Looking to BRRRR in Chicago

12 Replies | Chicago, Illinois

I've been looking into real estate in Chicago since it seems like a good place to BRRRR. Any advice or info would be greatly appreciated. We're also going to need an agent, contractor, property manager and lender.

Joett, are you looking in Chicago proper or in the Greater Chicago area? I'm looking to do something similar and I think Chicago proper is tough to make the numbers work in a decent neighborhood. I'm a broker/owner in Chicago my agents have rented over 15000 units in the last 10 years. I can probably point you in the right direction on most of your vendor needs. DM me if you want to chat sometime. 

Originally posted by @Joett Ocasio:

I've been looking into real estate in Chicago since it seems like a good place to BRRRR. Any advice or info would be greatly appreciated. We're also going to need an agent, contractor, property manager and lender.

 Hey.  I am an investor in Chicago.  Give some more specifics.  City or suburbs?  Price range?  What class of neighborhood?  

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@Jeff Burdick Up to 20k for the property itself, in terms of city or suburbs which ever one has a better clash flow. 

I’m not really focused on appreciation but it would be nice to have both cash flow and appreciation.

I spent part of my child hood around the Humboldt park area and I came back 20 years later and went to the same area while I was on vacation in 2017. So I honestly don’t know what are the good and bad areas.

Originally posted by @Joett Ocasio:

@Jeff Burdick Up to 20k for the property itself, in terms of city or suburbs which ever one has a better clash flow. 

I’m not really focused on appreciation but it would be nice to have both cash flow and appreciation.

I spent part of my child hood around the Humboldt park area and I came back 20 years later and went to the same area while I was on vacation in 2017. So I honestly don’t know what are the good and bad areas.

 20K for a property?  You're not gonna find much.  

@Jeff Burdick

Yeah that seemed very low... even if you were to look at some of the roughest parts of the city (ie Englewood) you’d be hard pressed to find $20k properties and below.

Jeff - I'm curious as to what you're thoughts are on the amount of cash (minimum) you should have on hand to comfortably BRRRR on the Northern side of Cook County (MCkinley/Bridgeport and North)?

@Lee Ribeiro In Bridgeport, you're looking at a minimum entry point of about $300k (though, there is one for $215k on the MLS right now) for a 3-4 unit building needing darn near a complete gut. Rents can range from about $700/month for a 2br/1ba on the low end to about $1300month for the same on the high end.

A 3br/1ba can get you anywhere between $1000-$1500/month.

My wife and I are planning on house hacking in the area in the next year, so I've already started doing my research and am patiently waiting for the right one to come along.

@Andrew Goodwin I've been trying to convince my wife to do the same in Pilsen/Bridgeport. Granted, not much available in the Pilsen area (yet). I'm curious to how many people are approaching their BRRR projects with cash on hand versus financing. What were you thinking for your house hack?

@Henry Massey There are a lot of factors. Depending on the condition, we'd like to ideally go the route of an FHA. Though, if the margins on cash flow are too thin we'd increase our down payment in order to reduce the mortgage. This is under the assumption that the property is just in need of some freshening up and minor repairs.

If we can get a very well priced property that needs serious TLC, we would be willing to go with a 203k, but again, cash flow is key. I'm generally okay with breaking even on the property if the tenants cover the mortgage, taxes, and insurance while we live in one of the units.

To get at more of your question I'd say it's a balance, especially if you go the route of an FHA or conventional. You need enough of a down payment to allow the property to cash flow while at the same keeping enough cash on hand to make any of the immediate upfront repairs/expenses/vacancies.

We live in the NW suburbs of Chicago and have mostly been focused on markets outside of IL. Seems difficult to make the numbers work given the taxes here. If we didn't have kids, we'd definitely be house-hacking.. I think that's the best way to get started especially low money down with the FHA.

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