Am I paying to much for a Lower West Side Chicago Multi-Unit?

Question

Hi BP!

I just went under contract for a gut rehab 4-unit in Pilsen, Chicago.  It may not technically be Pilsen but is definitely part of the Lower West Side neighborhood.  Basically, after the offer was accepted I became worried that I offered too high.  Is there anyone on here that knows west Pilsen/Heart of Chicago well?  I'd like some peace of mind that $600k on a gut rehab 4-flat isn't a crazy price.  It's hard to find comps for gut rehab 4-units in the area!

Account Closed · Answer

yikes! How's that bad boy gonna cash flow?

Lorenzo Perez · Answer

Like people said before, if the numbers works for you then good. You should be able to get at least $ 1000 per apartment. That area West of Ashland is still not the best but it will get there.

Larry Fried · Answer

@Nick Patterson When you say turnkey, does that mean that the units will all be rented out (except yours) by the time you close, or are you responsible for finding tenants?  What are the units renting for or expected to rent for?

Crystal Smith · Answer

The question of whether you've offered too much is an interesting one.  Prices only go up when people offer more than what's sold in the market in the past.   In the last 6 months within a one mile radius of your property, staying in the same area, the highest sale price for a small multifamily (4 units or less) is $355K.  So have you paid too much?  If the property meets your cash flow criteria then the answer is probably no.  The only thing I would be concerned w/ if you're going to get a loan is finding comparables.  If you can't find enough comparables or they are all much lower then you may have to put up much more cash than expected.

Kevin Coleman · Answer

That does seem like its a little pricey but with the "Paseo" announcement there's a Pilsen premium.  I lived in Pilsen(19th and halsted) in 2014-2015 in a 1 bedroom gut rehabbed apt and paid $1150.  The apartment was high quality and my landlord said he always rents the apartment within a day or so.  He also owned another building in Pilsen(also right off of Halsted) with 3bd-1bath units and got $1500 in rent.  I say that because I just looked at the property on Redfin and based on the rent roll there appears to be room for a rent increase.  Good Luck.

Nicholas Pascullo · Answer

Sorry, I guess I was unclear. The building has just been gut rehabbed, and I'm buying the product! It's a turn key home that I'm buying. It's just east of Damen, right off the pink line. 1906 W 21st Pl is the address. The listing is on MLS/redfin, etc

Nick Patterson · Answer

$600K for a gut rehab in west Pilsen, yes.  That is way too high.How much work needs to be done?

We recently purchased a few 4 flats in Bridgeport for $225K that needed a full gut.

How far west are you?  West of Damen?  Close to the pink line?

Josh Kundrat · Answer

Pilson is hot so you can probably get $5500 in gross rent, but with another 100k into it for the rehab and i'm also failing to see how it's gonna cash flow, but could see some good appreciation in the coming years.

Frank S. · Answer

Dude, that's a lot of cash.  How are your numbers?  Post your spreadsheet or you should list the address.  You have it under contract so who cares.

Nicholas Pascullo · Answer

I'll live in it for a year, but with me paying myself rent it should cash flow at least $700/month