Sugar Grove, IL · Member since 2015 · 3 posts · 1 vote
In trying to decide where to purchase a single family buy and hold in dupage or will county Illinois. I'm wondering how to go about finding the best towns to purchase in.
One note, in Illinois it's hard to get financing for less than $75K with a primary mortgage on the property. That said, you certainly could fund with a HELOC on another property or another means of financing.
Tough question to answer. Is the "best" town the one with the most favorable purchase price to rental income ratio? Is it one that's appreciating? Is it one with higher-end demographics and presumably better tenants? It all depends on your strategy.
For my initial buy & hold properties, I chose the best price to rental ratio. So I've invested in southern suburbs of Cook County. As I've developed cashflow and a process for investing, I've started to look at other areas.
I plan to purchase a foreclosure with 20 to 25 percent down and assume some rehab will be required. I am considering Bolingbrook or Plainfield in a more desirable neighborhood.
@Michele Musaraca, buying a foreclosure can be good, but you can also find some good deals outside of foreclosures. What I'm seeing in the market right now is banks are trying to get almost market rates for their REO properties, as foreclosure inventory is decreasing dramatically (30%+ down over last year). So you might be better off looking for a conventional sale property that needs work (maybe an estate house or something similar). Let me know if you need help finding these in Plainfield/Bolingbrook.
Its sounds like you know what type of neighborhood you are looking for. In areas like Bolingbrook and Plainfield, you wont see the cash flow like others are getting in Chicago and the south suburbs. However, you will probably be getting better tenants and appreciation is more likely. You can expect to be competing against a lot of cash offers. Both of your target cities are very hot fix and flip areas.
My personal investment strategy is in alignment with @Derek Martin. Buy in the lower-end areas for the great cash flow and then diverse your portfolio with some higher-end product as more of an equity play. This is also what most of the "big money" buy-to-rent funds have done.