Any one familiar with this location?
I'm analyzing a deal from a turnkey operator on Chicago and got to a deal that might make sense
But in the map, looks far from Chicago
Wondering about the local market. Any one familiar?
I'm concern about tenants turnover and DOM to close the lease.
Country Club Hills is not a very nice area. Crime rate is pretty high.
Prices have dropped significantly. And its in Cook county which is one of the worst counties you'll ever find for eviction laws (4 to 6 mos to get someone out if they know what they're doing - and most do).
Sorry. Didn't answer your other question. You will not have to worry about DOM or getting it rented. If you price it right, you'll have a ton of people applying. The problem is in the collections. The tenant pool in those areas (country club hills, richton park, etc) is just not very good.
I've got 6 out of 40+ houses in those areas in cook county. I would say my problem payer months there run about 60%. Its just a constant battle. I've tried section 8. I've tried business owners. I'm priced under market. I've tried everything out there. It doesn't really matter.
Its just a difficult tenant pool. And its also a declining market. Prices really took a bath out there during the bust and there isn't much sense that they're going up any time soon in those areas. If they do, I will be the first one to sell my properties out there and move the equity back near me and in counties with better eviction laws. 6 mos of no payments plus 1k in attorney fees will kill you.
Thanks a lot Mike
That's the feedback that I was looking for !
Mike is right rough area, high crime rate and cheap houses and yes you can get burned as I did in the beginning. Where can you buy a house for 30k and make 1,200 per month? Not in a good neighbor hood. Dealing this area I can buy 3 or 4 a year and make some amazing money. I work a similar area I'm doing well, I adapted. I have 20 out of 20 out there. I do certain checks now that improved my collections greatly. Is it perfect, defiantly not. Yes, a eviction can take six months if you don't do it right. I have messed one or two up in the past, I learned from them. If you do it perfect it will take 3 maybe for to get them out.
My numbers are not like 30K for 1.200 Rent, are more like:
Purchase Price: $135,000.00
I did diligence on the same property. Here were some of my conclusions:
- Rent seems reasonable
- The price is ~8% higher than the median home value in the area (I prefer homes in the 70%-100% of median range)
- Trailing 5-year average appreciation rate for this neighborhood has been 0.59%
- 35%+ of the neighborhood rents (I like < 25%)
- Crime is not great
- Schools are not great
- Last tax assessment was $5,308 vs. the pro forma's $4,680
- Insurance might come in higher than the pro forma based on the neighborhood profile
- My data suggests vacancy & turnover is an issue in this neighborhood
This provider also offers a 1-year rent & maintenance guarantee, so their pro formas don't include allowances for vacancy or maintenance.
Be sure when running the numbers you allow for vacancy (I assume 10%) and maintenance (I start with $100/mo and adjust based on the age of the property).
They also have a pretty low property management fee, so I adjust management fees up to what I would expect to pay if I fired them and hired another manager.
In my analysis, the year-1 CoC return is 5.1% with monthly cash flow of ~$115. Not enough for me personally given the risk profile of this hood.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing