Home Buying in Chicago>Question Details

Javier, Home Buyer in Chicago, IL

1St Time Home Buyer Dilemma

Asked by Javier, Chicago, IL Wed Dec 31, 2008

I'm a first time 31 and single home buyer and been told by a property investor to look into the Chicago North Lawndale area. Supposedly investors are receiving a city tax break to invest in the area and will be a great investment. I was also advised that with the purchase price of $115000.00 for a 3 bedroom house I can rent it out to section 8 tenants and still receive a positive cash flow. After a year of mortgage payments I can then invest into my dream condo while still building equity from my first purchase. How true is this? Should I look into a multi-unit instead in the same area? Should I just buy a beautiful condo in the Bronzeville area? Thanks

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Dear Javier,

If you are new to real estate investing, then I'd suggest either starting by researching being a landlord/property owner either online or at a library or bookstore.

Scott referenced some important questions which I might paraphrase as "are you planning to self-manage your investment property or are you planning to hire a management company (which will affect the profitability of your investment)?" You might also need some assistance with determining market area rents in the specific census tract that you're planning to purchase in before you determine what you can pay for a property and still have a positive cash flow.

You might want to take a look at the following website http://www.condor.depaul.edu/~fdemissi/lawndale5.pdf for starters about information on city incentive programs that are available. There is also a federal first time homebuyer credit available right now which you can research at http://www.federalhousingtaxcredit.com.

In general I would suggest that you speak with a mortgage lender about what you'd like to do financially over the next couple of years and they might be able to help you decide which avenue (condo, owner-occupied multi-unit, or pure investment property) to select. If you need referrals to any lenders, I'd be happy to provide you with some.

Let me know if I can be of further assistance.


Sincerely,
Christopher Thomas
Broker Associate, Sudler Sotheby's International Realty
773-418-0640 (cell)
christopher.thomas@sothebysrealty.com
Web Reference: http://www.myagentchris.com
0 votes Thank Flag Link Tue Jan 6, 2009
There is a lot to consider here, but the short answer is being a landlord is very difficult, time consuming, and potentially expensive. Done correctly, buying investment property can make you a multi-millionaire, but if the current market has taught us anything it can also make you file bankruptcy.

What is your risk tolerance? Are you a hands-on kind of person? These are important questions to consider.

Another important thing to note, if you're going to do section 8 you can buy multi-units for $10,000 then spend $50,000 to fix them up and get the same rents with even great profit margins.

I have numerous clients that I help do exactly the things you're asking about so if you'd like to discuss your personal situation and how I can be of assistance let me know.

Scott Newman
Newman Realty
0 votes Thank Flag Link Wed Dec 31, 2008
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