Newbie needs help analyzing a specific Property

7 Replies

I am working with a realtor on my first purchase. I told him I only have 15K to put down and needed help finding different ways to fund it. I am a first time home buyer so I can put the 3.5% down with an FHA loan.

I am looking at this property here 3928 N Bernard St CHICAGO, IL 60618

I was hoping someone could help me analyze this property .  


I was trying to use the BRRR calculator but im stuck at estimating ARV -

I'm having my realtor pull comps for me right now. I downloaded the ARV estimator word document- one thing I didn't understand is how do you know how much to adjust upward or downward. The example he gives is subj house is 1940 SQF while Comp is 2650 sqf he subtracts 8000 from the comp.

@Account Closed

Adjustment values may differ from location to location so there's no easy answer to that part. Is this going to be a BRRR property? Does your Realtor and Lender know that yet? The reason I ask is that FHA loans are for owner occupants so using this for a rental may be a problem.

Originally posted by @Mitul Gandhi:

I am working with a realtor on my first purchase. I told him I only have 15K to put down and needed help finding different ways to fund it. I am a first time home buyer so I can put the 3.5% down with an FHA loan.

I am looking at this property here 3928 N Bernard St CHICAGO, IL 60618

I'm having my realtor pull comps for me right now. I downloaded the ARV estimator word document- one thing I didn't understand is how do you know how much to adjust upward or downward. The example he gives is subj house is 1940 SQF while Comp is 2650 sqf he subtracts 8000 from the comp.

Well, ARV is more of an art than a science. I find 2 and 3 flats that need some work to be the most difficult to value. I have more experience with SFH. But a couple of comments.

Yours seems to me to be listed right at value or a little better. I do wonder why both units are vacant. Be slightly wary. If the seller won't guarantee the legality of the basement and is overstating square footage, I would lean toward the basement being not legal.

Tax records and other buildings in the area indicate the SF is 2082, not 2650. They are probably adding the possibly illegal basement?

I don't know interior conditions (your listing doesn't have interior pictures, not a good sign IMO) but good comps look like

3915 N Saint Louis Ave at 425  est 2400 gross rent

3837 N Spaulding Ave at 420  $2300 gross rent

3748 N Spaulding Ave at 375, not brick but nice inside

If you are planning to do a big rehab, 3837 N Central Park Ave looks interesting at 600 as a comp. Gross rent 3500

Again, 2-3 flats are not my specialty. 

Originally posted by @Lydia S. :

@Mitul Gandhi

Adjustment values may differ from location to location so there's no easy answer to that part. Is this going to be a BRRR property? Does your Realtor and Lender know that yet? The reason I ask is that FHA loans are for owner occupants so using this for a rental may be a problem.

Hi Thank you for responding.  So you to clarify you can't use this as a rental if you live in the property as well?  

Yours seems to me to be listed right at value or a little better. I do wonder why both units are vacant. Be slightly wary. If the seller won't guarantee the legality of the basement and is overstating square footage, I would lean toward the basement being not legal.

Tax records and other buildings in the area indicate the SF is 2082, not 2650. They are probably adding the possibly illegal basement?

I don't know interior conditions (your listing doesn't have interior pictures, not a good sign IMO) but good comps look like

3915 N Saint Louis Ave at 425  est 2400 gross rent

3837 N Spaulding Ave at 420  $2300 gross rent

3748 N Spaulding Ave at 375, not brick but nice inside

If you are planning to do a big rehab, 3837 N Central Park Ave looks interesting at 600 as a comp. Gross rent 3500

Again, 2-3 flats are not my specialty. 

Thanks for replying Eric. 

Couple questions 

How did you know that it's listed at value? 

How would I go about finding out why the units are vacant?s 

How did you calculate this ? "Tax records and other buildings in the area indicate the SF is 2082, not 2650"

What does gross rent mean?

What do you consider a good comp?  What is the criteria for a good comp? 

Hey Dude,

Pulled this from the Assessor's Website. Great resource by the way - every property you check out go to CookViewer.com to get assessed value (to estimate taxes), land sf, age, # of units, sometimes building sf. I've found that they are frequently wrong on # of units and/or building square footage. However, as Eric said that difference in square footage should definitely be on your radar and figured out.

Originally posted by @Mitul Gandhi:
Yours seems to me to be listed right at value or a little better. I do wonder why both units are vacant. Be slightly wary. If the seller won't guarantee the legality of the basement and is overstating square footage, I would lean toward the basement being not legal.

Tax records and other buildings in the area indicate the SF is 2082, not 2650. They are probably adding the possibly illegal basement?

I don't know interior conditions (your listing doesn't have interior pictures, not a good sign IMO) but good comps look like

3915 N Saint Louis Ave at 425  est 2400 gross rent

3837 N Spaulding Ave at 420  $2300 gross rent

3748 N Spaulding Ave at 375, not brick but nice inside

If you are planning to do a big rehab, 3837 N Central Park Ave looks interesting at 600 as a comp. Gross rent 3500

Again, 2-3 flats are not my specialty. 

Thanks for replying Eric. 

Couple questions 

How did you know that it's listed at value? 

How would I go about finding out why the units are vacant?s 

How did you calculate this ? "Tax records and other buildings in the area indicate the SF is 2082, not 2650"

What does gross rent mean?

What do you consider a good comp?  What is the criteria for a good comp? 


 I don't want to be mean but if you don't know the answers to these questions you should not be investing in RE yet.

I can see what your property is listed at and I did some research comparing with other properties and with common ratios, and yours seems to be priced near other similar properties at 399K. That is the definition of comp. I gave you a few comps that show the value is right there. Again, this is not being able to see the inside, which could change it by 100K or more up or down.

You find out why they are vacant by asking the seller.

Property square footage is public record in the county assessor office and website. You can look this up and your realtor should be showing it to you also. The county says the SF is 2082, if I remember correctly. Now, this can be wrong or outdated. But some people also try to exaggerate SF by including basements and porches, etc. or just lying to fool people into thinking the price is cheap. So you sometimes have to dig a bit. Often many buildings in the same neighborhood will be built with very similar floor plans. You look at other properties near, compare pictures, compare square footage and you get an idea if someone is lying. It is not always exact, they may have done an addition that the county doesn't know about. Only a personal inspection will tell but you can't just believe the listing.

Gross rent is the total rent collected each month for all the units together. It is the cash flow for the building. It's what is either going to allow you to pay your mortgage or not, so you better get very familiar with gross rent, taxes, expenses, net income, etc etc etc.  Your realtor should have access to all these numbers from the seller and should be giving them to you. Some of them are in the listing. Your realtor should also be answering these questions.

A comp is a similar property in the neighborhood which has sold recently. The closer the better, the more similar in age, size, use and condition the better, the more recent the better. It indicates the probable value of your property.

This is real estate 101. Please read some books before investing.