Finding a good first deal in the Chicago market?

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Finding a good first deal in the Chicago market?

James B.
Chicago, IL · Member since 2016 · 12 posts · 1 vote

I want to invest in the Chicago market, but it seems so expensive to find a good duplex, triplex, 4plex.

Does anyone have any suggestions how to go about securing a good solid first deal?

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Grant Rothenburger
Investor · Taylor Mill, KY · Member since 2016 · 2k+ posts · 964 votes
8y

@James B. I would recommend going to some meetups local to you and networking with investors there. I help organize a meetup here in Cincinnati and many deals have happened between the members that most likely would not have known each other without the meetup.

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  • Grant Rothenburger
    Investor · Taylor Mill, KY · Member since 2016 · 2k+ posts · 964 votes
    8y

    @James B. I would recommend going to some meetups local to you and networking with investors there. I help organize a meetup here in Cincinnati and many deals have happened between the members that most likely would not have known each other without the meetup.

    1Reply
  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    8y
    Originally posted by @James B.:

    I want to invest in the Chicago market, but it seems so expensive to find a good duplex, triplex, 4plex.

    Does anyone have any suggestions how to go about securing a good solid first deal?

     Depends on your expectations of a good deal?

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  • James B.
    OP
    Chicago, IL · Member since 2016 · 12 posts · 1 vote
    8y
    Originally posted by @Brie Schmidt:
    Originally posted by @James B.:

    I want to invest in the Chicago market, but it seems so expensive to find a good duplex, triplex, 4plex.

    Does anyone have any suggestions how to go about securing a good solid first deal?

     Depends on your expectations of a good deal?

     A traditional financed deal with 10-20% down, cash flowing, minor rehab would be fine. For my first deal I don’t want anything major.

    0Reply
  • James B.
    OP
    Chicago, IL · Member since 2016 · 12 posts · 1 vote
    8y

    @DavidZheng can you weigh in?

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  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    8y
    Originally posted by @James B.:
    Originally posted by @Brie Schmidt:
    Originally posted by @James B.:

    I want to invest in the Chicago market, but it seems so expensive to find a good duplex, triplex, 4plex.

    Does anyone have any suggestions how to go about securing a good solid first deal?

     Depends on your expectations of a good deal?

     A traditional financed deal with 10-20% down, cash flowing, minor rehab would be fine. For my first deal I don’t want anything major.

     That does not seem unreasonable, what areas are you looking in?

    Note - it has been a slow spring with not much coming up that is good. 

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  • James B.
    OP
    Chicago, IL · Member since 2016 · 12 posts · 1 vote
    8y

    @Brie Schmidt I really like the near west side, but the east of Western properties are expensive. Ukrainian village is all new construction it seems like. 

    Ideally I want a decent location not too far from the loop. Cash flow, easy to rent, minor rehab work is fine think: ~$20-30k (painting, trim, minor things). I want it cash flowing immediately as appreciation isn’t promised. I want to use the income to save for the next one and so on. I wouldn’t mind a value add rehab with a minimal budget to cash out refinance.   

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  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    8y
    Originally posted by @James B.:

    @Brie Schmidt I really like the near west side, but the east of Western properties are expensive. Ukrainian village is all new construction it seems like. 

    Ideally I want a decent location not too far from the loop. Cash flow, easy to rent, minor rehab work is fine think: ~$20-30k (painting, trim, minor things). I want it cash flowing immediately as appreciation isn’t promised. I want to use the income to save for the next one and so on. I wouldn’t mind a value add rehab with a minimal budget to cash out refinance.   

     Because of the loan limits a lot of those properties require more than 20% down

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  • James B.
    OP
    Chicago, IL · Member since 2016 · 12 posts · 1 vote
    8y

    @Brie Schmidt loan limits for conventional mortgage? What about if it was house hacked? 

    I guess that’s my other option. A place that was house hacked with at minimum, all expenses covered. 

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  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    8y
    Originally posted by @James B.:

    @Brie Schmidt loan limits for conventional mortgage? What about if it was house hacked? 

    I guess that’s my other option. A place that was house hacked with at minimum, all expenses covered. 

    correct, for a conventional mortgage if you live there or not. FHA is even llower

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  • James B.
    OP
    Chicago, IL · Member since 2016 · 12 posts · 1 vote
    8y

    @Brie Schmidt so what do young investors do with not a whole lot of cash available for a down payment?

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  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    8y
    Originally posted by @James B.:

    @Brie Schmidt so what do young investors do with not a whole lot of cash available for a down payment?

     Be flexible on area.  Think of it like a pie, you get 4 pieces of the pie and can choose which one is biggest, but to have a bigger piece the others need to be smaller.  The pieces are cash flow, location, price, and condition.  

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  • Dave Homyak
    Investor · Ann Arbor, MI · Member since 2016 · 71 posts · 56 votes
    8y

    Brie had a house listed that was being AirBnBed out.  Way easier to get decent cash flow that way.  Plus, Chicago is an AirBnB friendly city.  If I was looking to get into Chicago market, AirBnB is the easiest way to go, IMHO.  Triplex or quad, live in one unit, and have the ability to rent out the other 3.  If you can rent the other 3 together to accommodate bigger groups, you can command a higher price.  Even with management fees, you are still money ahead of LTR.

    1Reply
  • John CasmonPro Member
    Cincinnati, OH · Member since 2013 · 1k+ posts · 1k+ votes
    8y

    @James B. It depends on how much you have to invest and your investing goals. As @Grant Rothenburger pointed out, joining a meetup is a great way to connect with folks who may be able to help. @Brie Schmidt hosts a great meetup every third Tuesday and I host one every other Monday. 

    As far as doing deals, you'll need to get creative if you don't have the capital needed for your first deal, but there are a lot of tricks that investors use to invest with little to no money down. @Brandon Turner even wrote a book on it. 

    1Reply
  • Jeremy Marek
    Evergreen Park, IL · Member since 2016 · 138 posts · 59 votes
    8y
    That is very doable in Chicago, it all depends on where you are willing to look. West side has it's tough neighborhoods, but you can cash flow. also, you should brush up on the Chicago LTO to make sure u are compliant (or if renting in the city is even worth it, some guys skip Chicago all together and go into the suburbs...
    1Reply
  • Account Closed
    Member since 2018 · 6 posts · 0 votes
    7y
    @Dave Homyak Chicago is no longer an AirBnB friendly city. Two years ago legislation was passed and in effect 2018. Biggest thing is that you have to have a license to operate Airbnb. The online AirBnB websites are required to send the city listings of all properties registered on their Website. That’s how the city is cracking down and the fines are hefty. Lots of legal implications. Before engaging with Airbnb rentals get legal advice and do your research.
    0Reply
  • Bob Floss II
    Attorney · Northbrook, IL · Member since 2017 · 719 posts · 549 votes
    7y

    @Account Closed Chicago is not friendly for investors trying to Airbnb their condos. If you own a 2 flat or larger building you can make a great profit using Airbnb. Yes the city has requirements but most services I’ve encountered makes the process pretty painless for the investor. Yes you are paying an extra fee and tax but I’ve yet to see a property where it made a cash flowing property turn negative.

    0Reply
  • Alex Ferraro
    Investor · South Bend, IN · Member since 2018 · 111 posts · 57 votes
    7y

    Hi @James B., I'm looking to do the same thing (house hack as close to the loop as possible) and have run into the same issues. I think Brie is right in that you have to sacrifice in one area of the pie if you want another.

    @Bob Floss II, do you know much about the AirBnb rules for renting out a single room of a unit or a garden unit in Chicago?

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