Bad idea to buy very cheap property in Chicago?

Question

I'm interested in investing in real estate but I've yet to purchase my first property. I've seen a lot of real estate at low prices in the Chicagoland area. I'm assuming it's because these properties are in areas with high rates of crime. I'd love to read advice from anyone here who has invested in that kind of thing. Would you advise against it? Is the low price of admission not worth it in the long run because of the risk of being killed while remodeling or living in one of the properties?

Crystal Smith · Answer

I'm going to assume that when you say cheap it means less than $100K or even less than $50K. Don't automatically assume that when a property is cheap it's a bad investment or it's in a high crime area. About the only assumption, you can make on a property that's cheap is you'll have to spend $ on a renovation. This is overused saying but crime in Chicagoland area is a block by block issue. Process wise you should do the following:

• Use the Trulia color-coded crime map to check on your property of interest. It's quick & easy. You can also use google maps to check the location; i.e. is it on a busy street or not
• If the property is located in a low crime block then determine the After Repair Value of the property depending on whether you want to hold it for a rental or flip it.
• If the numbers look potentially good then you'll have to decide whether to take a look @ the property & determine how much $ are required to renovate

After you run analysis on enough properties & become familiar w/ the different parts of Chicago you'll eventually know when to pull the trigger on a "cheap" property.

Mike Russo · Answer

Michael, I live outside of Chicago. Before buying, you REALLY need to understand where you are buying. You could end up in a safe neighborhood or a risky neighborhood. I would ask people who invest in Chicago before pulling the trigger. Have you considered a turn-key deal? Brie Schmidt has a good site if you are considering that route.

http://turnkey-reviews.com/turnkey-investing-podcast/

.

http://turnkey-reviews.com/turnkey-investing-podcast/

Aaron Vaughn · Answer

Mike is right Mike. I invest in C and D neighborhoods in Chicago you need to know the lay of the land

Mike Russo · Answer

In addition, you will want to study the laws regarding rental properties in Chicago. Mark Ainley and Brie Schmidt can help you there too because they are seasoned veterans on the topic.

Michael Bracken · Answer

@Crystal Smith That is really good insight. I have spent time working neighborhoods in south Dallas. People sometimes refer to as "war zones". But if you know the area and the shifting demographics there are properties to be bought with reasonable risk in blocks that are on the move. Also sometimes people use the phrase "war zone" for "out of my comfort zone". I would encourage anyone to drive the neighborhoods during the day and see for your self.

Gilberto Alicea · Answer

I own property before in this areas and is not so bad. But I did learn that the geographic analysis is very important if you are buying to rent for the reason that you have to rent true section 8 on less the income is their. I also had one experience where I was approached by gang members and they ask for a percentage of my business a case of beer take care the problem.

Alex Bok · Answer

If you have the right contractors and agents in place it is a great buy imo. Management is key here. Rents are going up all throughout Chicagoland so if you can get in at a good price and choose section 8 or market price you can get a good return here

Frank S. · Answer

@Bel Roma

"I've seen a lot of real estate at low prices in the Chicagoland area. I'm assuming it's because these properties are in areas with high rates of crime."

To get better responses, consider posting the areas, neighborhoods, blocks or cross streets.

Mark Ainley · Answer

@Bel Roma there are certain areas to avoid and certain areas you can make money in. The key is having quality property management.

Bad idea to buy very cheap property in Chicago?

Bad idea to buy very cheap property in Chicago?

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