Bloomington, IL from California - should I invest?

Question

Hi, California investor here with 3 SFH's looking for a different market. Other than Property Management issues - what are things I should consider when investing in a place like Bloomington, IL? Do homes break down more due to snowfall or are there any hidden costs?

Jonathan Klemm · Answer

Hey @Monish Anand - Long distance real estate investing can for sure be challenging, but also forces you to dial in your systems or fail!

I 2nd @Jonathan Greene's question: why Illinois? Bloomington has milder winters then we do up here in Chicago, but still gets snow and cold, which takes a toll on the property.

Instead of lawn care, you have snow removal. The toggle back and forth each season is tougher on your furnace and condenser too!

Mike H. · Answer

Yea. If you plan on STR then you will have to do snow removal and lawn mowing. Snow removal is typically dependent on the amount of snow.

Usually you can find someone that will do a driveway for $50 to $75 a pop. You just ask to be added to their customer list and they'll come automatically when the snow hits. And we typically only get 4 to 5 snows a year that require the drives to be plowed. That being said, you never know what the weather might bring. You might get 8 or 9 snows a year or you might get 2 or 3. Last year I think I shoveled my drive twice and i'm further north than bloomington here.

Monish Anand · Answer

I'm a fan of the low prices and my plan is to STR since I currently run a short term rental business. Currently, I'm only qualifying off $80K of income so it doesn't help me qualify for a lot.

It looks like Snow Removal is about $700-$1000 for a full season? That is quite the added cost!

Are the older homes in this area safe to buy or do they break down a lot? In California I've bought mostly older homes but I recognize theere's some risk to that. The older homes are much cheaper than the newer homes, and I'm not sure why.

Mike H. · Answer

Landlords in illinois for sfh rentals don't provide snow removal or lawn cutting so thats not an issue. The tricky part of illinois can be the property taxes. Some of the nicer/newer homes are up there in property taxes even in bloomington (4k to 6k). The older homes there aren't as bad (2k to 3k). Thats in the 1500 to 1800 sq ft size.

Just be wary of the taxes there. The other issue is that town is a one trick pony. You're not getting people moving there that can commute to anywhere. So your renter pool could be limited.

If you like that price point, I would suggest going a little further north. You'd still be outside of the chicago suburbs but they'd be close enough to where they could work downtown. Areas like bourbonnais, manteno, bradley, and peotone. Home prices are a little bit higher than bloomington but so are the rents. And you have a lot less availability in terms of rents.

Overall though,when it comes to investing out of state, I would always suggest people look at STRs. You get built in property management which makes dealing with repairs easier. And you avoid things like damaged properties (guest insurance from airbnb or prop manager themselves cover that), evictions, collections, etc. And when a furnace does go out, the property manager will fix it.

You can get a property manager for a long term rental too but the numbers in terms of cash flow just don't seem to work well as they do for str's.

Jonathan Greene · Answer

What led you to Bloomington, IL? Where are your other 3 SFH?

A town in Illinois doesn't have any hidden costs just by it being in Illinois. Homes that get more winter weather need a different level of upkeep, but nothing more than a regular home needs that is built for their specific area.

Bloomington, IL from California - should I invest?

Bloomington, IL from California - should I invest?

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