Who said you can’t hit 1% on north side? Well almost!
First off congratulations @Brian N. on your first investment property! I see a lot of posts on here about how the north side A and B class areas don’t cash flow, etc. I want to show that you can find cashflow in nice areas of the north side if you look hard and get creative.
I just brokered a 3 unit in the neighborhood SW of north and western intersection in walking distance to the 606 trail and Western Blue Line stop. Technically Humboldt Park but right on edge of Bucktown/Logan Square. This property was 3 units with an old not in use attic unit which when we saw our eyes lit up and instantly thought of opportunities. Duplex up the 3rd floor 2br 1ba into a 3br 2ba duplex unit refinishing the attic into a master suite with a spiral stair case oh and sky lights yes everyone loves sky lights that was a must haha
Market rate rents as per MLS comps and personal experience leasing in neighborhood. What I really like about this neighborhood is properties are cheaper but it's still close enough to western you can pull the same quality/millennial tenants as properties just east of western that cost nearly twice as much.
2br 1ba 1st floor unit: $1300 – Keep as-is
2br 1ba 2nd floor unit: $1550 (Will try $1600 first but to be conservative) – Keep as-is
3br 2ba duplex unit: $2200 conservative depending how luxurious comps go up to $2500ish – Rehab
Parking: $75x2 = $150
Total rents: $5200
Purchase price: $530,000 with a $7500 closing credit + $20-25k for spiral stair case install and remodeling of attic = $542,500 at $5200 = .95% + added equity being a legal 3 with 3br 2ba now. The equity/appreciation play is also huge part of analysis in the class A/B areas.
The advantage of a closing credit is that it minimizes your capital in the deal. This is something everyone should try to get when buying a property and most sellers/lenders are willing to allow up to a few %.
A large dilemma for my client was should I put 20% down and erase PMI/increase cashflow or put 5% down and do a little bit of value add. We ran all the numbers and decided the 5% down with some left over for the value add on the 3br 2ba unit was the most profitable option.
Will share some photos once the rehab is done! Happy investing everyone 😉