Jeff, Home Buyer in Chicago, IL

Got a single family residence for free in englewood. It will cost 15-35k to repair. I can't flip it for 3 years. What should I do?

Asked by Jeff, Chicago, IL Thu Sep 19, 2013

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9
if you have to keep for 3 years try to repair the most you can and rent it! The school is one block away ( like you said) ,than will be easy to rent! After 3 years put it for sale right away!
i don't see another solution! Never heard about 3 years seasoning on the property before!
1 vote Thank Flag Link Fri Sep 20, 2013
Thanks Dan. It's coming from a non for prof org. & we have to rent to low income tenants for those first 3 yrs.
Flag Fri Sep 20, 2013
Jeff,

Let's assume:

Cost to fix = $35k
Taxes = $3k/yr
Insurance = $1k/yr
Miscellaneous = $1k/yr

Rent = $600/mo (You can likely get much more).

Therefore Income = $7200/yr
Expenses = $5k

Net Profit = $2200/yr

ROI = $2200/$35000 = 6.3%/yr


If Rent = $1k/mo, Then

$7k/$35k = 20% = ROI


Plug and chug the real numbers and you are likely to have much higher returns.

If you fix up the property nice enough you may be able to pass a Sec 8 Inspection.

Good luck and keep in mind there are always unforeseen expenses and headaches with home ownership. Consider using a property manager if you are not experienced.
1 vote Thank Flag Link Fri Sep 20, 2013
Jeff,

Many factors play into your decision. Are you looking to live in the house or rent it out. Each has its own ups and downs.
0 votes Thank Flag Link Tue Sep 24, 2013
What do you think you should do?
0 votes Thank Flag Link Sat Sep 21, 2013
anything for free has almost no dowbn side.

put it on the MLS NOW wth me and we will sell it for about $60,000 and you will know exactly how much you have to work with and what needs to be done and the profit...in the end if you can walk with 20 K and do it with 100 hours of labor and 20 K in parts you win
0 votes Thank Flag Link Fri Sep 20, 2013
Fix it up for the minimum about you can to make it nice, and rent it out for 3 years.
0 votes Thank Flag Link Fri Sep 20, 2013
Well, if you do not secure it, and register it as vacant with the city, you will soon be paying hundreds if not thousands of dollars in fines.
The city will not let it just sit, you will find they are going to poke and prod you to either act or they are going to work on getting you to Demo court. That path will cost you money.
You should be able to get market rate tenants for $1000+ a month. Whether or not a voucher tenant wants or can live there will depend on the work you do and the area the house is in.
You are right about the timeframe for selling it, you can expect it will take you at least 36 months to see enough turn around in that market to even find a buyer. i would say more like 60 months.
The good news is if you do your homework and get the right tenant, you can make 20% on that investment over the next few years.
If you want to talk about getting out of it now, give me a call or write me back.
We have several houses like this in Garfield Park.

Dave Hanna 773-732-9123
0 votes Thank Flag Link Fri Sep 20, 2013
Put the money that you want to put into it to live there.
0 votes Thank Flag Link Fri Sep 20, 2013
15-35K is pretty cheap to fix up, but if that is true what is the problem waiting 3 yrs IF you can make a decent profit? If 3yrs is too long then just do not do it.
0 votes Thank Flag Link Fri Sep 20, 2013
It's in the worst neighborhood in the city, maybe the nation. Positives are, it's one block from a city high school. What determines if I can make decent profit in this case?
Flag Fri Sep 20, 2013
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