Chicago newbies earn 85k on no money down flip!

Chicago newbies earn 85k on no money down flip!

Rental Property Investor · Chicago, IL · Member since 2016 · 123 posts · 64 votes

A huge congrats goes out to Al and Heidi Wang on their very first flip! a few months ago I connected with Al on BP. He and his wife had for some time been interested in a flip. After attending a meeting with my group Chicago Action investors they decided to take ACTION!

They purchased a Greystone two unit in Englewood at 6537 South Green St. for 54k using no money down lines of credit . the building was in need of a vigorous rehab. All of the Plumbing lines were busted and needed to be replaced, tuckpointing was needed, an entire interior repaint was needed as well. Some updating in the kitchen sink and baths included new granite countertops and Custom vanities and Cabinets. The garage needed repair as well. They decided to add central air units which were placed on the roof. They also replaced all light fixtures and ceiling fans switches outlets and covers. New carpeting was added. There was a laundry list of Minor tasks that needed tending to. The building contained three separate apartments. All three had individual heat and 3 bedrooms 1 bath each. All told there was 80k in improvements. For those not in the know, Englewood has become a hot area to invest in. With Kennedy King College buying land and expanding as well as BNSF Railroad, a 50 million dollar infusion from state and city funds, along with anchor stores Whole Foods, Starbucks, and Chipotle, Al and Heidi were able to secure a buyer at full list price 215k even before they had completed the rehab! Now that the Thanksgiving holiday is coming to a close, they will be preparing for their second flip! Way to go guys! So glad we could help!

8Reply
38 views

Most Popular Reply

Architect · Chicago, IL · Member since 2014 · 19 posts · 18 votes
9y

I haven’t been on BP in awhile, and I just noticed this post! I would like to clear the air as I’ve received some messages about the property and the experience. I’d like to start by saying that the specific area in Englewood (around 65th and Halstead, near the new wholefoods) is definitely an area you should all have on your radars. Activity down there is growing – projects both small and large – and there are great deals to be had. With that said, like many other neighborhoods you have to evaluate properties street by street here.

Now to the numbers – things didn’t go THAT well, but overall we did good. The biggest hit to me were financing “success” fees, for a service that really wasn’t worth it. Anyone of us can get online loans without help, and we shouldn’t have to pay a success fee for doing this.

Like all projects, there were hiccups along the way and unforeseen conditions. Here are the numbers:

Purchase: $52,000

Closing Fees: $5000

Finance Fees: $11,000

Rehab Costs (contractors, material, holding costs): $104,000

Resale: $215,000

Realtor Fees: $12,000

Closing Costs: $12,000

Buyer’s Concessions: $6500

Project Earnings: $12,500

Note, the numbers are rounded out, and also the earnings were then split amongst partners. I’m not going to get into too much of the details, but lessons learned include:

-Schedule is important, but don’t rush too fast. Take your time to correct problems such as water/moisture/mold, etc. You can’t correct these by going fast. Do things the right way, and it won’t haunt you later. This likely resulted in several thousand dollars worth of lost profit.

-I don’t know how to say It b/c trying new creative financing methods inherently means taking a risk -- but it’s important to do your homework and weigh all of the options when it comes to financing. This project should’ve been $11,000 more profitable.

-Contracts contracts contracts. Make sure you have a very clear understanding between partners from the get-go. Contracts aren’t just for legal reasons, it’s a chance for the partners to sit down and flesh out the details so everyone is 100% in-the-know about where risk lies, and what the expectations are both financially and logistically from each person. Unfortunatley for this project, it resulted in unequal risk, and unequal shares of the profit.

As a final thought – there have been some negative comments on Englewood, of course some of it is true and you have to be careful. But for every “bad” thing that I witnessed, I also witnessed a lot of “good” things. I typically visited the project at 7am in the morning and was greeted by moms taking their kids to school, and that is frankly the impression that I am left with. I chose to do this project for financial reasons, and I left feeling satisfied that I also helped to stabilize a neighborhood (where the housing stock is largely abandoned), as incremental as my effect may be.

See this reply in the discussion

30 Replies

Jump to latestLatest
  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    9y

    Awesome job!

  • Real Estate Consultant · Chicago, IL · Member since 2014 · 720 posts · 439 votes
    9y

    Congratulations! 

  • Paul AmegatcherPro Member
    Rental Property Investor · Brookville, OH · Member since 2016 · 488 posts · 363 votes
    9y

    Looks very good.  Everything looks very clean and sharp.  Great work and good job on the rehab.

  • Evanston, IL · Member since 2016 · 2 posts · 0 votes
    9y

    May I please have the general contractors info, I'm looking to do a gut rehab in either Woodlawn or Englewood.  Or any other good contractors.  Thanks.

  • Investor · Lee's summit, MO · Member since 2016 · 75 posts · 45 votes
    9y

    wow, people have a lot to say about Englewood but every market has a way to make a return. Really cool!

  • Real Estate Investor · Cali · Member since 2015 · 86 posts · 7 votes
    9y

    Congrats! Do you find a lot of retail buyer interest in Englewood? I mean with all development, it is still a hype and not safe area. Are there enough comps that support above 200k price?

  • Real Estate Investor · Gary, IN · Member since 2016 · 50 posts · 4 votes
    9y

    I'm very impressed with the renovations. I keep coming back to this post because it seems too good to be true. Hats off to all involved, this was a great filp!

  • USA · Member since 2016 · 66 posts · 18 votes
    9y

    Man..profits in Englewood.  Probably gotta repair a lot of bullet holes in the walls though :) 1 of the worst areas in the country. More power to you. I'd NEVER do a buy and hold in an area like that, but making money off a flip is awesome in such a dangerous and highly burglarized area. Good job!

  • Rental Property Investor · Chicago, IL · Member since 2016 · 123 posts · 64 votes
    9y

    Thx Ray and Adina! We've been telling investors for a while now about the good things happening in Englewood with Whole Foods, Starbucks, Chipotle , and others setting up shop there. Also properties , especially multi family have been selling if rehabbed right and you don't buy into the stereotypes and negative press. Chicagoactioninvestors currently has 4 ongoing flips in the area.

  • Chicago, IL · Member since 2014 · 710 posts · 200 votes
    9y

    Congrats - nice to see it appraised out

    85K had to be pre closing profit based on repair costs of $80K.  I'd like to see a little more detail on the #'s as far as actual profit after closing.

    This looks like hard cost math only based on what I read (54K acquisition, 80K repair, 215K ARV)

    Finance costs, closing costs, utility, insurance.....

  • Architect · Chicago, IL · Member since 2014 · 19 posts · 18 votes
    9y

    I haven’t been on BP in awhile, and I just noticed this post! I would like to clear the air as I’ve received some messages about the property and the experience. I’d like to start by saying that the specific area in Englewood (around 65th and Halstead, near the new wholefoods) is definitely an area you should all have on your radars. Activity down there is growing – projects both small and large – and there are great deals to be had. With that said, like many other neighborhoods you have to evaluate properties street by street here.

    Now to the numbers – things didn’t go THAT well, but overall we did good. The biggest hit to me were financing “success” fees, for a service that really wasn’t worth it. Anyone of us can get online loans without help, and we shouldn’t have to pay a success fee for doing this.

    Like all projects, there were hiccups along the way and unforeseen conditions. Here are the numbers:

    Purchase: $52,000

    Closing Fees: $5000

    Finance Fees: $11,000

    Rehab Costs (contractors, material, holding costs): $104,000

    Resale: $215,000

    Realtor Fees: $12,000

    Closing Costs: $12,000

    Buyer’s Concessions: $6500

    Project Earnings: $12,500

    Note, the numbers are rounded out, and also the earnings were then split amongst partners. I’m not going to get into too much of the details, but lessons learned include:

    -Schedule is important, but don’t rush too fast. Take your time to correct problems such as water/moisture/mold, etc. You can’t correct these by going fast. Do things the right way, and it won’t haunt you later. This likely resulted in several thousand dollars worth of lost profit.

    -I don’t know how to say It b/c trying new creative financing methods inherently means taking a risk -- but it’s important to do your homework and weigh all of the options when it comes to financing. This project should’ve been $11,000 more profitable.

    -Contracts contracts contracts. Make sure you have a very clear understanding between partners from the get-go. Contracts aren’t just for legal reasons, it’s a chance for the partners to sit down and flesh out the details so everyone is 100% in-the-know about where risk lies, and what the expectations are both financially and logistically from each person. Unfortunatley for this project, it resulted in unequal risk, and unequal shares of the profit.

    As a final thought – there have been some negative comments on Englewood, of course some of it is true and you have to be careful. But for every “bad” thing that I witnessed, I also witnessed a lot of “good” things. I typically visited the project at 7am in the morning and was greeted by moms taking their kids to school, and that is frankly the impression that I am left with. I chose to do this project for financial reasons, and I left feeling satisfied that I also helped to stabilize a neighborhood (where the housing stock is largely abandoned), as incremental as my effect may be.

  • Homeowner · Chicago Heights, IL · Member since 2014 · 105 posts · 8 votes
    9y

    Nice job. Congratulations.

  • Chicago, IL · Member since 2014 · 710 posts · 200 votes
    9y

    @Albert W.

    The numbers are what they are and it's good you were profitable.   

    I have 1 question.  Why is @Aaron Vaughn titling a thread "Chicago newbies earn $85K on no money down flip" when your profit was just $12.5K profit?

    $85K is was different than $12.5K for profit you just clarified.  

  • Investor · Chicago, IL · Member since 2008 · 80 posts · 24 votes
    9y
    Aaron Vaughn , good job with your group. You are creating a pattern of success in spite of the typical hiccups that occur in fix and flips. Albert W. , profitable in your first deal.... congrats!!!! Even more, great perspective on a neighborhood that has been demonized.
  • Real Estate Investor & Consultant · Los Angeles, CA · Member since 2016 · 620 posts · 386 votes
    9y

    Congrats @Albert W. ! I'm sure your next deal will be even better after the lessons learned here. 

  • Johnson City, TN · Member since 2014 · 586 posts · 705 votes
    9y

    @John Weidner I think you, I and most of the people here with any common sense know the answer to that question.

  • Holyoke, MA · Member since 2017 · 16 posts · 4 votes
    9y
    Wow, what a flip!
  • Investor · Los Angeles, CA · Member since 2015 · 53 posts · 34 votes
    9y

    @Albert W.

    Congrats on completing a flip and earning (even a small) profit in a very challenging area. Just curious why the realtor costs and closing costs on sale are so high, at 12k each. Even if you're paying 5% commission on a sale of 215k, that's less than 12k. FYI, Redfin sale commissions are now 3.5% in Chicagoland, but they may not serve Englewood.

  • Investor · Park ridge, IL · Member since 2014 · 84 posts · 33 votes
    9y

    I'm from Park Ridge just outside of Chicago and I have not heard many good things about Englewood to be honest. Where you ever scared to go into that Neighborhood? I have to say I don't think I would even consider driving through it. But the rehab looks amazing and congrats on it!

  • Real Estate Entrepreneur / Investor · Chicago, IL · Member since 2016 · 688 posts · 367 votes
    9y
    Englewood honestly isn't as bad as the news media points out. The news media tries to portray it as so bad when there are neighborhoods are worse as of right now. Gentrification is going on heavy in Englewood. In about three years englewood will look much different. It's still bad over there on certain blocks but it's not as bad as the news media says.
  • Real Estate Entrepreneur / Investor · Chicago, IL · Member since 2016 · 688 posts · 367 votes
    9y
    Edouard Pierre wow. Very nice man. Congrats. Who was your rehab team for this project? I think I would like to use them for my duplex/triplex. Your setup is very nice. All your missing is a man cave lol.
  • Ray DipasupilPro Member
    Investor · Los Angeles, CA · Member since 2016 · 149 posts · 51 votes
    9y

    That's so fantastic, wow

  • Chicago, IL · Member since 2017 · 7 posts · 2 votes
    9y

    @Elbert Dockery,

    The rehab team is Chicago action investors

    They assisted me with my purchase.

  • Investor · Rochester, WA · Member since 2013 · 221 posts · 30 votes
    9y

    Congrats, outstanding job!

  • Flipper/Rehabber · Chicago, IL · Member since 2016 · 33 posts · 11 votes
    9y

    Nice job on the flip. The numbers will be much better on future deals. Good learning experience 

Join the conversationCreate a free account to reply, vote on answers and follow this thread.