All Forum Posts by: Mike B.

Great comments above, but in my opinion, you should hold off on analysis. Go to some meet ups and build your team first. Start vetting your construction. When you get it down to a couple of people/companies, find out what their price per sq ft is for cosmetic, medium and gut rehabs. Walk their current projects so you can see quality of work. Talk to their references and ask what their experience was like. Understand walking in that cheaper construction will typically come with headaches and it never ends up being cheaper. Be comfortable with the people you're working with.

Shake hands with some agents, wholesalers, bird dogs etc... and ask to be put on their lists. It's very hard to find a deal on the mls, it's where most investors go to sell, not buy. RE agents will be happy to put you on the mls auto list, but that's not what you're looking for. Tell them you're interested in hearing about their pocket listings BEFORE they go on the mls.

Ask people for lawyer referrals. Most lawyers can get a property closed, but I prefer lawyers that understand investments and are willing to discount title fees knowing that they will continue to get business from me. You may not get this accomplished on your first one, but the goal is to get there eventually.

Speak to other investors to possibly form jv relationships where everyone is throwing some cash in. This way you aren't alone on your first property. You have someone experienced with skin in the game and an interest in making sure the investment performs. Separately, you can also find companies that will manage the investment and hold your hand through the process. Just make sure they can show you a history of wins. Not spreadsheets created by them, but HUDS/tax records that show the wins.

Speak to an accountant that can help you form your llc the correct way. It only costs a few hundred dollars to open an llc in Illinois.

When you have all those pieces lined up, you can start running numbers on properties to get a closer idea on actual costs. Until then, all of your analysis is nothing more than a guess.

Hi David, welcome back! I lived in CL for over 10 years, still have a daughter there. It's a great city. I'm happy to grab coffee next time I'm out that way (typically Friday and Sunday).

@Tom Shallcross lol, I offered you coffee at the Richmond closing. The offer still stands!

@Charles M. How much would it rent for? 

The 70% rule is relative. If you're looking at a gut rehab that's going to take 9-12mo from start to finish then yes, it should be at 70% or less. If you're looking at a cosmetic flip that will take 3-6 months, you can certainly adjust that number IMO. Time is just as big of a factor as profit.

As far as how much money to put in, it's impossible for us to tell without pics of the subject property and pics of the comps.

You are not getting an eviction done in Chicago in 2-3 months. I'd love to be proven wrong on this, but I have one hundred American dollars and a cup of coffee that says that your lawyer buddy can't produce an example.

What type of neighborhoods are ideal for you to invest in? Is your goal to cashflow or are you shooting for appreciation down the line?

While I admit that Englewood isn't for the faint of heart, money can still be made in the area. If you have a great PM and budget for the proper security costs, it makes sense. There's a low barrier of entry with tremendous upside, but it will come with it's headaches. If you're a first time investor I would recommend that you get a partner that has experience in the area. The caution in the comments above should definitely be heard but it's not much different than the challenges we faced rehabbing properties in Logan Square, Humboldt Park, Wicker Park, etc...once upon a time. Somebody has to be on the ground floor, you just have to decide if it's for you.

They were already under contract once and probably already ordered the zoning cert. Ask them to see it or make your offer contingent on zoning if they don't have it yet.

@Frank S. Since when does buying an $800k property automatically translate to a $2 mil rehab?