I've got a question for Chicago area investors. I'm looking to get into my first investment, but have bounced around ideas from SFR to multi-family to lastly looking into flipping condos if possible because there's little capital to start with.
20k doesn't go as far in the area as is does in other more rural places, but for those of you that plan to invest here or have had success, what might be some of your suggestions for 20k? Or is this still a pipe dream at this point? I no longer want to pay rent. I need my money to make money. Any thoughts are greatly appreciated.
@Kevin K. Welcome to BP! This is a great place to come and learn about the various niches of real estate investing. There's people in every niche you can imagine. If you haven't done so yet, check out Beginner's Guide or listen to some of the great Podcasts.
Getting on here and posting questions on the forums is a great way to find others in your local area. Though I don't have any information about your market, real estate is all about supply and demand. What is your local market like? Are there a lot of rentals or few? Are the prices high or affordable? Those are some of the things that help give an indication of whether or not there's a market for space, vacancy rates, etc.
Also, you might want to go the Events and Happenings Forum and do a search for a meet up in your area. Good luck!
$20k as in all-in $20K or $20K down payment?
You can make money flipping condos actually they can be easier to identify due to easier to comp.
I started with about $20k and bought a 3 flat and lived in 1 unit. If you get closing costs rolled in you could buy up to $350k with that but that price point is super competitive here and you can't be picky about area
@Kevin K , @Brie Schmidt is wright. You can use the 20K to buy a 2-4 unit building owner occupied and either take an FHA loan with 3.5% down and seller paid closing costs, or if you find a great property that needs work than buy it with a 203K FHA construction loan, and the bank will finance the construction work also.
If you already have an FHA loan you can buy a single family, condo or townhome with a conventional Fanny Mae construction loan 20% down and seller paid closing cost, however that will limit you to a purchase price of 100K.
Good luck to you!
Lumi Ispas, Century 21 SGR | [email protected] | 773‑392‑2906
@John Weidner 20K cash right now. Of course there's still monthly income from work etc for some moderate rehabs. I understand condo flipping is incredibly risky because of the HOAs, but it also seems like an opportunity if the homework is done.
@Brie Schmidt I've taken a look at some 3-flats with that same thought process of living in one and that be my starting point. My DTI though is giving me problems because of some student loans so it's been difficult in that regard. I have an appointment tomorrow with a financial adviser specializing in student loans to see if there's something I can do to get them reduced. Fingers crossed. Maybe a co-signer would help?
As @Brie Schmidt said you can try and go with the down payment on a place but if you have difficulties with DTI and little money why not look to partner with someone who has what you don't. Put in all the sweat equity and get a piece of a property.
If you don't have time to use sweat equity, then it might not be the right time to start your investing career.
Agree with @Cliff Mccue about timing. It took us over a year of planning and paying down debt to be in a position to start investing. I know it is hard, but don't force a situation because you want to do a deal. That is when most people get in trouble IMO
plenty of opportunity on the S and SW sides. Start getting to know your farm and hook up with a mortgage broker to see what you qualify for.
Lots of ways to get involved in investing with only $20K. Much depends on your short & long term Return on Investment goal. Things we've done in the past.
- Leverage Hard Money- There are some legitimate sources in Chicagoland for hard money. The costs of money is expensive but your ROI will be high because your'e using Other people's $. The challenge is making sure you have multiple exit strategies. Even with a quick renovation days on market in the Chicago winter can eat in to your profits.
- Partner with someone- This could be as a passive investor or an active investor. It could be your deal or someone else who's looking for a partner. I recently attended an REI meeting in Chicago & there were 1/2 dozen or more people who were looking for partners.
- Crowd Funding- Lots of rules associated with using this strategy but it works if you have the right deal & mechanisms in place.
I agree with everyone above - it's more about finding the right deal. If you find a great deal the money will come
Larry Smet, Boomerang Capital Group | 1‑800‑266‑6345 | http://www.boomerangcapitalgroup.com
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!