Inherited a bungalow home in Auburn Gresham district, what to do?

Question

Due to passing of family member, I own a Bungalow in the Auburn Gresham District of Chicago. The house needs a lot of work. It still has a steam boiler, heating radiators, no upgrades to kitchen and bathrooms. Hard woods in decent shape, basement needs renovation, etc. The house is paid for, trying to decide on selling as is, rehab and rent, or rehab and sell to get the most out of it. Any recommendations on how to analyze the potential and guidance on best path forward. I live out out of state.

Thanks in advance......

Caleb Heimsoth · Answer

You have to nail down your rehab numbers.  Look at it from a normal purchase.  Spend 60k, rehab for 75k and sell for 160k.  You’d make basically zero money.  So you need to really narrow that down.

My gut says sell as is and see how it goes

Henri Parker · Answer

@Michael Montesino - Thanks for the quick reply, yes it's definitely an interesting question that I've been pondering for some time now.  Investing in Chicago is something I've wanted to do but it hasn't been my top priority from an investing standpoint.  I was born and raised on the Southside of Chicago and all my family is still there so I visit the city 2 -3 times a year so having investments there makes sense.

I think I've been leaning towards selling as-is vs. rehabbing and rental was not a preference but I wanted to check all options.  As you also said, finding someone I can trust to rehab and sell will take time so selling as-is is definitely the easiest option.

@John Clark - Thanks for providing the additional insight, I've been away from Chicago a long time but I was aware of some of the issues that the city has dealt with.  Both of my parents were City of Chicago employees, both retired with full pensions from the City of Chicago but they are dealing with reduction of benefits in their retirement which is related to the financial problems of the city.

Selling as is $60-$70k, ARV depending on extent of rehab $160k - $200k.

Joseph Konney · Answer

@Henri Parker - Sorry to hear about your loss!

Rehabbed or not, the days on market for listings in that area are typically higher relative to other areas of Chicago. I would either do a minimal rehab to get section 8 ready and have it professionally managed (and then cash out refi) or sell as is to mitigate risks.

If you don't have anyone residing in the property right now, I would highly recommend moving quickly on whatever you do and install an alarm system. The area is prone to break-ins on vacant property. If using an agent, they might be able to supply one for you.

I personally use Ring on my vacant property in Chicago. Professional monitoring is only $10 a month and includes cellular connectivity. It's definitely worth it for my piece of mind due to a squatter or someone looking to scrap $100 of copper that will cost you $8K to fix.

Henri Parker · Answer

@Caleb Heimsoth based on my research, I think the house will sell as-is around $60-$70k.  Depending on the level of rehab it could range from $25k - $75k.  Thoughts on rehab range from:

- Kitchen and main (2) bathroom remodel including floors.

- Carpet in bedrooms

- Basement floor

House is currently a 3br, 1.5 bath

Could easily add (2) bedroom downstairs

- add central heating/HVAC

I have family in the area.

Estimated ARV based on similar homes in the immediate area range from $160k - $200k.

Henri Parker · Answer

@Anthony Lehtio, Thanks!  I’ll send you a note.

Erika Carter · Answer

I support your 1st mind! Let me know if you need any additional assistance!

Henri Parker · Answer

@Erika Carter my first mind told me to sell the house.

Anthony Lehtio · Answer

There are definitely many options.  It all depends on how much risk you want to take.  Flipping of course is going to be the most lucrative in the short term but of course that comes with risk.  We have done many deals in South Side Chicago and have been through several contractors and realtors to find the best ones.  That all of course cost us time and money. We currently have a flip in Southside Chicago that has been waiting for permits to continue from the city for 6 months.  Frustrating to say the least!

If you want any help send me a DM and we can tell you more about our lessons learned on Southside Chicago.

Rachel Imhof · Answer

I sent you a connection request @henri Parker

Inherited a bungalow home in Auburn Gresham district, what to do?

Most Popular Reply