Newbie from Naperville, Illinois

24 Replies

Hi Everyone,

My name is Isaac Lane and I'm from the western suburbs of Chicago. I'm a mechanical engineer that is striving for financial independence and see real estate investing as a great avenue for it! Over the past year and half, I've been vigorously educating myself about real estate investing whether it be listening to the BP podcasts or reading books like "The Book on Rental Property Investing" by Brandon Turner.

I plan to purchase my first buy and hold multifamily property in April 2021 around the Chicagoland area. As I continue to prep to purchase my first property, I would l love to learn from people that are currently investing what they wish they knew going into their first deal?

I'd love to connect with anyone from the Chicagoland area or really anyone who's interested in networking. I look forward to it, Thank you!

Welcome to BP Isaac!

You're in the right place, there's a ton of great investors here in the Chicagoland area. Check out Mark Ainley and Tom Shallcross' "Straight up Chicago Investor" podcast as well! They dive deep into the different markets in and around Chicago.

I would get familiar with the village or town code you're considering investing in. Each one can have their own set of rules that you need to look out for (Bolingbrook requires landlords to complete a class and pay an annual landlord license fee, or another example is Berwyn requires permits for a lot of various work and contractors to be licensed and bonded to the city of Berwyn.) 

One "gotcha" moment was having to replace all the electrical wiring in my 3-flat here in Berwyn. I accounted for replacing the old electrical panels but didn't take a look at the actual wiring, which was outdated cloth wiring and could be a potential fire hazard. So performing a thorough due diligence is essential, and if you're looking into older multifamily properties I would pay attention to the condition of all the mechanicals.

@Isaac Lane

Welcome to the forums! I highly recommend reading Set for Life or the House Hacking Strategy when getting started if you haven't already. What areas will you be targeting in your search?

Going into your first deal you'll realize you have to make concessions one way or another whether it's price, location, cash flow, appreciation potential, etc. You don't need to know everything, just enough to buy your first property. Also as a landlord you're in the customer service & sales business.

Watch out for properties with galvanized steel plumbing since depending on the age corrosion can become a real problem and affect your water pressure.

Hi @Isaac Lane - looks like you're heading towards the right path! I am a fan of buy and hold investment properties, however if you are going to invest here in Chicago, make sure you are aware of tenants rights and do you due diligence when renting, especially now because of the eviction moratorium. Being a landlord requires its own set of skills as @Paul De Luca stated, its customer service oriented. 

Hi @Isaac Lane ,

Congrats on moving forward with your first rental property. As a relatively new investor, I strongly encourage you to really study your market before going for a deal. Being from the Chicago Suburbs myself, I think your focus of the Western suburbs is a strong place to start. The ratio of purchase price to rental value is still strong there with a wide range of housing stock and price points. Additionally, being close to Naperville offers many of the benefits of major cities, i.e. (high paying employers, and entertainment) without the drawback of Chicago public schools. Covid 19 restrictions tend to be a little more lax outside of Chicago as well, which has resulted in a shift of people moving out of the city into the suburbs for cheaper cost of living a, less congestion, and more entertainment options. As far as deal analysis goes, my best advice is to be on the look out for value add opportunities. As an example, one of the reasons I selected the property I am in now was due to an unfinished basement that has a separate walkout entry that can be built to 2 bedroom unit for relatively minimal cost and potentially double my cashflow for the property. 

Good Luck!

Hi @Isaac Lane , welcome to not only bigger pockets but the Chicago land REI community. There are a lot of friendly people here who are great resources. As others have mentioned, please check out the straight up chicago investor podcast as well as the website. We have a lot of great resources there to help you continue learning!

Hi Issac and welcome. I wish I would have done more research on the cost of rehab. My first flip I lost $8,000. I just kept discovering repairs I hadn't budgeted for. Glad to see you are reading. I wish I had done more before that first flip. It's been nothing but awesome after though so keep going.

Welcome to BP. I'm In Ontario, Canada, so I don't know your market in any way but all I can say is build yourself up a great network of anyone you can, so you can listen & learn. Listen to as many podcasts as you can. I listen to loads of BP podcasts. I'm not going to do 90% of what is being taught out there because there's so many different angles on real estate investing  and also there's so much being talked about that is specific to the USA. However, I've gotten to know the language of real estate investing just by listening to all the podcasts and I've been able to pick a market & a strategy thanks to what I heard. The BP podcasts are awesome. Even if the topic is completely unrelated to what I'm doing, I often find that I can learn mindset ideas from those podcasts. You can learn how to be professional, learn & develop strategies, marketing, getting leads, being legal & legit, getting yourself systematized,  being profitable, problem solving, etc. Those things transcend strategies, borders, cultures & politics.

Every journey begins with the first step

Welcome to a great community

@Isaac Lane It is exciting to hear about your journey and especially to hear you are from the burbs(I am in St Charles).  You should connect with people like @Josh Mitchell@Tony Angelos  who know the Dupage market well on the investment side.  @Paul De Luca also brings up a valid point on a plumbing pitfall you need to look out for based on the housing stock and there is plenty more too.  I would also advise you visit on a monthly network group or two to hear about what others are working on.  You learn and get inspired from others with that type of interaction.  @John Warren has a group that meets virtually this upcoming Tuesday. @Eudith Vacio also brings up a great point with the local laws you want to account for before closing.  Places like Naperville are pretty easy to deal with but towns like Glendale Heights, Aurora, and West Chicago come with rental licenses, crime free classes, and annual inspections.  They are nothing you cant account for but something to look out for.  

@Isaac Lane
Hi Isaac,

Welcome to the forums! Congrats on navigating your way here. This is where I started, after listening to the BP podcast, and I was able to knock out a couple of rehabs in as many years while working full time with a toddler. I’ve definitely learned a lot in the process and I’d be happy to share my experiences with you if you’d like. The buy and holds I own are in Naperville and Aurora. Shoot me a message if you’d like to connect.

Cheers,

Rob 

@Isaac Lane - I don't know what else to say besides, welcome!  You have a ton of smart investors above already putting you on the right path.

I think it's awesome that you nailed down a date for purchasing your first property, commitment is half the battle.

Let us know any way we can help!

Isaac,

Welcome to BP and to Naperville. I am in Naperville and have been active in smaller buy and hold multi units primarily in Kane county. I have added almost 30 tenants over the last 5 yrs thanks to BP.

Happy to connect to share resources.

regards,

Joe

Originally posted by @Isaac Lane :

Hi Everyone,

My name is Isaac Lane and I'm from the western suburbs of Chicago. I'm a mechanical engineer that is striving for financial independence and see real estate investing as a great avenue for it! Over the past year and half, I've been vigorously educating myself about real estate investing whether it be listening to the BP podcasts or reading books like "The Book on Rental Property Investing" by Brandon Turner.

I plan to purchase my first buy and hold multifamily property in April 2021 around the Chicagoland area. As I continue to prep to purchase my first property, I would l love to learn from people that are currently investing what they wish they knew going into their first deal?

I'd love to connect with anyone from the Chicagoland area or really anyone who's interested in networking. I look forward to it, Thank you!

There's a lot I wish I knew going into my first deal, but I guess the biggest thing was how much I did not like single families to hold and buying turnkey properties at retail price. Regarding the single families- Every time there was a vacancy it drove us nuts.  So we finally decided to hold multifamilies and only flip single families. With the multi's if there was a vacancy in one unit at least we had the other units occupied. That's not to say there's anything wrong with a strategy of holding single families, we just decided we didn't want any assets that had a period of time that they were not throwing off cash, so we stopped holding single families. 

Regarding the turnkey properties- The first multi's we purchased were move-in ready turnkey at retail price. When the market took a turn we found ourselves underwater. So we changed our strategy and only purchased distressed multi's or commercial, improved, then rented. The objective: The $ invested never be more than 80% of the market value so if we ever have to sell for emergency reasons we at least break even. That's the objective in a perfect world.

@Isaac Lane welcome man! Chicago is such a great community to invest in and there are so many wonderful people on here. You can always reach out to the group if you need anything. 

@Isaac Lane Welcome! Happy to help in any way that I can. There's a lot of FB groups/events that happen within them. Feel free to PM and I can provide (I don't think you can post these in the forums).

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