All Forum Posts by: Marcin Chojnacki

@Robert Leach yes will county is great. I'm very familiar with our markets. Am curious on other cities/states. 

Sorry I meant to write "Other closing fees on the sell side and commissions are paid for out of seller proceeds" and not buyer proceeds. My mistake.

Greetings fellow BP members. I've seen a lot of posts regarding questions on what cities are getting fix and flip investors good returns. Let me share how the Chicago Land area currently looks. Please share ACTUAL numbers from your most recent successes and their locations, curious to see how they compare. 

A very good benchmark in Chicago and suburbs is a 25% return on cash invested. Yes we have competition and there are plenty of "multiple offer situations" however with due diligence and a keen eye on the market it's not overly difficult to meet that criteria. When we do analysis if the property doesn't return a MINIMUM estimate 20% return on cash invested (semi conservatively) then we throw it in the trash and look for the next one. 

25% is a good benchmark however many times the realized returns on projects can well exceed that number. We have had returns in the 30's and mid 40's as well. Deals in that "higher range" are considered a steal and much harder to get. 

A good example of an easy flip in a Chicago land suburb:

Address: 832 Salem Ln. Carpentersville IL

Purchase: $62,251

Closing (Buy SIde, HUD does not pay title insurance): $1,800

Rehab: $37,000

Holding: $1,200

Closing Costs (Sell Side): $2,500

Commissions 3% (We waive our half): $4,080

Break Even: $108,831

Sales Price: $136,000 Net (139k with a 3k credit.. Sold in 4 days with multiple offers).

PROFIT: $27,169

Cash Invested: $99,500 (In illinois a tax credit is given at the purchase closing from the seller. Many times the funds due at closing are a few thousand less than the actual contract price. Other closing fees on the sell side and commissions are paid for out of buyer proceeds, in other words they don't come out of pocket). 

% RETURN ON CASH: 27.3%

Project Length: 3.5 Months (from time cash was invested to time cash was recouped).

Before and After Pics:

Once again, curious to see how other parts of the country are.

Thanks for sharing in advance and happy investing!

Respectfully,

@Andrey Y. if you set it all up right not much. These neighborhoods aren't by any means considered "bad". They are safe and property conditions are good. As long as you are open to section 8 they get rented fast and tenants stay a long time. Taxes are low (compared to other Chicago land areas) and rents are generous when considering the value of the home. 

Example in one municipality a $35,000 home (25,000 purchase, 10,000 repairs) will get you $1,050 in rent. Small 1,000 square ft ranches far from the "bad areas".  

Chicago Land! Great value, properties don't break the bank (even in good neighborhoods). Typical price range for most suburban flips is a 80k-150k acquisition. 

COC returns on rentals are 10%-14% in better areas. Lower income neighborhoods can easily produce 30%+

If you can move the property fast then the earnest money shouldn't be a problem. Many sellers will want EM as it shows them that your financially invested in the deal and that if you simply waste their time they will be somewhat compensated.

If I were a seller I would NEVER not take EM. 

However here's how you as the wholesaler can be savvy about it:

1. Have an attorney add a section in the contract (if there isn't one already) that states that EM isn't due until 5 days (or longer if seller accepts) after contract acceptance. During these 5 days see if your buyers really are serious before submitting the funds. 

2. Do a 10 day attorney review period. During this period your attorney can cancel the contract for whatever reason as long as it is NOT based on purchase price. 

3. Ask the seller if they are open to EM of $500 instead of $1,000. This can save you $500.

4. Add contingencies to the contract to protect you. You can add, for the most part, whatever contingency you want as long as the seller/sellers attorney approves it. Many people add a "contingent upon my partner approving the deal". If your partner does not approve the deal then the contract gets canceled and you get your EM back. 

I am not an attorney (advise you talk with one) and this is what can be done in Illinois, Texas might be slightly different. 

Always be considerate of seller's time. Three months of being under contract and having the deal fall apart due to you not producing any qualified buyers will get under any seller's skin. 

Bundle of 5 performing rentals. All properties are duplexes. Built in 2005 or newer, slab foundations. 

$560,000

GROSS RENT: $78,900 Annually

Net Rent: $54,400

Addresses are:

403 Alyssa

3 bed/2.5 bath, 1,450 sq ft.

Rent: $1,410/month

100% section 8 voucher holder

3005 Alyssa

3 bed/1.5 bath, 1,800 sq ft.

Rent: $1,295/month

3209 Hoffman

2 bed/1.5 bath, 1,000 sq ft

Rent: $1,050/month

318 Waubonsee

3 bed/2.5 bath... 1,400 sq ft.

Rent: $1,410/month

Section 8

4308 Klatt St.

3 bed, 2.5 bath, 1,400 sq ft.

Rent: $1,410/month

Section 8

Attached are images of the front of the homes. All the interiors are in very good shape, I have photos as well if you would like. All proof of payments can be provided. Very good and clean tenants. 

Let me know if you any questions on this.

Thanks,

@Brian Pulaski  That also goes back to many people not being able to visualize. They might've thought that staging would not help however when the property is beautifully furnished and decorated they might've had a completely different opinion on it. Always hard to say!

Yes that's a good way to save some money. Personally I would never have the time to haul the furniture there myself and set it up. We also do multiple projects at a time so it would turn into a nightmare with deliveries and storage. On properties that we sell for 100k we do what I call a "mini staging". We ourselves bring in simple items like hand towels, soap dispensers, fake flower vase, stools (when there is a breakfast bar), etc. even minor items can help make the property feel more "homey". 

On a full stage the only part we leave out is the rest of the bedrooms (we stage the master). 

@Ellie Hanson That's great value!

@Crystal Smith The logistics on that would scare me. For starters, I would not be looking to rent the property as I always want it sold as soon as possible. What happens if the tenant were to ruin your place, or refuse to leave (I'm sure this doesn't happen with corporate temp housing often but definitely a possibility)? Also, didn't the furniture leave when the tenant moved out? How were you able to utilize the furniture when you were trying to sell? 

@Frank Eimiller Thank you, I wish you the best of luck. I'm sure you will find just as good of deals!

@Eric X. Eric shoot me a message.