Flipper · Elmhurst, IL · Member since 2011 · 96 posts · 23 votes
Anyone invest in 4-plex, 6-plex in Chicago south suburb? I came across few listings that look good on paper. For example, one 6-plex list for about 80k, and market rent is around $800/month /unit on rentometer.com. Definitely in low income area, so tenant turn over could be high. Crime rate seems low. Even with high property tax, if you get $500/month/unit, the numbers still look very good. Is this too good to be true? Is this area a good place to invest in small multi buildings? Would love to hear your story.
Rental Property Investor · Grand Haven, MI · Member since 2015 · 71 posts · 108 votes
10y
For some perspective, I have owned 4 plex's in Lansing, IL, a south suburb of Chicago that borders Indiana. At the time of this writing I currently still own 1 of them. I purchased it for $180,000 & the gross rents are approximately $3,000/mo. On the surface everything looks great. However, the number one thing you need to pay attention to in the south suburbs of Chicago (Really all of Chicagoland) when evaluating a building is the tax rate. The tax rates in these suburbs will absolutely kill you. Do your research and pay attention to the trajectory of the taxes. The effective property tax rate in Illinois is 2.25% (2nd behind NJ but not for long) and that will be revised higher after the property tax hike in Chicago gets implemented. In some of these south suburbs such as Harvey, Dolton, Park Forest, etc it is not uncommon to see effective tax rates of 4-6%, sometimes even higher. I know this sounds absurd but it is true. That means for every $100,000 you shell out you may be on the hook for $4,000-6,000 a yr in property taxes. I am currently paying an effective tax rate of over 4% on my 4 plex in Lansing. I hope this helps some.
Rental Property Investor · Grand Haven, MI · Member since 2015 · 71 posts · 108 votes
10y
For some perspective, I have owned 4 plex's in Lansing, IL, a south suburb of Chicago that borders Indiana. At the time of this writing I currently still own 1 of them. I purchased it for $180,000 & the gross rents are approximately $3,000/mo. On the surface everything looks great. However, the number one thing you need to pay attention to in the south suburbs of Chicago (Really all of Chicagoland) when evaluating a building is the tax rate. The tax rates in these suburbs will absolutely kill you. Do your research and pay attention to the trajectory of the taxes. The effective property tax rate in Illinois is 2.25% (2nd behind NJ but not for long) and that will be revised higher after the property tax hike in Chicago gets implemented. In some of these south suburbs such as Harvey, Dolton, Park Forest, etc it is not uncommon to see effective tax rates of 4-6%, sometimes even higher. I know this sounds absurd but it is true. That means for every $100,000 you shell out you may be on the hook for $4,000-6,000 a yr in property taxes. I am currently paying an effective tax rate of over 4% on my 4 plex in Lansing. I hope this helps some.
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
10y
A lot of the South suburbs have those types of numbers. Hope you have a tank to go collect rents though... I have seen buildings listed in those neighborhoods listed really cheap but with no plumbing left since it was all cut out.
Flipper/Rehabber · Crown Point, IN · Member since 2009 · 482 posts · 216 votes
10y
$80k is a very low price, unless it needs a lot of work. What suburb is it in? I can tell you right away how bad the area is, if I know where it's located. Rick is absolutely right about taxes. Some of the properties taxes are deal killers. I rehab and sell properties in the south suburbs of Chicago and Northwest Indiana. Indiana's taxes can be less than half of Illinois and the rental rate is not much lower than Illinois.
Rental Property Investor · Grand Haven, MI · Member since 2015 · 71 posts · 108 votes
10y
Scott is right on with what he's saying. The majority of my properties outside of the city of Chicago are in Northwest Indiana. I'd still love to know what town we're talking about. Please don't say Ford Heights.
Flipper · Elmhurst, IL · Member since 2011 · 96 posts · 23 votes
10y
The property is in Riverdale, close to the railroad yard, sold as-is and very negotiable on price. Not sure about annual property tax. Sounds like owner is desperate to get out of this house. Might be a good deal for someone with guts and a tank to collect rent.
Western Suburbs, IL · Member since 2016 · 58 posts · 16 votes
10y
I just looked on Zillow and there are 3 properties bigger than the one you're mentioning between $87k to $130k that don't need a ton of work. Is this really that great of a deal?
Anyone invest in 4-plex, 6-plex in Chicago south suburb? $500/month/unit, the numbers still look very good. Is this too good to be true? Is this area a good place to invest in small multi buildings? Would love to hear your story.
Before you purchased a building in the South suburbs make sure you:
Review & understand the village requirements for sale of a property. Some villages are easy to work w/. Others are arcane
We end up killing deals in the South Suburbs because of taxes. In some cases the taxes are so high that it kills the cash flow number. The taxes are why some owners are trying to sell. If you find a place where the cash flow number works even w/ the current taxes you have to make sure that the taxes aren't a result of an exemption (owner occupied for example) or grandfather. An exemption that you loose if you purchase as an investor & don't plan to live there.