Chicago area flip, cash or finance?

[Jonathan Klemm]

Hey BP,

My names Jonathan I am new to the bigger pockets community.  I am nearing what should be my first successful flip (in Louisville, KY) and am looking for advice on how to move forward.  I believe I have the perfect contractor/project manger and have the right contacts to pursue real estate investing in the Chicago land area.  I should have ~$200k cash to use on my next investment.  My question is whether it makes more sense to find a smaller unit (maybe SF foreclosure) and pay cash or do a few conventional loans to get 2 or 3 properties?  Does it make any sense to try to finance and flip a multi-family instead of 2 or 3 SF? Also any suggestions on which Chicago suburbs have more potential than others?  Thank you for the help!

[Scott Hollister]

Hello @Jonathan Klemm,

Welcome and congrats on you first flip. 

Lets start with your goals? 

• Why are you investing? 
• What is your end goal? 
• How will you reach that goal?

It makes it easier to give advice once you have fine tuned your goals.

For instance, If I had 200k cash I would do 5 flips at once. (For me I would do 5 BRRR's at a time because I like the passive income of rental properties)

• 100k for 20k down payment on each property with a hard money or private financing on the rest. You can find 10% down with rehab costs covered once you set up a relationship with a lender. (Or even better terms, I've seen $0 down while using another property as collateral)
  • Or buy 1 house at a time all cash. (Slower growth because you aren't leveraging your money)
• I would keep 100k emergency fund. (I like to plan for the worst and sleep at night...) 
• Build your contractor/project manager team up to handle 5 houses at a time. You may want to only do 2 houses to start, remember slow and steady building! 
• Single family homes are "easier" to flip because the buying pool is bigger than the 2-4 unit market. Someone looking for a multifamily has a different mindset as opposed to a first time home buyer. 
• Connect at your local meet up for a answer to the Chicago suburbs. Remember, don't ask @Joshua Dorkin about Chicago real estate;) 

Best of luck Jonathan!