Looking to buy a multifamily property in 2025

Investor · Deerfield, IL · Member since 2015 · 9 posts · 5 votes

Happy new year, folks!

I'm a guy approaching middle-age, living in Chicago. For several reasons (property taxes, politics), I would prefer to begin real estate investing somewhere other than locally. Currently, my interests are Indianapolis and Louisville (though I would welcome other suggestions).

My goal, over the next five years, is to utilize real estate in lieu of my current hourly consulting income, by building a portfolio of rentals.

My professional background is data science / analytics, which means analyzing cash flows will probably come more naturally than building relationships, which apparently, is how one finds deals worth making.

Are there meetups in these areas I should attend (digitally at first, presumably)? Curious to have some conversations with similarly-minded folks.

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Allan C.

Rental Property Investor · Member since 2018 · 826 posts · 810 votes

Quote from @Evan Coopersmith:

@Allan C. That's exactly what I needed, thank you. I accept the need for a competent PM and the reality that competence typically ain't cheap. It seems there are plenty of ways to be penny-wise and pound-foolish.

When you allude to "real wealth-drivers," to what are you referring? Long-term fundamentals? Micro-local patterns?

Wealth-drivers are appreciation, debt pay-down (ie. principal payments) and tax shielding.

Since you're analytic savvy, run some high level amortization schedule scenarios to see how much equity you gain through annual principal payments. Most people focus on cash flow, and while that's nice, it doesn't build wealth. Many people don't realize that you gain as much or more net worth through debt pay-down, and while it's less liquid than cash flow, over a 5-10 yr hold period it's considerable if you buy in the right areas with the right asset class. You can surely buy cheaper properties and obtain the same debt pay-down, but now you've got 5x the head-ache, so right asset class is more about efficiency when it comes to debt pay-down.

Tax shielding is similar concept in that more expensive properties directionally give you more building basis to depreciate, which means less net income to tax. Again you can buy more properties in lower asset class area, but it's less efficient.

There are many threads about appreciation, so i won't repeat it here, but my guidance to you is to think through the difference between appreciation and inflation. They ultimately look the same when it comes to property value, but the fundamental drivers are different. It doesn't matter if you already have assets, but it makes a difference when you're looking to make new purchases. You have many people who say midwest markets are now appreciation markets, but I disagree with that statement. Midwest has inflated over the past 5 years (as everywhere else), indexed to cost of new construction. Appreciation is driven by demand outstripping supply, and cost of new supply. Some of it can be temporary, but ideally you'll want to be in markets where it can be sustained (ie. have barriers to entry).

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DuBois Othero Toy
Chicago · Member since 2019 · 38 posts · 14 votes
1y
Hey what's up man, im a house hacker in the Chicago area. You should definitely get one meet up.com and event bright. They have a ton of good groups and meet up events happening on both sites.
0 Reply
Evan Coopersmith
OP
Investor · Deerfield, IL · Member since 2015 · 9 posts · 5 votes
1y
Hey DuBois, thanks for the suggestion. How many of the folks at those meetups are investing outside of Chicagoland? Maybe I should join a meetup for another location?
0 Reply
Jarret Jarvis
Real Estate Agent · Chicago · Member since 2021 · 168 posts · 62 votes
1y
Happy New Year Evan!

It's great to see you're looking to start your real estate investing journey. As a fellow Chicagoan, I understand your reasoning for exploring opportunities outside of Illinois. Both Indianapolis and Louisville are excellent markets to consider—affordable entry points, landlord-friendly laws, and steady rental demand.

Since your background is in data science and analytics, you already have a strong foundation for analyzing deals. Pairing that with relationship-building will help you uncover off-market opportunities and find local experts who can guide you.

For meetups, here are a few ideas:
- Indianapolis Real Estate Investors Association (Indy REIA): They have a mix of virtual and in-person events and are a good starting point for networking with other investors in the Indy market.
- Louisville Real Estate Investors Group (REIG): A similar organization for the Louisville market, with educational and networking opportunities.
- Check out BiggerPockets Meetups: Many cities have local meetups organized by investors active on BiggerPockets, and they often include virtual options.
- Facebook Groups: Look for local investing groups like "Indianapolis Real Estate Investors" or "Louisville REI." These can be great for making initial connections and learning about specific markets.
Since you're thinking long-term, consider spending some time in your target markets to build relationships with agents, property managers, and contractors. Even a weekend trip to scope neighborhoods can give you a feel for the area.

Good luck building your portfolio, and feel free to ask if you have questions about getting started!
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Jonathan KlemmBusiness Member
Moderator
Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
1y
Hi @Evan Coopersmith - Even though you aren't currently interested investing in Chicago I'd still suggest looking into some of the local meetups here! I have a list of them that I can share with you.
Chicago, without a doubt, has some downsides, but there are also a lot of positives, like the inventory of older multi-family properties and price points at all levels.
Investing out-state can be challenging because of the distance and the need for boots on the ground that you can trust 100%.
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2 Reply
Evan Coopersmith
OP
Investor · Deerfield, IL · Member since 2015 · 9 posts · 5 votes
1y
@Jarret Jarvis, thank you for the excellent suggestions!

Would you, or anyone of your ilk be willing/able/interested in letting me partake in the analysis of a deal? (Not as part of my consulting business, just as an opportunity for me to learn and perhaps build a relationship?)

I can and will absolutely join the Indianapolis REIA. And of course, will gladly drive somewhere for a couple days, park myself somewhere and work-remotely as needed. What do YOU look for when roaming a new environment for that purpose?

0 Reply
Evan Coopersmith
OP
Investor · Deerfield, IL · Member since 2015 · 9 posts · 5 votes
1y
@Jonathan Klemm, thank you for the reply. Do you have any particular meetups you especially recommend? While I doubt I'll be investing here (terrified that property taxes and the pension debt will ultimately cripple property values), I'm always interested in meeting new people.
0 Reply
Allan C.
Rental Property Investor · Member since 2018 · 826 posts · 810 votes
1y
I get the desire to own outside of Chicago proper, but instead of going to another state altogether, why not invest in one of the burbs? As an new investor you should consider which factor is higher risk - proximity or market dynamics.

While I fully invest remotely these days, I wouldn't start new in REI in a remote market until learning the ropes in my local market. There are a lot of ways to crash and burn, so increasing the odds of succeeding long term should be your highest priority. you can always sell your local assets once you're comfortable managing rentals and ready for a market that better-suits your criteria.

btw, kudos for being self-aware of your limitations. That pragmatism will help you mitigate risks as you understand the different components of managing rentals

0 Reply
Evan Coopersmith
OP
Investor · Deerfield, IL · Member since 2015 · 9 posts · 5 votes
1y
@Allan C. Thanks for the reply! I'm certainly cognizant of the risks of managing a property remotely (my wife and I did rent out our Chicagoland house for a couple years while living in STL). I don't mean to throw shade at my fellow Illinois residents, but I'm quite bearish on this state for the long-term.

Your comment does bias me slightly in favor of Indy, since at least we're talking about a manageable car ride.

That said, I'd love to know the biggest mistakes you've seen - how do neophytes typically "crash and burn?" Knowing what NOT to do is often the most valuable advice!
0 Reply
- Allan C.
  Rental Property Investor · Member since 2018 · 826 posts · 810 votes
  1y
  @Evan Coopersmith penny-pinching is an easy way to crash. If you plan to manage remotely, then find a good PM or have a trusted team that can inspect your property regularly - and be ready to pay them. I also recommend buying in a B-class neighborhood so you can learn the ropes with an easier tenant class. Most folks chase paper-returns and overlook the real wealth drivers in REI.
  0 Reply
Evan Coopersmith
OP
Investor · Deerfield, IL · Member since 2015 · 9 posts · 5 votes
1y
@Allan C. That's exactly what I needed, thank you. I accept the need for a competent PM and the reality that competence typically ain't cheap. It seems there are plenty of ways to be penny-wise and pound-foolish.

When you allude to "real wealth-drivers," to what are you referring? Long-term fundamentals? Micro-local patterns?
0 Reply
Allan C.
Rental Property Investor · Member since 2018 · 826 posts · 810 votes
1y
Quote from @Evan Coopersmith:

@Allan C. That's exactly what I needed, thank you. I accept the need for a competent PM and the reality that competence typically ain't cheap. It seems there are plenty of ways to be penny-wise and pound-foolish.

When you allude to "real wealth-drivers," to what are you referring? Long-term fundamentals? Micro-local patterns?
Wealth-drivers are appreciation, debt pay-down (ie. principal payments) and tax shielding.

Since you're analytic savvy, run some high level amortization schedule scenarios to see how much equity you gain through annual principal payments. Most people focus on cash flow, and while that's nice, it doesn't build wealth. Many people don't realize that you gain as much or more net worth through debt pay-down, and while it's less liquid than cash flow, over a 5-10 yr hold period it's considerable if you buy in the right areas with the right asset class. You can surely buy cheaper properties and obtain the same debt pay-down, but now you've got 5x the head-ache, so right asset class is more about efficiency when it comes to debt pay-down.

Tax shielding is similar concept in that more expensive properties directionally give you more building basis to depreciate, which means less net income to tax. Again you can buy more properties in lower asset class area, but it's less efficient.

There are many threads about appreciation, so i won't repeat it here, but my guidance to you is to think through the difference between appreciation and inflation. They ultimately look the same when it comes to property value, but the fundamental drivers are different. It doesn't matter if you already have assets, but it makes a difference when you're looking to make new purchases. You have many people who say midwest markets are now appreciation markets, but I disagree with that statement. Midwest has inflated over the past 5 years (as everywhere else), indexed to cost of new construction. Appreciation is driven by demand outstripping supply, and cost of new supply. Some of it can be temporary, but ideally you'll want to be in markets where it can be sustained (ie. have barriers to entry).
2 Reply
Jeffrey BlackmanPro Member
Lender · Chicago, IL · Member since 2017 · 107 posts · 34 votes
1y
Hi @Evan Coopersmith, I'm an investor and licensed mortgage broker here in Chicago (Oak Park). I've invested in both multi-unit properties (2-4 units), and multi-family properties (5+ units). The financing and management of each are very different. Which are you considering?
0 Reply
Evan Coopersmith
OP
Investor · Deerfield, IL · Member since 2015 · 9 posts · 5 votes
1y
@Allan C. I appreciate that, and you're right, any back-of-the-envelope calculation suggests that much of the wealth comes from the equity accumulation, even in the earlier stages of the amortization schedule. And mercifully, building wealth is a more important goal than the cash flow, to be sure. I also see your point about avoiding bargain basement properties, especially insofar as tax shielding is easier with an asset of a reasonable size.

Your point about barriers to entry is also interesting, since I suppose those barriers can be geography (natural boundaries of mountains/water), but you're probably referring to that which impedes future construction?
0 Reply
Nicholas McCormick
Member since 2020 · 7 posts · 1 vote
1y
Hi Evan, I live down in Indy and would be happy to connect and chat about the area. I know of a couple of good PM's if you need them and can give you a general idea of the best areas to invest in.
0 Reply
Nicholas McCormick
Member since 2020 · 7 posts · 1 vote
1y
Hi Evan, I live down in Indy and would be happy to connect and chat about the area. I know of a couple of good PM's if you need them and can give you a general idea of the best areas to invest in.
0 Reply
Evan Coopersmith
OP
Investor · Deerfield, IL · Member since 2015 · 9 posts · 5 votes
1y
@Nicholas McCormick, thanks for the offer! What's your schedule look like in the next couple days? I'd be curious to learn more. (I'm an early-riser in Chicagoland, so that's generally my preferred hour for meetings).

0 Reply
Nicholas McCormick
Member since 2020 · 7 posts · 1 vote
1y
@Evan Coopersmith Are you available tomorrow at 7:00 am your time? Otherwise, I can take a look at the rest of this week. Thanks!
1 Reply
Evan Coopersmith
OP
Investor · Deerfield, IL · Member since 2015 · 9 posts · 5 votes
1y
@Nicholas McCormick. Absolutely around at 7am. Connect with me and we can share numbers. (Talk to you tomorrow)
0 Reply
Jack Matthias
Lender · Chicago · Member since 2023 · 176 posts · 70 votes
1y
Hi Evan,
If you do land on Indy and want any help crunching numbers and current rates. Let me know as I am licensed over there as well.
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