Help Wanted with House Flipping in Chicago Area
Member since 2019 · 7 posts · 1 vote
Help Wanted with House Flipping in Chicago Area
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Real Estate Agent · Chicagoland · Member since 2018 · 314 posts · 199 votes
5yHi Zach, welcome to BP! I also flip houses in the Chicago area. I'll start by saying the best way to get into house flipping is to do a house hack. You're going to have a hard time getting a hard money loan if you have no experience and have no GC. That's a route for more experienced investors.
I got my start house hacking a foreclosed property in an outer suburb where prices were cheaper. From there I fixed it up, sold it, got another, sold it for more, etc. I lived in each one as I did it. Get a couple roommates that don't mind some dust, and you'll be well on your way. Lots of projects you can do yourself by youtubing the problem e.g. faucet replacement, drywall patching, flooring installation. That can teach you a great deal about how much work and money goes into each improvement. Let me know if you want to connect.
7 Replies
- Real Estate Agent · Chicagoland · Member since 2018 · 314 posts · 199 votes5y
Hi Zach, welcome to BP! I also flip houses in the Chicago area. I'll start by saying the best way to get into house flipping is to do a house hack. You're going to have a hard time getting a hard money loan if you have no experience and have no GC. That's a route for more experienced investors.
I got my start house hacking a foreclosed property in an outer suburb where prices were cheaper. From there I fixed it up, sold it, got another, sold it for more, etc. I lived in each one as I did it. Get a couple roommates that don't mind some dust, and you'll be well on your way. Lots of projects you can do yourself by youtubing the problem e.g. faucet replacement, drywall patching, flooring installation. That can teach you a great deal about how much work and money goes into each improvement. Let me know if you want to connect.
- Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes5y
@Zach Taylor what is your background? I would think through your goals with flipping. Obviously everyone wants to build capital, but flipping is really a type of business if you do it regularly. It is not as cool as HGTV makes it seem and it is like any other business... hard work!
If you want to get into flipping, you need deal flow, capital and project management/construction. You have to think about where you fit on that spectrum. Are you the deal provider that finds the juicy deals? Are you the money/finance person? Are you the project manager that sees the construction through and keeps the deal on budget? Find a partner or vendor partner to complement the areas you don't have strengths in.
- Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes5y
@Zach Taylor - Finding a solid team is definitely the best place to start! It can be tough to just "start" flipping without some experience.....many hard money lenders are going to be looking for experience before they start giving away money. But heck if you find a good deal, let me know, and we'd be happy to partner on something that makes sense.
If house hacking is an option for you that is the path I would probably take. You can get in with low money down and then also find something that needs a little rehab so you can get some experience in that as well.
Definitely link up with @John Warren or @Eudith Vacio if you are going to start looking on the West side of Chicago. Once you have your agent lined up I'd work on understanding your purchasing power. If you connect with @Zack Karp or @Michael Facchini they can definitely help from the lending side of things.
Quality Builders4.966 Reviews - Member since 2019 · 7 posts · 1 vote5y
Thanks for the replies! I looked into house hacking about a year ago. I talked with an agent and looked at a couple properties and what I discovered was that most properties that make sense financially involve renting out illegal garden units, which I didn't want to be involved in. I'm also married, so renting out rooms to roommates isn't going to work. All that plus the fact that I'm not from Chicago and I'm not committed to living here longer than a couple more years made me decide house hacking probably isn't for me at the moment.
@John Warren thanks for that advice. My background is in math and computer science, so I would probably fit somewhere in the deals/finance area. I'm good with numbers and I like analyzing deals.
It sounds like it's hard to get into flipping without some experience, or at least without enough money of my own to invest. I know someone who has money and might be willing to do this with me, but we'll see. That would take care of the capital part, then I could be the deal/finance person. Sounds like the project manager is my missing piece. Is a project manager and a general contractor the same thing?
Thanks again for the advice, everyone!
- Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes5y
@Zach Taylor there are a few ways people get into flipping. Most of the time from your position people hire the GC. The main road block is finding the deal, but you can definitely find a great building here in Chicago if you put your mind to it. Flipping is not rocket science, but it is a job and that is what most people don't realize. I did a flip in Berwyn a few years back and I spent a lot of nights and weekends managing contractors, cleaners, stagers, etc. We made very little money because I didn't know what I didn't know about construction at that time. I ultimately decided that I wanted to focus on a different niche than flipping, but you can definitely do very well with it.
You should connect with @Tom Shallcross. He is currently very active flipping properties.
- Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes5y
Originally posted by @Zach Taylor:
Hey everyone. I'm looking to get into house flipping and I'm wondering if anyone has some advice on how to get started in the Chicago area. I could also potentially go outside Chicago, like into the suburbs or northern Indiana or southern Wisconsin. I've heard that buying from wholesalers is usually the way to go for a flip, but I'm not sure how to find a wholesaler. I've also heard that I should go with a hard money lender for a flip, but I don't know any hard money lenders either. I also don't know any general contractors. I'm pretty new to this as you can tell, so if someone could point me in the right direction, that would be super helpful!
Dealing directly with your questions
- Finding wholesalers- start networking in Real Estate forums and you'll find wholesalers. I also recommend you establish a relationship with a realtor who knows wholesalers. Please note that many realtors are also wholesalers
- Hardmoney- Here's a link on Bigger Pockets to Hardmoney Lenders- Hardmoney is just one way- You should also build up capital on your own; establish partnerships, find some private lenders,.....
- General Contractors- Network, network, network..... but you should not bother with General contractors until you have everything in place to run a business.
So I just answered your specific questions but flipping homes is running a business & it takes more than the elements above. So if you want to get in the business I recommend start reading, networking, finding some mentors,.... Treat it like getting a degree.
- Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes5y
Originally posted by @Zach Taylor:
Hey everyone. I'm looking to get into house flipping and I'm wondering if anyone has some advice on how to get started in the Chicago area. I could also potentially go outside Chicago, like into the suburbs or northern Indiana or southern Wisconsin. I've heard that buying from wholesalers is usually the way to go for a flip, but I'm not sure how to find a wholesaler. I've also heard that I should go with a hard money lender for a flip, but I don't know any hard money lenders either. I also don't know any general contractors. I'm pretty new to this as you can tell, so if someone could point me in the right direction, that would be super helpful!
As people have indicated and you sense, finding deals is the difficult part about flipping. Well, the construction part is also hard and construction costs are way up too. And the financing can be hard or easy depending on your situation. Luckily, right now, the selling isn't hard but most everything else is.
In the OP you asked about wholesalers. Yes, Some deals are gotten through wholesalers. The problem is 99% of wholesale deals pitched to you will not be deals. 1% are awesome. There is a lot of crap to wade through and then a lot of competition for the good ones.
There are wholesaler Facebook groups and you will get a thousand wholesalers who claim to have deals and want to put you on their buyer list. That is fine. Just know that most of them will never find a good deal and they will pitch you many bad deals, deals they don't really control, etc.
Right now, since one of the avenues to find deals (sheriff sales) is closed, the competition for the good wholesale deals is nuts. Those wholesalers have dozens or hundreds on their lists so when they do find that nut, it is gone in a second or bid to crazy prices. MLS is very difficult but can be useful. The only thing keeping flippers making good money is the fact that prices keep rising. And who knows how much longer that holds.
Right now the formula is, buy a flip at a price that will make a small return. Manage it tightly and hope prices have risen by resale to make it a good return. Not a sustainable, great plan.
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