Should i invest or wait for inventory to improve?

Question

I am rookie investor in the Naperville area. I want to invest in more rental properties but these days the inventory is very low and whatever comes to the market is being over bid on, so should i

1. Look at other areas in the Chicagoland area for suitable investments. If yes then which ones?

2. Wait until the mortgage moratorium is lifted so the inventory is improved and keep increasing the cash savings in the mean time?

3. There are some opportunities in Chicago city these days but I am not sure how the rental future is there because of the flight towards the suburbs.

Appreciate the help.

John Warren · Answer

@Usman Chaudhary other markets in the US are experiencing the same low supply we are here in Chicago. I have been in your shoes, and I would focus on saving a high percentage of your income while you keep analyzing deals. One will show up and you want to be prepared financially and mentally when it does.

Jonathan Satizabal · Answer

Buy now, buy later, buy everything!

I'm mostly joking. I've been using this time to look at different areas and trying to find off-market deals.

I'm also looking into different financing options and networking with other investors to partner with.

There are still deals out there. I have not purchased anything since last February, mostly due to time constraints and a growing family, but there is still work you can be doing to grow your business.

Network with contractors, locate neighborhoods and drive through them, get your leases in order, work on your tenant screening process and find a good handyman that you call when issues come up.

Pin point some neighborhoods analyze some deals so when something comes up you know you have a good deal and you can ready to pull the trigger.

My advice look for properties that are 1960's and above that just need cosmetic repairs. Single story or raised ranch homes are great for new investors. They're super simple homes and you can add value by refinishing the basements.

Bob S. · Answer

@Usman Chaudhary sounds like a case of analysis paralysis.. There are double digit net caps to be had 100% hands off....... Its all about your team and knowledge

Jonathan Klemm · Answer

@Usman Chaudhary - I think now is really a good time to be patient and to continually be analyzing deals until the right one comes along.

I'd also suggest you have the right team in place so that when the right deal does come around you can take immediate action.  Are you pre-approved yet?  That is usually step #1.  I'd recommend talking to @Zack Karp who is an investor-focused lender out in the Naperville area.

As for Chicago, I think there will always be a demand to live in the city, especially in the A & B class neighborhoods.  I would agree there could likely be a slight drop in rents over the next 2-3 years but not significant.

Crystal Smith · Answer

Should you invest or wait for inventory to improve? You can always find an excuse to wait even after inventory improves. While you're waiting, others are establishing and implementing strategies and investing. Whether off-market, listed, flipping, renting,....... Don't wait. Yes keep saving, but don't stop studying the market and looking for opportunities.

Ian Walsh · Answer

There are always deals so it is all about knowing your market.

Usman Chaudhary · Answer

Thank you for the very helpful comments. What are your thoughts about investment in Chicago city? There are deals coming up but I am unsure of what the future rental potential is in the short and long term.

Mia G. · Answer

Hi @Usman Chaudhary. Personally, I have been focusing solely on finding off-market deals. The good properties don't last long on the MLS these days, and you'll probably end up in a bidding war for them anyway.

Should i invest or wait for inventory to improve?

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