Trying to judge if this is a good deal or not. There's a pair of 2bd/1ba duplexes with attached 1 car garages for each unit (so 9bd 4ba, 4 1car garages for the whole purchase)
It's in a pretty rural town in N. Illinois (pop. 350) My parents would manage it for me as it's 2 min down the street from them.
Purchase price is $148k. Property taxes are $7500 (worst part if you ask me). Gross rents per month are $2.250.
It's at the 1.5% rule, but not quote to 2%. Tenants pay electric, gas, heat. Water is via community well and sewage is private septic field. The buildings look in great shape and they were built in 1989.
On paper this whole thing makes sense, but it seems they've been on the market for some time and haven't sold. So maybe I'm missing something.
What's the town?
What will your tenants do for work? Earnings?
Any growth prospects (for the town)?
How do you feel about the fiscal health of Illinois? Think that tax bill has a chance to go up? I grew up in Evanston. Illinois will always have a special place in my heart, but I think the state/Chicago government will be excluded from that special place.
These are not yay or nay on the deal, just questions you'll want a good answer for.
*This is a great way to get a look at the type of person you can expect in the neighborhood: Esri Tapestry
I grew up in the town and lived there for almost a decade. My parents and two adult brothers both live in the town. There's not much for work in the actual town but that's ok, everyone commutes anyways. People generally will be working around 15 minutes away in a larger city called Dekalb IL or if you were like my parents you'd commute to downtown Chicago or St. Charles which were 45 min at a min.
Not huge growth prospects for the town to be honest. These duplexes look nice and don't seem to need any major maintenance at this time.
The property taxes scare my quite honestly. My house here in eastern Washington is valued at over 240k and I only pay $2,200 in taxes while a $50k house in this same town is paying $1,800. These duplexes are getting $7,500 in taxes alone.
The real reason I want to buy there is I'll get basically free management from my folks and I've been having a heck of a time finding a profitable rental here in Spokane, WA.
Zack, The taxes in IL are absurd. Based on the area my guess is its not in COOK County, which is good, as there is a good chance of property taxes going higher in COOK County next year.
Also, you need to be sure that the property can be rented out post purchase, with a town of 350 population, what is the ratio of rent vs owning? Even if you rent out, what are typical vacancy turnarounds. Just getting free property management should not be your buying trigger.
Numbers, are not the only thing that you should go with, there are town where you can find great properties on numbers, but are war zones, and there are town where numbers make sense, but the economics of the town, proximity to work place don't.
I hope this helps you to make some valuable decision.
Look for JV partners who can help you get started and who are seasoned. You will share part of the deal, but atleast its better then owning something that's harder for you to turnaround.
Thanks for all the advice. The property is in Lee County and i shudder to even think about Cook County taxes.
The town is tiny for sure, and there is a 5 unit apartment complex, a couple SFR rentals, and these two duplexes. Most of the homes are owned but it seems they stay rented. I don't see many vacancies in the properties over the years.
I'm going to try harder to buy local here in Spokane I guess for now and when a good deal presents itself in IL I'll go that way too. I may just try do flip in IL instead.
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