Need help to analyze deals in Chicago neighborhood

9 Replies

Hi
I am Lynn . I have moved to suburban of Chicago for a year and is interested to invest in Chicago neighborhood . I am not familiar in Chicago neighborhood .
The rental income makes sense in cheaper areas. However , I heard that it can be headache to deal with tenants at that kind of neighborhood like south Chicago . Hence , it seems to me that rehabbing for flipping make sense to me . I saw some deals from wholesalers in neighborhood like 60651 ,60619, 60620 , 60475 (Steger ).
Is anyone familiar with Chicago neighborhood help me to answer the following questions ?
1. Which neighborhood is better to avoid even for flipping and which neighborhood worth to consider with deals under 80K ?

2. Below is one potential deal from a wholesaler . Can anyone help me to analyze if it is a deal ? If yes, is it safe to invest in that neighborhood ? I don't want to watch my back every 10 minutes . Thank you for your feedback . 

Address 1109 N KeystoneChicago, IL 60651

Cook County

Asking Price $49,000.00

Type Single Family Home

Beds 4

Baths 2

Sq. Ft. 1642 sq ft

Year Built 1912

Garage 2 Car Detached

Basement Unfinished

Lot Size 3,810

Dirt Cheap Deal in Humboldt Park area of Chicago Brick Single family. Only $49,000 After Repair Value $164,000. Estimated cost of rehab 50,000 to 60,000 for a flip. Brick single family home 4 beds 2 bathrooms over 1600 square feet.

Taxes $3060

Fix and Flip numbers (these are just example numbers)

Purchase Price: $49,000

Repair Costs: $50,000

Holding costs: $2940

Closing costs: $3280

Realtor fees: $6560

Resale Price: $164,000

Net Profits: $58,780!!

Humboldt has some decent areas, but a fair amount are areas I wouldn't want to invest in, personally. Areas like Bronzville on the Southside aren't too bad and you may be able to find a flip for around $80k, but definitely do some driving around and see what the neighborhoods are like and what areas seem comfortable to you as investor. Also, consider your location. Do you really want to drive an hour+ into the city to check your rehab? Look farther out from the city. Maybe not Naperville, but maybe a townhome or condo in a neighboring suburb. 

Thanks for the feedback , Daniel . I am planning to drive around like you said . I was looking around my surrounding area like Bolingbrook , Aurora , my source is limited .Most  of the deals from the wholesaler are from Chicago .. 

@Lynn Por

As Daniel mentioned, there are some areas in Humboldt Park, which are pretty good to invest in. I'd say more towards the east side of Humboldt Park. I too would suggest driving around the area. I pulled up Google 'Street View' and the property looks similar to others in the area, so comps might not be hard to get, assuming inventory is selling and investors have rehabbed in the area. 

I looked over your numbers and it does seem like a cheap acquisition price, but you have to know your ARV. Do your own due diligence when analyzing a property. See if the wholesaler has done an analysis of the property and neighborhood. Have they ran comps around the area to support that ARV? Don't just go off of the numbers presented; have a conversations with the wholesaler to get a feel for the numbers they are presenting. Also, ask the wholesaler how they arrived at the holding, closing, and realtor costs (I'm assuming they gave that information, unless you provided that on your post). Lastly, and one of the most important parts ask how they arrived at the rehab costs. I like to be conservative with my numbers, so I would take the higher repair cost of $60k for my own analysis, especially because it's going to be a gut rehab. Even then I would add a 20% contingency costs for any unforeseen issues during the rehab. That would put the rehab costs to about $72k, plus all holding, closing, and realtor costs, which would put the whole project cost to around $134k, including the purchase price and assuming the holding, closing, and realtor costs are accurate. So the actual profit might be closer to $30k (assuming ARV is accurate), which is not bad, but it's not $58k, as mentioned. I'm not saying the wholesaler didn't do their due diligence. They probably have done extensive analysis, I'm just suggesting asking questions and doing your own due diligence in order to make a more sound investment decision.

One side not, I just thought of is that you stated that the property has 4 bedrooms, but the square footage seems small (1642 sq ft) for 4 bedrooms. It could be that they are small bedrooms, but just something to look into.

Sorry for the long post, but just want you to have as much information before making a decision. Good luck, and keep us posted if you go through with the rehab or not.

To your success!

Xavier

thanks for your valuable info , Xavier . I am not sure that property is still there by the time I have been  familiared to that neighborhood . But let me drive around the neighborhood first before I put the offer . 

If anyone knows any experinced realtors and contractors active in Chicago ,please let me know .i can let the realtor lists the properties even if they can't find the deals for me. Thank you . The contractor I know only focus in suburban of Chicago . 

Xavier , thank you again for taking your valuable time to analyze the deal. I quite often have the list of deals but just afraid to pull the trigger because I am not familiar to the area . I did end up buying one property in other state from turnkey company and will close in 3 weeks . ( that is passive enough as an investor :) ) 

Lynn,

I am partnering with a broker now, who I've known for a while. His name is Pedro, and he has been actively working with investors as well as working to start his own wholesaling business. Here's his email: [email protected] Also, I noticed you are living in Naperville and mentioned you'd be interested but aren't finding properties out that way. I grew up in Bolingbrook and am very familiar with the area and surrounding suburbs, so please reach out with prop questions. Also, I'll shoot you a message if I come across any deals out that way. Feel free to shoot me a message and let's connect. Best of luck!

Mike Nickles

Hi, one of the things I like to use as a good cheat is the crime map on Trulia.  If you Google an address, you can find it on Trulia, and then there is a good color coded map of green = good to red = lots of crime.  I like South Chicago.  PM me if you are interested.

Hi Mike 

Thanks for the info , May I know where does Pedro focus his area for wholesale ? I will shoot him an email . I do drive around Bolingbrook and it is my preference . If you come across any deals from there, woodridge  or Aurora . Let me know :) 

Lynn 

Hi Derek , 

Thanks for the valuable info. I usually use zillow but will check the trulia for crime areas. May I know which area of south Chicago you are investing in for flip ? 

I decided to take my first step to drive to South Chicago  like  60651 zip to check out, and also bronzeville . 

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