4k-10k Homes. Go or No Go?!

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4k-10k Homes. Go or No Go?!

Chase London
Chicago, IL · Member since 2015 · 44 posts · 3 votes

I'm seeing  a few properties listed in the 4k-10k range in the Chicago area. The neighborhood doesnt matter much to me. What I wanna know is are the properties in those price ranges worth getting if the cash is on hand and you want to do a quick house hack? 

Im sure they need repairst. If snatching up say a 7k house that needs doable repairs and house hacking to get away from renting is possible. Would anyone here say thats a ok start or would holding cash and seeking a Conventional loan  be better.

side note: I want to get out of renting before summer 2016 (month2month lease at moment)

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James Paine
San Diego, CA · Member since 2015 · 136 posts · 62 votes
10y

I've lost more money on houses that cost me less than $10k than any other homes I've ever purchased hands down.  

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  • Daniel Hansen
    Real Estate Investor · Winston Salem, NC · Member since 2015 · 25 posts · 9 votes
    10y

    I'm going to point out the obvious and say that these properties seem like a high risk. 

    2Reply
  • James Bitakis
    Investor · Melrose Park, IL · Member since 2015 · 77 posts · 24 votes
    10y

    As long as you are okay with the neighborhood, I'd do it.  Just make sure the repairs aren't too bad.

    0Reply
  • Jacob Sampson
    Investor · Topeka, KS · Member since 2015 · 1k+ posts · 1k+ votes
    10y

    I think, arguably, the area is the most important part of the deal.  Also, we would need more data.  A home for 10k that needs 50k in work but would be worth 20k when all is said and done doesn't sound like a good deal.

    Both the house hacking and saving are reasonable options.  The correct answer depends on your goals and the individual deals.

    2Reply
  • Anil Villamkandathil
    GREENSBORO, NC · Member since 2014 · 25 posts · 5 votes
    10y

    I would say have enough reserves for repairs. They turn out to be pretty expensive.

    All the best.

    0Reply
  • Chase London
    OP
    Chicago, IL · Member since 2015 · 44 posts · 3 votes
    10y
    Originally posted by @Daniel Hansen:

    I'm going to point out the obvious and say that these properties seem like a high risk. 

     My father and grandfather are contractors so i can get some free to lowcost repair work. Im wondering if anyone else has purchase any of these under 10k homes in Chicagoland area. If so how was it?

    0Reply
  • Brian Lacey
    Rental Property Investor · Hailey, ID · Member since 2015 · 218 posts · 143 votes
    10y

    You're clearly better off going to a nicer neighborhood. If you don't have the 20% down payment, then go FHA, and 3.5% down on a duplex or triplex in a decent area. Still will definitely be paying less than your current, I imagine.

    5-10k anywhere is bad. 5-10k in Chicago sounds like its in a war zone. 

    5Reply
  • Steve Long
    Lender · Chicago, IL · Member since 2016 · 5 posts · 2 votes
    10y

    A house for $7k is probably not in livable condition and may not even have a certificate of occupancy, so you wouldn't even be able to live there while doing the work.  

    1Reply
  • Account Closed
    Investor · Chicago, IL · Member since 2015 · 189 posts · 47 votes
    10y

     don't mean to step on any contributors toes  but I purchased a 4 bedroom one and a half bath home in Englewood for $8,000 a couple of years ago I put in about $12,000 in upgrades to the kitchen and bath and did an entire interior repaint so yes it there are properties in Chicago town in that range.Chase pls PM me.

    3Reply
  • Lumi Ispas
    Real Estate Consultant · Chicago, IL · Member since 2014 · 720 posts · 439 votes
    10y

    @Chase London, if you and your dog live in the house next door to them and you'll personally be there every day to manage and take care of the properties and tenants - maybe, just maybe yes, otherwise NO!

    There is a reason they are priced at that price! Nobody wants them, and you don't want to be one of the many that learn on their own skin & pocket why!

    Seriously now, the only way I will buy such a house is if I already had a tenant that I trust would like the neighborhood, would pay the rent and would sign a very long, long lease, otherwise is always wise to say NO!

    2Reply
  • Chase London
    OP
    Chicago, IL · Member since 2015 · 44 posts · 3 votes
    10y
    Originally posted by @Account Closed:

     don't mean to step on any contributors toes  but I purchased a 4 bedroom one and a half bath home in Englewood for $8,000 a couple of years ago I put in about $12,000 in upgrades to the kitchen and bath and did an entire interior repaint so yes it there are properties in Chicago town in that range.Chase pls PM me.

     Ill call you tomorrow.

    0Reply
  • Chase London
    OP
    Chicago, IL · Member since 2015 · 44 posts · 3 votes
    10y
    Originally posted by @Lumi Ispas:

    @Chase London, if you and your dog live in the house next door to them and you'll personally be there every day to manage and take care of the properties and tenants - maybe, just maybe yes, otherwise NO!

    There is a reason they are priced at that price! Nobody wants them, and you don't want to be one of the many that learn on their own skin & pocket why!

    Seriously now, the only way I will buy such a house is if I already had a tenant that I trust would like the neighborhood, would pay the rent and would sign a very long, long lease, otherwise is always wise to say NO!

     Thanks for the insight everyone

    0Reply
  • Chase London
    OP
    Chicago, IL · Member since 2015 · 44 posts · 3 votes
    10y
    Originally posted by @Lumi Ispas:

    @Chase London, if you and your dog live in the house next door to them and you'll personally be there every day to manage and take care of the properties and tenants - maybe, just maybe yes, otherwise NO!

    There is a reason they are priced at that price! Nobody wants them, and you don't want to be one of the many that learn on their own skin & pocket why!

    Seriously now, the only way I will buy such a house is if I already had a tenant that I trust would like the neighborhood, would pay the rent and would sign a very long, long lease, otherwise is always wise to say NO!

     Thanks for the insight everyone

    0Reply
  • Michael Hunter
    Contractor · Kansas City, MO · Member since 2016 · 87 posts · 16 votes
    10y
    Originally posted by @Chase London:
    Originally posted by @Daniel Hansen:

    I'm going to point out the obvious and say that these properties seem like a high risk. 

     My father and grandfather are contractors so i can get some free to lowcost repair work. Im wondering if anyone else has purchase any of these under 10k homes in Chicagoland area. If so how was it?

     I have done this in DC and Baltimore but not in Chicago. But the principle as others have mentioned is the same wherever you want to invest. Find a good neighborhood for you (if flipping the property think of who will be buying it), buy low enough to make your repairs and still have equity left. Be warned that the recent trend I have seen in the flipping market is that you will not find it easy to get a good property for this price. Be careful.

    1Reply
  • James Paine
    San Diego, CA · Member since 2015 · 136 posts · 62 votes
    10y

    I've lost more money on houses that cost me less than $10k than any other homes I've ever purchased hands down.  

    6Reply
  • Matt F.
    Columbia, MD · Member since 2014 · 15 posts · 5 votes
    10y

    @Michael Hunter I'm impressed you managed to make sub 10 shells in Bmore work.  I've always been a bit tempted by them, but the blocks just scare me off.

    1Reply
  • Nancy L.
    Philadelphia, PA · Member since 2014 · 178 posts · 64 votes
    10y

    @Chase London I think if you're planning to live there and you understand the neighborhoods, and can get help with repairs, you have some advantages. I'd go through and start to list everything that you need to make it work: How is the roof? Electric? Plumbing? HVAC? Bring ppl through and list out what the materials cost to get it fixed up and get an idea of how much time is needed on each job. Really understand what you're getting into before you get into it. 

    Then if you live there for a while and turn it into a rental someday, you'll know how to rent it. Your repair work could give you some good equity in the house to sell or borrow against for your next purchase. Good luck!

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Chase London  I have funded a bunch of this stuff in Chicago land.. nice brick buildings that can be bought for 10 to 30k  the issue is they take 60 to 100k to totally redo.

    And that city is uber tough on rehab

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    4Reply
  • John Weidner
    Chicago, IL · Member since 2014 · 710 posts · 200 votes
    10y
    Originally posted by @Jay Hinrichs:

    @Chase London  I have funded a bunch of this stuff in Chicago land.. nice brick buildings that can be bought for 10 to 30k  the issue is they take 60 to 100k to totally redo.

    And that city is uber tough on rehab

    This is great point - a roof on a $7K will cost the same as $250K house in a different neighborhood. My repair #'s always hold. What I can't always make work are the comps for ARV. This will be the issue you run into trying to flip in these lower aquisition neighborhoods. People do it though just make sure your ARV is solid

    0Reply
  • Alan Goetsch
    Investor / Contractor · Sierra Vista, AZ · Member since 2015 · 13 posts · 76 votes
    10y

    Indeed you may well be sitting a potential gold mine (or 2, or 3 or 4 or?) First you buy, rehab and then qualify for Sec 8 housing. The process in most places is relatively painless in spite of all the horror stories. The pivotal factor for our team is rehab costs. Weve found in two market areas that FSBO's w owner financing is a freeway to huge profits. Just did our 3rd house in 27 days and between the 3 have a POS cash flow of $738. Houses purchased at, 12,500, 19,680 & 22,600 respectively. Rehab costs 23k, 14k & 16k. ARV 79k, 83k & 86k. Note equity alone! DO NOT let others scare you away from the possibility. The key is purchase price and your contractor (pay super close attention to his labor costs). Need more info feel free to contact me.

    1Reply
  • Rob Gubiani
    Investor · Melbourne, Abu Dhabi · Member since 2016 · 6 posts · 1 vote
    10y

    I find it incredible that there are places where you can buy a home for 10K. Really interesting thread. I would love to hear how it all develops.

    0Reply
  • Scott Schultz
    Rental Property Investor · West Bend, WI · Member since 2015 · 931 posts · 598 votes
    10y

    my question is, whats the FMV?, and where do you see them listed, MLS, or auction sites? the auctions dont reflect the reserve. I purchased one recently for $6K but its in a small town, and yes its flawed, but nothing i cant deal with, I will put $4K in and have a rental, but in big cities, its a totally different story, id imagine its in a "D" area or worse, if i gota wear body armor, to go there I wouldnt want it, just my 2 cents.

    0Reply
  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    10y

    How familiar are you with the neighborhoods where these properties are located?  I would also be careful planning for the family contractor discount as if that doesn't work out, how much do you have to pay someone you don't know to do the job?

    0Reply
  • Randy E.
    Rental Property Investor · Durham, NC · Member since 2014 · 1k+ posts · 1k+ votes
    10y
    Originally posted by @Chase London:

    I'm seeing  a few properties listed in the 4k-10k range in the Chicago area. The neighborhood doesnt matter much to me. What I wanna know is are the properties in those price ranges worth getting if the cash is on hand and you want to do a quick house hack? 

    Im sure they need repairst. If snatching up say a 7k house that needs doable repairs and house hacking to get away from renting is possible. Would anyone here say thats a ok start or would holding cash and seeking a Conventional loan  be better.

    side note: I want to get out of renting before summer 2016 (month2month lease at moment)

     Chase, as long as you are very familiar with the neighborhoods, have no problem communicating with the neighbors and potential tenants, and you have the money/skills necessary to rehab the properties, I think this is a fine idea.


    Good luck and keep us posted on what happens.

    0Reply
  • John CasmonPro Member
    Cincinnati, OH · Member since 2013 · 1k+ posts · 1k+ votes
    10y

    @Chase London Go for it, but make sure you are comfortable living in the area and dealing with the tenants in that area. Do your research on ARV, vacancy and loss to lease. It's one thing to own property in a rough area and collect rent, it's another to live in that same tough neighborhood and try to collect rent from the tenant upstairs (yet alone dealing with them as a neighbor).

    Also, make sure you go in knowing your exit. Will you stabilize and hold or will you sell after 1-year?

    0Reply
  • Account Closed
    Professional Auctioneer · Baltimore, MD · Member since 2015 · 1k+ posts · 1k+ votes
    10y

    yes, true, I just purchased one in Baltimore county for $5,000. Sold it for $6,000 DP and $34,000 take back for three years, interest only at 10%. 

    Real estate is really a wonderful business. Seek and yea shall find. 

    0Reply
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