom downstairs is also a good one and more readily available. Or rent by the room. Do this every year for the next 5-10 years.
If you want to replenish capital and rinse and repeat you will want to do the BRRR strategy. You will need to get good at finding deals on distressed properties and need to get better at learning the rehab process. Do not need to necessarily do it yourself but good at networking with contractors and knowing enough so as to not get the wool pulled over your eyes.
This will be work and may not be fun but it will set you up for great success in real estate and wealth building
[email protected]319-288-5382
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John Warren
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
3y
@Jared Swiecicki you are in the right spot for sure, and you will get a lot of varied advice here. I would definitely start locally since you are in a major metro with a ton of inventory relatively speaking. Depending on where you are in Chicago, you can choose multiple submarkets that are drivable from your home.
Your wife being a former PM is a huge bonus. I would start networking in the area asap. When I started out, I got a lot of great guidance from other land lords, and I was able to get those initial contacts that are so critical like handymen, painters, flooring folks, etc.
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Wale LawalBusiness Member
Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
3y
Welcome to BiggerPockets, you are definitely in the right place. Just make sure to consume contents here as much as possible and feel free to ask any questions you may have. We are here to help each other grow.

Goodluck
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Jay ThomasPro Member
Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
3y
Real estate investing is a great way to build wealth and secure your financial future. In order to be successful, it's essential that you have the right knowledge and resources at hand. There are numerous sources available online, but nothing beats real-world experience. Take advantage of local investment clubs and network with experienced agents or investors who can provide valuable insight into the current market conditions. This will help shorten your learning curve, save time and money, and prevent costly mistakes. With the right preparation and guidance, you'll be well on your way to becoming a successful real estate investor! Good luck!
[email protected]832-889-5607
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Jonathan KlemmBusiness Member
Moderator
Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
3y
Hey @Jared Swiecicki - Welcome to the Chicago BP forums and congrats on getting into the real estate game!

1. Personally, I love Chicago for its endless inventory of distressed multi-family properties at all price points, so I'd buy locally.

2. The bigger the better! Stress is stress. If you find the right team they will help with all the challenges that come up with rehabs.

3. Big value add projects will be the best way to BRRRR your properties

4. Sounds like you are using all the right metrics. For me, getting started is the most important thing and you'll never find a perfect deal right away or if you do you'll be searching forever. Experience is the fastest way to learn.

5. Check out @Mark Ainley & @Tom Shallcross's podcast Straight up Chicago investor. Also, attend in-person meetups. Our next one is on the 18th of this month.
Happy to connect and help out anyway I can.

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