First-time Chicago investor interested in BRRRR NW Indiana market

[Jack Plantin]

Hello everybody, I am a union construction worker currently renting and living in Chicago. Was originally planning on purchasing and occupying a duplex in the city with a 3.5% FHA loan, but my wife and I were not willing to sacrifice commute and lifestyle (lived in a basement, not willing to do it again) to house-hack, so we ended up signing an apartment lease for another year.

After receiving some inspiration and anecdotes from coworkers recently, I've recently become interested in buying, rehabbing and renting out a SFR in NW Indiana or SW suburbs around Joliet, IL.

Our financial situation is pretty solid. 6k combined monthly income and 2.5k monthly expenses. Wife has a 700 credit score and I have a 650 credit score with no debts besides an auto loan that is being paid off with Turo. I have around 18k cash saved up, with another 4-5k in stocks that I'm willing to cash out if necessary. I have a couple potential partners willing to help finance a good deal if there is profit to be made. We would be looking at properties around 80-120k to minimize financial risk if the property remains vacant for longer than we expect.

I have a couple questions for now:

1. How is the rental market in NW Indiana or SW suburbs?

2. Am I likely to find any good deals just on Trulia, Zillow, MLS, etc. or should I look for foreclosures/short sales/under-contract to make the numbers work?

3. What kind of partnership is standard when taking outside investors money for BRRRR? 50/50 on rental profits or a 10-12% hard-money loan?

Regards,

Jack

[Daniel Guerra]

1) Rental market is good in NW Indiana. There’s a variety of homes from class A+ (St. John, etc) to D- (Gary, etc.). I would stay away from Illinois to be honest. Property taxes kill cash flow, population trend is bad, etc. Joliet is ok, depending on the location within, Will counties taxes are not as bad as cook counties.

2) To find a true deal, you will have to look off market. You might find something on the MLS, rehab, and make 5K/10K.

3) There’s a variety of partnerships out there. There really is no standard. I guess if somebody was going to finance 100% of a deal and you find the deal then manage the rehab, 50/50 sounds about right.

It comes down to this. You will need 2 out of the 3. Hustle, Money, or Knowledge.

Honestly, continue to educate yourself and save money. Definitely get out of the renting game and own a property. 

Best of luck!