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Updated almost 10 years ago on . Most recent reply

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Will Johnston
  • Investor
  • Washington, DC
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Mid-Sized Multi-Families in Chicago, What am I Missing?

Will Johnston
  • Investor
  • Washington, DC
Posted

I live and invest in DC, but I'm from the Chicago burbs, so every now and again I Redfin properties in Chicago.  The other day I'm browsing around the Austin neighborhood on the west side, and I find a bunch of multi-family properties that aren't selling but seem like no-brainers.

I'm finding places listed at $450k, with gross rents of $15k. Even assuming 60% expenses and a 30% down mortgage at 5.5%, you're looking at like $4k/month cash flow, or a 35% CoC return.

I've got a friend who lives in Austin, so I've spent some time there and know it isn't exactly Chicago's premier neighborhood, but it doesn't strike me as a terrible area either.  And these numbers seem sick.

So I've gotta ask, what am I missing?  I haven't done any multi-family, so are my numbers off somehow? This just seems too good to be true.

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Jean Bolger
  • Aurora, CO
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Jean Bolger
  • Aurora, CO
Replied

@Will Johnston If I were you, I'd call several property managers that work around there and get their take on the situation. To be sure, some of them may just try to talk you in to buying something there no matter what and hiring them so they can get some bucks off of you, so you'd need to be cautious. But you may get lucky and find someone who really knows what they are doing in that type of property/neighborhood. And if they are all leery of that neighborhood then at least you'll know it would be really difficult to make something work there.

  • Jean Bolger
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