Now a days, it feels like everyone is buying up property and claiming to be an ‘investor”
. Trust us when we say, it aint easy! Too many times we have wholesaled properties from investors who bought their first properties and found themselves in bad situations. Purchasing investment property is easy…. on paper! Luckily, ChicagoCashFlowProperties.com has found a veteran, Craig Stone , who is a 25 year Real Estate Investor, IL Licensed RE Broker, and Rehab Pro. Craig is a pro and knows how to find deals!will be sharing his tips on purchasing investment property in and around Chicago.
I approached Craig and asked him, how do you get started investing in cash flow properties? Here are his tips:
1. Know Your Investing Area
Get to know the area where your looking to invest. Become a market value expert, how do you do that? Find a broker, get a l ist of all of tha actives, contingent, and closed/sold properties in your exact 6-8 block area. Study them. See how many bedrooms, baths, room sizes, garage, basements, etc… Then GO see houses, walk in at least 10-15. Compare the values of each, the good, bad, and ugly. See why one home sits, and the others sell. What makes it sell? Nice updates, neutral paints, colors, clean uncluttered, you bet. Know your market.
2. Buy and Live In Your First Property
MY suggestion is to 1st buy a 2-4 unit building. Live in one unit, rent out the other unit. My 1st building was a 2 flat, and my tenant came with the property, paying $650/mo. We met during the contingency period of the contract. I wanted to make sure I liked him, and learned about his payment history, job status, and living habits. If you do this, GO in see how they live. At $650/mo. my payments to OWN the building were less than what he was paying. I had the 2 story duplex, he lived in the garden apt.
3. Know Your Numbers!
Understand your costs, ALL of them. Just some costs associated with ownership are: Principal Payment – Interest on Payments -Taxes -Insurance (PITA) -Maintenance -Repairs -Landscaping -Snow Removal – Gas – Electricity – Phone – Cable…..and more!
See what I mean! Know what you can afford! Then once you know what you can afford, start your search, I suggest 50K and higher. Always make lower offers to what fits your budget, which would be predetermined by getting pre-qualified. If you get a higher priced deal for your budget requirements, then your in the sweet spot. A better bang for your buck, nicer digs, and hopefully you’ll make some money.
4. Location, location, location.
Look for investment properties in the city near transportation, trains, bus lines, food, retail, entertainment, but far enough away that its quiet. Find the worst house on the best block. Look for signs of money, upkeep, good neighbors, and no boarded up buildings, especially today. Look for curb appeal, cute, cozy looking with character. Make sure your neighbors maintain their properties, and help hold up values.
Dont buy the “IF” deals. If you find yourself saying, “Only if the EL tracks weren’t there” or, “what a great house if the neighbors 3 pit bulls weren’t always barking” or, “If this…. than that…” or, “if the house wasnt on Kedzie, it would be great!”
No “IF” deals.
5. Basements and Good Roofs
Always find good, solid, straight, high basement, no water filled homes, one layer on the roof, siding solid, in tact especially on your 1st deal. Make life easier on yourself! Don’t think it’s a cheap fix, it always costs more than you think. So on your 1st deal buy a cosmetic rehab. Paint, new tile, floors, and a few appliances. 2-5K at most, and you can do it yourself. IF you cant, just find a some reasonable help.
*6 Again buy a 2-4 unit, NO CONDOS!!!!!
Get help with your tenant paying your mortgage. Tips 1-5 are only the beginning to your real estate investing career. They are a good way to begin molding your mental journey into property ownership. It’s not easy, but owning in the long run is how most Wealth is earned.
Start slow, build for a lifetime.
Good stuff! If you are new and are interested in working with Craig, please email him with any questions.
Craig Stone
Cambridge Realty Partners
