Foreclosure in Chicago>Question Details

Joe K., Home Buyer in Chicago, IL

I am looking for an investment property in chicagoland area.

Asked by Joe K., Chicago, IL Sun Jan 13, 2008

My price range is between $350K-$650K depending on positive cash flows. Any good areas to invest? Pilsen? I have went through several realtors but have not found someone to ask for investment advice. I am looking both commercial and residental.

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Hi Joe - it is difficult to to find cashflow positive buildings on the north side unless you provide a substantial downpayment - often times to make it work, you almost need to be owner occupied to avoid a greater than 20% downpayment and more attractive interest rate. I work a great deal with investors - large multi-units. Currently I have had a great deal of luck finding a number of 3 to 6 flats in South Shore that in terms of cashflow are very attractive. Easy access to Metra along S. Exchange makes it convenient for tenants. The key to evaluating any investment property is to think of a three-legged stool - cashflow / cash on cash return, appreciation and tax benefits (ie depreciation). Many of these buildings have significantly better returns than buildings on the north side.

South Shore area is 6700 South to 8900 South - Stoney Island east to the lakefront. The area has seen steady appreciation - a very large development is planned at 89th and the lakefront - empty land along the shipping channel.

I've read that Pilsen is the new Bucktown - after doing a fair amount of analysis of the buildings available, I am not convinced the current prices are worth the price - simply my opinion.

Hope that helps!
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2 votes Thank Flag Link Sun Jan 13, 2008
I think Joe's nailed this one. buy and hold is definitely a preferred strategy in today's market. If you really want to cash in take advantage of the REOs on the city's south side. buying now and putting in a little rehab work can go a long way in terms of cash flow.

cash flow depends on 3 key factors:

purchase price
down payment (affects loan amount)
full doc or stated loan (affects interest rate on loan amount)

With your price rangeI'd say the optimum senario would be to purchase (2) two unit building w/ finished basements on the city's south side EAST of the dan ryan. (one in south shores as Thomas suggest and maybe another in washington park or woodlawn) appraised values are at 350K and the industry standard for multi unit investments is a 10% down payment. since you have the capital I would say put down 15% on each. You'll have a lower interest rate going full doc, however, stated programs are investor friendly. the difference in rate is about a 2 points on the rate which will affect your cash flow by a couple of points. Rental rates in the area are about 1300/unit and I anticipate that they're bump up as we get closer to October 2nd 2009.

worst cash senario you cash flow even and hold for the appreciation that's to come from the 1.1 billion dollar Olympic Village and the 370 miilion Olympic Stadium.

find an experienced loan officer and make him your best friend.
1 vote Thank Flag Link Fri Jan 18, 2008

When it comes to Investment property one of the most important points to consider is proximity to transportation. Once you've looked into that you can assess the financials of the various buildings along with their condition and operating costs to determine their return/loss.

A positive cashflow is difficult to attain in areas that are close to the city or have seen gentrification through condo conversions over the past few years. Properties once valued on income alone are also valued today based on their land value (teardown potential for new construction) and the ability to convert units to condo.

A good approach is to buy a mixed use building with a commercial storefront with residential units above. Take a buy and hold approach and watch over the years as rents increase beyond your carrying costs. Division street from Ashland to Leavitt has seen a big rejuvenation over the last 6-7 years with more still to come. Division west of Western is just starting to see the same occur.

Best of luck.
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1 vote Thank Flag Link Sun Jan 13, 2008
I gave Mark a TU because this was a solicited request. To anyone tempted to give him a TD, please read the referenced post.
1 vote Thank Flag Link Sun Jan 13, 2008
Ruthless, Other/Just Looking in 60558
2 flat in Chicago, Millwaukee and Foster could generate $500 positive cash flow monthly.
Email me for more info
1 vote Thank Flag Link Sun Jan 13, 2008

I would focus on other investors as opposed to realtors. I do agree with Thomas Hall, we are finding incredible opportunities in the Historic Chicago South Shore neighborhoods. Our cookie Cutter has been Single Family REO Foreclosures. Average cash flow $500.00 per month per home. The neighborhood is made of 65% to 70% renters.That ratio is growing do to the number of foreclosures. We can reccomend several good investor clubs. We also have excess inventory, and have been wholesaling these properties to other investors in our network. Come join a network investors that are helping place people in homes and making a whole bunch of money doing it. We are people helping people, creating wealth, abundance, and enlightened millionaires.
0 votes Thank Flag Link Mon Jan 21, 2008
Contact me and I'll show you how to make it worth your while.
0 votes Thank Flag Link Mon Jan 21, 2008
Joe. This is the time to by rental properties as mortgage qualification has changed. If you are serious and intrested in excelent cash flow and the units are 100% rented.
Contact me to get started .
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0 votes Thank Flag Link Sun Jan 20, 2008
I can't recommend any properties or city locations but I can recommend a Realtor. Patti Pereyra is one of the top voices here on Trulia. I've been reading her answers for 6 months now and think she is great. That's my opinion. What's great about Trulia Voices is that you can go back and read her answers too and decide for yourself. I have a Western Springs agent that I have worked with to buy and sell my home and consider her a friend. I was meeting with both her and Patti about listing my Oak Park property. This was the first time that I had met Patti and I felt I knew her better than the agent that I have known for 6 years.

If you are looking beyond downtown, I might consider near Midway airport, Lyons or Summit. The reference is Patti's profile page to read through her posts.
Good luck,
0 votes Thank Flag Link Sun Jan 13, 2008
Ruthless, Other/Just Looking in 60558
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