flip, hold, sell or none of the above

Member since 2020 · 10 posts · 1 vote

I was able to get a single family home under contract for 207,500 ARV 300,000 rehab 25/30. I'm getting a 5.875 interest rate taxes $8700 and insurance $900. The numbers made sense when taxes where $4700 for rental. Unfortunately the $4700 was with tax exemption I will not be getting. I believe I can get $2500 as a rental because of location Bolingbrook, IL. I would like some feed back and thoughts.

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Marco Anemone

Bolingbrook Illinois · Member since 2018 · 50 posts · 33 votes

@Elvia Morales, is your intention to flip it or rent it? How many bedrooms? Is it in 60440 or 60490? Rental numbers may be a little tight in the short term but over time your rent will increase while your loan principal and interest payments remain the same (assuming your loan is fixed rate for the entire term). Regrettably taxes and insurance are still likely to increase.

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Marco Anemone
Bolingbrook Illinois · Member since 2018 · 50 posts · 33 votes
4y
@Elvia Morales, is your intention to flip it or rent it? How many bedrooms? Is it in 60440 or 60490? Rental numbers may be a little tight in the short term but over time your rent will increase while your loan principal and interest payments remain the same (assuming your loan is fixed rate for the entire term). Regrettably taxes and insurance are still likely to increase.
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Elvia Morales
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Member since 2020 · 10 posts · 1 vote
4y
Thank you for your reply! I wanted to keep it as a rental. Unsure what makes more sense flip or rental. It's in the 60490 zip code. Currently a 3 bedroom looking into adding closet to what they had as storage it has a window. This home is a raised ranch.
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Elvia Morales
OP
Member since 2020 · 10 posts · 1 vote
4y
Quote from @Marco Anemone:

@Elvia Morales, is your intention to flip it or rent it? How many bedrooms? Is it in 60440 or 60490? Rental numbers may be a little tight in the short term but over time your rent will increase while your loan principal and interest payments remain the same (assuming your loan is fixed rate for the entire term). Regrettably taxes and insurance are still likely to increase.

@Marco Anemone, Thank you for your reply! I wanted to keep it as a rental. Unsure what makes more sense flip or rental. It's in the 60490 zip code. Currently a 3 bedroom looking into adding closet to what they had as storage it has a window. This home is a raised ranch
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Marco Anemone
Bolingbrook Illinois · Member since 2018 · 50 posts · 33 votes
4y
@Elvia Morales, converting the storage space into a bedroom makes sense. This more than likely the route to go as it should increase property value and increase rental amount. You may want to look at housing choice voucher program (section 8)- You might be able to get a bit more for rent.
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Elvia Morales
OP
Member since 2020 · 10 posts · 1 vote
4y
@marco anemone, would you do keep it or flip it?
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Chris Mills
Investor · Northern VA · Member since 2020 · 124 posts · 87 votes
4y
I would lean toward keeping it as a rental as well. If PITI comes out to $2,000 or less with the higher taxes, I'd say it's a keeper.
1 Reply
Jake McVey
Real Estate Agent · Bolingbrook IL · Member since 2022 · 38 posts · 17 votes
4y
Quote from @Elvia Morales:

I was able to get a single family home under contract for 207,500 ARV 300,000 rehab 25/30. I'm getting a 5.875 interest rate taxes $8700 and insurance $900. The numbers made sense when taxes where $4700 for rental. Unfortunately the $4700 was with tax exemption I will not be getting. I believe I can get $2500 as a rental because of location Bolingbrook, IL. I would like some feed back and thoughts.

There's of course a lot of variables here. Depending on where the raised ranch is at, there are some common maintenance issues that could be costly over time because of the lack of building codes during the early years of Bolingbrook being established. I've flipped a few houses in Bolingbrook, and my family has lived here since the first homes were built way back in 1961 so we've come across quite a bit of the issues that could arise depending on what neighborhood you're in. Overall- Bolingbrook is an amazing place to invest, but as you are noticing higher taxes can cut into profits. Feel free to reach out if you have any specific questions- glad to help out others working in my neck of the woods!
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Elvia Morales
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Member since 2020 · 10 posts · 1 vote
4y
Quote from @Chris Mills:

I would lean toward keeping it as a rental as well. If PITI comes out to $2,000 or less with the higher taxes, I'd say it's a keeper.

@Chris Mills, Yes PITI is around $1800. Thank you so much for your feedback.
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Elvia Morales
OP
Member since 2020 · 10 posts · 1 vote
4y
Quote from @Jake McVey:

Quote from @Elvia Morales:

I was able to get a single family home under contract for 207,500 ARV 300,000 rehab 25/30. I'm getting a 5.875 interest rate taxes $8700 and insurance $900. The numbers made sense when taxes where $4700 for rental. Unfortunately the $4700 was with tax exemption I will not be getting. I believe I can get $2500 as a rental because of location Bolingbrook, IL. I would like some feed back and thoughts.

There's of course a lot of variables here. Depending on where the raised ranch is at, there are some common maintenance issues that could be costly over time because of the lack of building codes during the early years of Bolingbrook being established. I've flipped a few houses in Bolingbrook, and my family has lived here since the first homes were built way back in 1961 so we've come across quite a bit of the issues that could arise depending on what neighborhood you're in. Overall- Bolingbrook is an amazing place to invest, but as you are noticing higher taxes can cut into profits. Feel free to reach out if you have any specific questions- glad to help out others working in my neck of the woods!

Thank you for your feedback. Yes Bolingbrook is a very good place but those taxes gobble the profits. It's located by Lili cache east of Weber. Great to hear your from the area. I will definitely reach out.
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Larry Turowski
Flipper/Rehabber · Rochester, NY · Member since 2014 · 1k+ posts · 1k+ votes
4y
@Elvia Morales Flip it. If you think you can find another like this, flip it. It looks like you should walk away with at least 40k. (Hint, do a flat fee listing and save 3% listing agent commission.)
Once you have more money or time than you can commit to flips, then start holding some.
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Elvia Morales
OP
Member since 2020 · 10 posts · 1 vote
4y
Quote from @Larry Turowski:

@Elvia Morales Flip it. If you think you can find another like this, flip it. It looks like you should walk away with at least 40k. (Hint, do a flat fee listing and save 3% listing agent commission.)
Once you have more money or time than you can commit to flips, then start holding some.
Thank you Larry!
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Marco Anemone
Bolingbrook Illinois · Member since 2018 · 50 posts · 33 votes
4y
@Elvia Morales, everyones situation is different and everyone's objectives may be different. You should make your decision based on what your situation, needs, goals, and objectives are and proceed with a course of action that best meets the aforementioned. For me personally, I am currently buying to hold and rent. Purely coincidental, I just closed on a single family house in Bolingbrook this morning. So to your question, I would be inclined to do both. Make it a 4 bedroom and rent it. And then sometime after a year has passed, reassess my goals and objectives and sell at that time, should it help achieve that goal/objective. I say after a year because selling before 1 year has passed would create a larger tax liability.
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Elvia Morales
OP
Member since 2020 · 10 posts · 1 vote
4y
Quote from @Marco Anemone:

@Elvia Morales, everyones situation is different and everyone's objectives may be different. You should make your decision based on what your situation, needs, goals, and objectives are and proceed with a course of action that best meets the aforementioned. For me personally, I am currently buying to hold and rent. Purely coincidental, I just closed on a single family house in Bolingbrook this morning. So to your question, I would be inclined to do both. Make it a 4 bedroom and rent it. And then sometime after a year has passed, reassess my goals and objectives and sell at that time, should it help achieve that goal/objective. I say after a year because selling before 1 year has passed would create a larger tax liability.

I really appreciate your feedback. A couple of things you mentioned I had forgotten. Thank you again!
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Basit SiddiqiBusiness Member
Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
4y
Property taxes are almost 5%($8,700 / $207,500)

They will likely go up after a purchase + go up again when you pull permits for repairs/ renovations.
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