Property Analysis Help South Side Chicago

12 Replies | Chicago, Illinois

Hi all, I recently received a deal on a  property on the south side of Chicago in Woodlawn neighborhood that is a duplex and in good shape. 

2 flat with 3 bed/1bath and 2 bed/1bath with 2 bed unit vacant (states was hoping to get buyer that would move in and rent other flat) and 3/1 unit rented for $900 currently

Asking price: $150k

Downpayment: $37.5k (25%)

P&I (4%): $528/mo

Property tax: $271/mo

Insurance: $117/mo

PITI: $912/mo

Expense: Snow removal/lawn $50, Yard cleanup $50

Can likely rent out second unit for ~$850/mo but currently vacant - ? should I use this to calculate purchase price?

Income = $900 + $850 = $1750

Expense = $912 + $50 + $50 + 5% vacancy ($87.50) + 5% CapEx ($87.50) - will manage myself = $1187

Closing cost = ? ~7k

Balance = $563

Cap Rate = 4.5%

Cash on Cash = 15%

No repair cost needed likely. Seems like an alright deal although this is assuming the rental of the 2nd unit. What do you guys think?

@Peter Halliday you're right. surrounding properties of similar size are ranging from $80-220k and of course differing on their interior build. This place has been on/off the market for 1 1/2 years. The numbers look good. Not sure why it has been on market so long. 

Seems like there is not much difference between a 3bed and 2bed. One of them is priced cheap. 

A $50 difference doesn't make sense.  Have you been able to look at both units?

@Federico Gutierrez It's a strange situation. The person selling it is a family acquaintance who connected me with a realtor on the south side of Chicago as I'm new investor and was looking for help. I'm just learning the local market there. The realtor also happens to be the seller agent so I think I first need to find a non-conflicted agent. The numbers I was sent showed a total rent of $2k/mo exactly 1 year ago when both units were rented. I probably need to find another agent first and go look at the property physically. 

@Vishal Didwania woodlawn can be spotty..Not sure where exactly in Woodlawn your building is, but try staying close to Jackson park if possible..As always drive around the block, you will see how things change one block to another.

@Vishal Didwania those numbers seem very solid from the surface. Would check on the area as well to make sure you are enough east. People's definition of 'Woodlawn' is often skewed. Also those rent numbers look a little low imo

I would definitely scope out the area first if you haven't already.  Southeast Woodlawn is very rough still.  Your best bet would be to try and make them section 8 compliant.  2 br should get you around $900 and 3 around $1000.  If you haven't been down there, you would be surprised the difference a couple blocks west/east or north/south can make. 

That insurance cost is quite low. Does your property have a flat roof? 

If so, what insurance vendor are you using, if you don't mind me asking? 

I'm looking to invest in the Chicago area and I've been rejected from a couple vendors due to the properties I'm looking at having flat roofs.