Author Topic: Chicago Property/Project. - Landlording  (Read 1292 times)

aalferez

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Chicago Property/Project. - Landlording
« on: June 08, 2017, 09:36:03 AM »
Hi everyone.
I'm very new in this so please be gentle.
I'm currently renting in Chicago in the same area as this house I want to buy and flip is.
I pay $1100 + $100 (2 car garage) a month. I also pay for utilities. Since this is Cook county, we don't pay for water :).

Now, I just found this property 3 blocks south of where I live.
Price is $155K, so I hope I could buy it for less.
I would have to ask for a mortgage, 30 years, 4% (is this a conservative estimate?)
With a $2800 tax and $1000 insurance, numbers are $1056.65 a month.


Property clearly will need some TLC and I have an appointment today to determine this. Will take pictures.
The property is a 4 Bed 4 Bath 1900 sq ft built in 1891 (so old!). But my current apartment is too.

I wonder what other costs are associated with this, what formula can I use to determine if it's worth the investment.

I also have tools and skills for remodeling (plumbing, framing, ... you name it) so fixing things would be easy.

Thank you for your time.

Cwadda

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Re: Chicago Property/Project. - Landlording
« Reply #1 on: June 08, 2017, 09:54:48 AM »
Do you have a lender already? I think a good next step for you would be to find a good lender you're comfortable with. Your loan officer will be able to walk you through a lot of costs you have questions about.

I've attached a cashflow calculator for you to fill in numbers. Hope this helps.

aalferez

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Re: Chicago Property/Project. - Landlording
« Reply #2 on: June 08, 2017, 12:56:06 PM »
That is an awesome excel!
Thank you.

So here are the numbers:
Cashflow: 161.18
Cash on Cash return: 11.5%

How good or bad are the numbers?
Here is the excel attached too

Cwadda

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Re: Chicago Property/Project. - Landlording
« Reply #3 on: June 09, 2017, 08:13:02 AM »
I don't know the area of Chicago very well, but this place looks pretty good to me. It looks like someone flipped it and is offering it as a turn-key rental. You could always live in the in-law apartment and rent the main house. Because you're owner occupying you could consider managing the property yourself. This would bump up your cash-on-cash return to a whopping 26%!

I'd call the listing agent and ask why the pending sale fell through in May. See what they say.

If you're not already in touch with a mortgage lender, I'd get a good one if you're ready to buy a house. They will walk you through all the financing options. It seems like conventional 5% would work well for your case, if possible. FHA with 3.5% down is possible but can get very messy.
« Last Edit: June 09, 2017, 08:15:12 AM by Cwadda »

aalferez

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Re: Chicago Property/Project. - Landlording
« Reply #4 on: June 12, 2017, 08:01:56 AM »
I got pre approved for a 5% down. 30 year fixed up to 200K. I didnt want to spend more than 200K.

I have a showing of the house today. What more questions should I ask?

My biggest concern is that there is something wrong with the house and that's why the pending sale fell through.

Thank you

Cwadda

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Re: Chicago Property/Project. - Landlording
« Reply #5 on: June 12, 2017, 08:34:26 AM »
I got pre approved for a 5% down. 30 year fixed up to 200K. I didnt want to spend more than 200K.

I have a showing of the house today. What more questions should I ask?

My biggest concern is that there is something wrong with the house and that's why the pending sale fell through.

Thank you

Either the buyer was not qualified or there was something drastically wrong with the house that the buyer/seller did not want to pay for. Just take a good look around and ask questions. Good luck.

monarda

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Re: Chicago Property/Project. - Landlording
« Reply #6 on: June 12, 2017, 07:16:47 PM »
In 2001 we were one of 10 offers on a house. The offer that was accepted (not us) went through the process to remove contingencies and changed their mind after inspection report.

Then the sellers took additional offers, our second offer was 10K lower than our first offer - because we got to see a summary of what was wrong with the place. That offer was accepted. We've put a lot of work in that house, but now the value has at least doubled and the rents have also doubled since 2001.