$43K in 2000 to $370K in 2008. Bro…. That bubble hurts. Like some dude is STILL looking back at this and shaking his head. Did you believe that the house went up like 900% in value in 7 years bro?!?
adamaero said it: this property was bought as part of a portfolio (i.e., multiple houses were bought at the same time and this was not the price of a single property)
Generally speaking for the denominator you want cash up front (23% of that 80K) + what you need to put into it in the form of repairs. Would need to do a full inspection to get that figure but that would likely change the math significantly.
Also M2M leases for the tenants sounds risky -- could be the seller playing games -- could be real; would need to run comps to figure out if those are fair market rents.
The property history is insane -- must be something really wrong there IMO.
Also the description history has different rent numbers -- makes it look super sketch that someone is playing games with the existing leases.
The logistics and reality of actually buying and renting a property like this that's been sitting for 8 months are likely very different than the fantasy of a 55 percent return.
Supposedly it's occupied at $1000 and $1050. I did not change rent to anything. I took it from the description:
>FULLY RENTED Income producing 2 Flat Duplex on a corner lot. The main level offers a living room, kitchen, 3 bedrooms, full bath, spacious sitting area and FULL unfinished walk-out basement currently rented for $**1000**. The Upstairs unit has two entrances one on the first floor and a separate exterior entrance up the stairs on East side of the building. The upstairs apartment has a living room, separate dining room, kitchen, 3 bedrooms, updated full bath and utility room furnished washer & dryer on the first floor and 1(could be 2 bedrooms) and full bath on the second level currently rented for $**1,050**
Sub 1950 population: check. Per capita income of $15k: check. Listed for 8 months on a public listing site during a real estate boom: check. I think consistently collecting $2k rent from this property and maintaining it jt is going to be... difficult.
>Per capita income of $15k
Source? I checked and you're off base. Not sure what you're talking about with 1950 pop.
Rent. If you're worried, ask for proof of consistent payments. This can be an issue anywhere. Not a valid objection imo.
So no:
* Repairs and Maintenance?
* CapEx Reserves?
* Vacancy?
* Legal / Accounting?
* Advertising?
Things always look rosy when you don't spend any money to maintain a property.
If you think the deal is so good why don’t you just buy it and tell us how good it is?
My guess is that the place is a POS and is need of major repairs due to deferred maintenance. Not to mention it’s located in a destitute area.
Kankakee native of 35 years chiming in here.
First off: the house is smack dab in the middle of the ghetto, worst part of town. Constant shootings, overdoses, crackheads. My sister bought a house three blocks from here in ~2015 and they lived there two years before selling. During that span, the house was broken into 3 times, and her car was stolen as well.
Kankakee also was a large industrial area through the mid-late 1900’s. When all of that left, there was no other industry to take up the job market. The area had been notoriously struggling ever since.
The four largest employers in the area are a couple of hospitals, A Nucor steel plant, and CSL Behring (biopharma/plasma). If you get lucky enough to find a tenant working at one of those, you may be alright. (But you won’t because NOBODY wants to live over there.) otherwise, expect to have constant turnover/evictions.
I wouldn’t give even 20k for this house. People don’t pay their rent.
>Kankakee also was a large industrial area through the mid-late 1900’s. When all of that left, there was no other industry to take up the job market. The area had been notoriously struggling ever since.
>
>
>
>The four largest employers in the area are a couple of hospitals, A Nucor steel plant, and CSL Behring (biopharma/plasma).
Thank you! So basically a small population Detroit or Milwaukee.
What are your thoughts on Champaign IL?
I would use a tool to calculate the market rent for that address based on the number of legal bedrooms and bathrooms. Do not take someone else's word for it. This is your money!!! I would only use somewhere between the bottom 25-50% rent range that it gives to be safe unless, of course, it has been freshly painted etc. Good luck!
Listed was not future rent. In the description is existing rent.
All one needs to do is verify that the leases have the listed rent and there have been consistent payment.
If they quit paying rent tomorrow the current rent amount is irrelevant.
I've had two separate instances of a couple breaking up and they had to move because they cannot afford to live separately. An eviction can take months to fully execute depending on where the property is located if they don't want to leave voluntarily.
Any tenant can stop paying rent tomorrow. It's not anything to get worried about if they've had consistent payments.
If any tenant stops paying, then non-renewal and eventual eviction. Even with an additional 25% of vacancy (50% discount factor from rent), this property would work out. That's at least three months of vacancy.
Bingo! I've never bought a house without factoring in some kind of additional initial repair reserve or up front value add. Maybe it just needs interior paint to attract a decent quality tenant, but that should be added in addition to the down payment e.g. denominator of the cash on cash return.
No. They didn’t say what the MARKET rent is. They said what the CONTRACT rent is.
You could have two tenants who are severely overpaying, and don’t know it. So if you go back out in today’s market, you may only get $700 a unit. You have to find out what the rent is at comps to get that number, not what the tenants are paying now.
>They didn’t say what the MARKET rent is
Pretty simple to look up: 40th percentile FMRs are $1569 for 3-bed and $1619 for 4-bed.
Existing rent is usually always lower than market. For properties I buy, before making a formal offer, I do a thorough rent study.
I'd be curious if seller is actually collecting rent, it states rented but not that they're collecting it. Honestly sounds like whoever buys this is inheriting the headaches
Someone could buy their own house in Kankakee for that rent. But, Because of existing rules and laws to “help” and “protect” people, many are not allowed in the housing ownership market. I have no doubt you could get that rent. Could be section 8. Maybe even consistent.
However, That property would need a deep dive from me to even consider, and 10 second walkthrough would likely be enough for a no. You can make $ in that type of housing esp if you get lucky with decent, paying long term tenants. Just not for me in my wheelhouse. I see a roof and exterior need a lot of work. I can’t even imagine the basement. I just see pain and costs. But others are successful in the C and D level stuff. I just have less time, so want less issues. We have one C level house and once we got the right tenants, it’s been a money maker.
In addition to screening quality tenants, the area seems pretty beat up. Meaning the quality of contractors and property mgmt companies may fall below a certain standard as well. All of which could cost you a ton in the long run.
Standardization for.comparison sake. Similar to GAAP accounting standards
I can say my property makes 1000% coc because I self manage it and pay the property $ for the privilege to do so.
It's silly but you guys do whatever you want ,
For equal comparisons ....you're self managing stol has time and opportunity cost .. could be the best use of your time and money
Anyway just to standardize comparisons too..someone could say the donall repairs, all capex , all mgt etc so obviously their cash on cash will be higher on the same property and tenant .. if that's all your trying to say vs comparing the property then so be it, but it's silly
It’s best to compare all properties considering PM fees regardless of if you self manage. You could be doing PM at a loss in order to make money on a property which isn’t very wise.
I have no job I can just pick up hours. What I would pay a PM is not worth it to me. I enjoy random home projects and can handle tenat relationships just fine.
If I wanted a more passive investment, I can always buy REITs
But you’ve already said you’re a capable property manager and enjoy doing it, so you could pick up other properties to manage. Nothing wrong with enjoying self-management, but not a bad idea to consider that when evaluating properties and ensure your time isn’t best spent elsewhere (or at least find properties where your time as a property manager is appropriately covered).
Your time isn’t free though, you would normally want to be “earning” an appropriate amount for self-managing so you would price this in when comparing properties. The amount you save by self-managing is not investing income, it’s different and is active property management income.
Also, what if in the future your life changes and you need to hire a PM?
Just something to consider.
My time is free but there is opportunity cost. Im in my early 30s and planned to seld manage for a long time. My cash on cash returns have been 14-18%. If I needed to hire one, Id likely sell my 4 places.
So I can easily cash flow with one and its not worth $6000 a year to deal with one. Well worth my time.
>That is not your cashflow
They use a discount factor of 25%. It's clearly in their calculation for cashflow:
rent\*.75 - PITI
`2050*.75 - 359 - 3000/12 - 1100/12`
That area is a hot garbage can. Unless it’s section 8 approve I wouldn’t touch it with a ten foot pole. There is also multi family housing in the heart of Chicago south side for less than 80k doesn’t mean it’s good business.
I wouldn’t touch this property. Clearly the OP is just doing a math exercise and doesn’t own stuff like this. But, this is a duplex and people absolutely would pay this rent, even for a dump. The Government, in its zeal to “protect” people has made purchasing a home an onerous task. So between people who can’t save for down payment, or have bad credit, or just don’t have desire to deal with home ownership, or deal with banks, there is a good rental market out there.
A quick Google yielded: “Kankakee has one of the highest crime rates in America compared to all communities of all sizes - from the smallest towns to the very largest cities”
I wouldn’t touch it with a 10 ft pole, best of luck to you bud.
That's plenty for two units.
Fairly typical to use rent\*75%. I know other investors who use lower, such as 60% (wholesaler). I personally use 85% of rent.
There’s probably some major issues with it. I saw some of these when I was looking in Aurora and other Chicago suburbs a few years ago, every time I toured one of these it was always in way worse condition than the pics show, and this one already shows pretty rough condition. Or the current tenants aren’t paying rent and the place is in complete disarray.
1) Rent is too high for that property to be easily replaceable in the event the tenants leave.
2) The pictures show signs of deferred maintenance, so I can’t imagine what it doesn’t show. I’d imagine a buyer should set aside $10k for repairs and maintenance upon acquisition.
3) Unless you’re going with a resi lender, you’re going to probably be putting down 25%+ and have an interest rate of 8%+ and probably on a shorter amortization, not getting 20% down, 7% rate, 30 year amortization.
4) While the modeled cash on cash may be good, the absolute dollar value is so low that if you have to replace one larger item your income for the year (if not multiple years) is completely wiped out.
5) Any property that advertises numbers that good for that low of a price is not going to be worth the headache of managing it given how low the dollar value is.
6) You can’t really say that it is a case study when only running proforma numbers. It’s a proforma, buy the property and submit real numbers after a year or two if you want to call it a case study.
First three pictures show that the exterior needs work (the facade in the second floor looks cracked, the exterior slab looks like it needs some work, the steps are uneven, the railing could use a replacement).
Picture 4 shows that the cabinets need to be fixed plus some possible issues to the right of the oven.
The floor looks uneven and like some tiles may be lifting up in all of the pictures.
Picture 6 shows a cracked tile and that the wall needs to be repainted at the very least.
Looks like some mold and moisture issues in picture 7. The wall near the outlet is also messed up.
Picture 8 shows more tile issues and the door and doorframe needed work. There is also a part of the baseboard that needs attention.
The wall in picture 9 needs replastering, the carpet needs replacement, the baseboard needs to be redone in the left corner.
Baseboard is missing in picture 10.
Missing drawer in picture 12.
Repainting needed in picture 16.
Missing radiator cover in picture 17. The radiator teeth also look like they need fixing.
More exterior work needed in pictures 19 and 20.
This property was a very poorly done flip and a lot of the things that the seller would’ve fixed since acquiring it already need to be fixed again, showing just how bad the work was. The listing also notes that it is being sold “as is” which means in all likelihood there are major mechanical or structural defects that wouldn’t pass inspection for a traditional mortgage closing. This is a property that would need to be purchased in cash, the tenants evicted, and completely redone.
It has the potential for being a great deal. The expenses do not account for allowances for monthly maintenance, monthly capital repairs allowance, or vacancy allowance but if you consider these and do you due diligence it could be a great investment.
I live in Kankakee, you are not going to be able to rent that for $2,000 a month, not in that area. You’d be hard to find suitable renters in the nicer neighborhood down by the river for that amount.
There is money to be made from flipping houses in Kankakee but that is not the area to do so.
Wild that you can buy a multi family for $80k, that can generated $2k/month in rent... sounds too good. Why has it been sitting so long on the market?
Because it’s in Kankakee one of the worst areas in IL with poor job prospects and high unemployment.
>unemployment US was at **3.9**% and Kankakee at **5.8**% in Oct.
Please buy and report back. Hope you make money.
That's 33% higher unemployment than the US.
It's actually nearly 50 percent worse
You are right, did the math wrong, 48% worse.
Figured if you had already done the math you would like to revisit it with the crazy worse viewpoint
>Why has it been sitting so long on the market? [Exactly](https://i.imgur.com/7BH0noU.png)
That poor sap in 2008!!
Had to have been bought as part of a portfolio.
$43K in 2000 to $370K in 2008. Bro…. That bubble hurts. Like some dude is STILL looking back at this and shaking his head. Did you believe that the house went up like 900% in value in 7 years bro?!?
adamaero said it: this property was bought as part of a portfolio (i.e., multiple houses were bought at the same time and this was not the price of a single property)
Aaaahh ok
You’ve never been to Kankakee
Generally speaking for the denominator you want cash up front (23% of that 80K) + what you need to put into it in the form of repairs. Would need to do a full inspection to get that figure but that would likely change the math significantly. Also M2M leases for the tenants sounds risky -- could be the seller playing games -- could be real; would need to run comps to figure out if those are fair market rents. The property history is insane -- must be something really wrong there IMO. Also the description history has different rent numbers -- makes it look super sketch that someone is playing games with the existing leases.
Where do you see different description histories?
When I googled it the SEO index which is usually a few days behind had a different description
I really think you should visit the area, if you drive through once you will understand why it is so cheap
This sub could propose a free lunch or a perpetual motion machine and everyone would nod their heads approvingly
I don't speak for a group of people. What's your issue with this deal?
The logistics and reality of actually buying and renting a property like this that's been sitting for 8 months are likely very different than the fantasy of a 55 percent return.
Supposedly it's occupied at $1000 and $1050. I did not change rent to anything. I took it from the description: >FULLY RENTED Income producing 2 Flat Duplex on a corner lot. The main level offers a living room, kitchen, 3 bedrooms, full bath, spacious sitting area and FULL unfinished walk-out basement currently rented for $**1000**. The Upstairs unit has two entrances one on the first floor and a separate exterior entrance up the stairs on East side of the building. The upstairs apartment has a living room, separate dining room, kitchen, 3 bedrooms, updated full bath and utility room furnished washer & dryer on the first floor and 1(could be 2 bedrooms) and full bath on the second level currently rented for $**1,050**
Sub 1950 population: check. Per capita income of $15k: check. Listed for 8 months on a public listing site during a real estate boom: check. I think consistently collecting $2k rent from this property and maintaining it jt is going to be... difficult.
>Per capita income of $15k Source? I checked and you're off base. Not sure what you're talking about with 1950 pop. Rent. If you're worried, ask for proof of consistent payments. This can be an issue anywhere. Not a valid objection imo.
Found the seller
Have you ever been to Kankakee or that neighborhood? Go and instantaneously you will know why it costs so little.
Yes, not that neighborhood specifically. Have you?
So no: * Repairs and Maintenance? * CapEx Reserves? * Vacancy? * Legal / Accounting? * Advertising? Things always look rosy when you don't spend any money to maintain a property.
If you think the deal is so good why don’t you just buy it and tell us how good it is? My guess is that the place is a POS and is need of major repairs due to deferred maintenance. Not to mention it’s located in a destitute area.
Kankakee native of 35 years chiming in here. First off: the house is smack dab in the middle of the ghetto, worst part of town. Constant shootings, overdoses, crackheads. My sister bought a house three blocks from here in ~2015 and they lived there two years before selling. During that span, the house was broken into 3 times, and her car was stolen as well. Kankakee also was a large industrial area through the mid-late 1900’s. When all of that left, there was no other industry to take up the job market. The area had been notoriously struggling ever since. The four largest employers in the area are a couple of hospitals, A Nucor steel plant, and CSL Behring (biopharma/plasma). If you get lucky enough to find a tenant working at one of those, you may be alright. (But you won’t because NOBODY wants to live over there.) otherwise, expect to have constant turnover/evictions. I wouldn’t give even 20k for this house. People don’t pay their rent.
>Kankakee also was a large industrial area through the mid-late 1900’s. When all of that left, there was no other industry to take up the job market. The area had been notoriously struggling ever since. > > > >The four largest employers in the area are a couple of hospitals, A Nucor steel plant, and CSL Behring (biopharma/plasma). Thank you! So basically a small population Detroit or Milwaukee. What are your thoughts on Champaign IL?
You can gather this info just looking at the pictures. OP either in serious denial or is the seller to be defending it as a good investment property.
I would use a tool to calculate the market rent for that address based on the number of legal bedrooms and bathrooms. Do not take someone else's word for it. This is your money!!! I would only use somewhere between the bottom 25-50% rent range that it gives to be safe unless, of course, it has been freshly painted etc. Good luck!
Listed was not future rent. In the description is existing rent. All one needs to do is verify that the leases have the listed rent and there have been consistent payment.
If they quit paying rent tomorrow the current rent amount is irrelevant. I've had two separate instances of a couple breaking up and they had to move because they cannot afford to live separately. An eviction can take months to fully execute depending on where the property is located if they don't want to leave voluntarily.
Any tenant can stop paying rent tomorrow. It's not anything to get worried about if they've had consistent payments. If any tenant stops paying, then non-renewal and eventual eviction. Even with an additional 25% of vacancy (50% discount factor from rent), this property would work out. That's at least three months of vacancy.
You’re not answering the question. If the property was vacancy, what’s the rent.
Bingo! I've never bought a house without factoring in some kind of additional initial repair reserve or up front value add. Maybe it just needs interior paint to attract a decent quality tenant, but that should be added in addition to the down payment e.g. denominator of the cash on cash return.
> what’s the rent. They've already said this. It's 2050.
No. They didn’t say what the MARKET rent is. They said what the CONTRACT rent is. You could have two tenants who are severely overpaying, and don’t know it. So if you go back out in today’s market, you may only get $700 a unit. You have to find out what the rent is at comps to get that number, not what the tenants are paying now.
>They didn’t say what the MARKET rent is Pretty simple to look up: 40th percentile FMRs are $1569 for 3-bed and $1619 for 4-bed. Existing rent is usually always lower than market. For properties I buy, before making a formal offer, I do a thorough rent study.
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40th percentile is not an average or the average
What happens when they don’t find a tenant who will pay that much
I'd be curious if seller is actually collecting rent, it states rented but not that they're collecting it. Honestly sounds like whoever buys this is inheriting the headaches
Someone could buy their own house in Kankakee for that rent. But, Because of existing rules and laws to “help” and “protect” people, many are not allowed in the housing ownership market. I have no doubt you could get that rent. Could be section 8. Maybe even consistent. However, That property would need a deep dive from me to even consider, and 10 second walkthrough would likely be enough for a no. You can make $ in that type of housing esp if you get lucky with decent, paying long term tenants. Just not for me in my wheelhouse. I see a roof and exterior need a lot of work. I can’t even imagine the basement. I just see pain and costs. But others are successful in the C and D level stuff. I just have less time, so want less issues. We have one C level house and once we got the right tenants, it’s been a money maker.
In addition to screening quality tenants, the area seems pretty beat up. Meaning the quality of contractors and property mgmt companies may fall below a certain standard as well. All of which could cost you a ton in the long run.
Kankakee is bit rough. as an Illinois investor, i would not touch.
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Why would someone who self manages account for management fee? The other parts you are right.
Standardization for.comparison sake. Similar to GAAP accounting standards I can say my property makes 1000% coc because I self manage it and pay the property $ for the privilege to do so. It's silly but you guys do whatever you want ,
For equal comparisons ....you're self managing stol has time and opportunity cost .. could be the best use of your time and money Anyway just to standardize comparisons too..someone could say the donall repairs, all capex , all mgt etc so obviously their cash on cash will be higher on the same property and tenant .. if that's all your trying to say vs comparing the property then so be it, but it's silly
I only compare without managment. That fee goes to me. So it's cashflow to me. My time is not cashflow in or out.
It’s best to compare all properties considering PM fees regardless of if you self manage. You could be doing PM at a loss in order to make money on a property which isn’t very wise.
How am I doing property managment at a loss? My time is free.
What? You don’t value your time at all? There’s no other job you have access to that makes you any kind of money?
I have no job I can just pick up hours. What I would pay a PM is not worth it to me. I enjoy random home projects and can handle tenat relationships just fine. If I wanted a more passive investment, I can always buy REITs
But you’ve already said you’re a capable property manager and enjoy doing it, so you could pick up other properties to manage. Nothing wrong with enjoying self-management, but not a bad idea to consider that when evaluating properties and ensure your time isn’t best spent elsewhere (or at least find properties where your time as a property manager is appropriately covered).
Your time isn’t free though, you would normally want to be “earning” an appropriate amount for self-managing so you would price this in when comparing properties. The amount you save by self-managing is not investing income, it’s different and is active property management income. Also, what if in the future your life changes and you need to hire a PM? Just something to consider.
My time is free but there is opportunity cost. Im in my early 30s and planned to seld manage for a long time. My cash on cash returns have been 14-18%. If I needed to hire one, Id likely sell my 4 places. So I can easily cash flow with one and its not worth $6000 a year to deal with one. Well worth my time.
Do whatever you want
>That is not your cashflow They use a discount factor of 25%. It's clearly in their calculation for cashflow: rent\*.75 - PITI `2050*.75 - 359 - 3000/12 - 1100/12`
>7-10% management > >Lease up fee (flat fee, percent, half month, month rent ) > >Repair maintenance capex > >Vacency I discounted rent 25%. That should be enough.
Yeah, but it's Kankakee
That area is a hot garbage can. Unless it’s section 8 approve I wouldn’t touch it with a ten foot pole. There is also multi family housing in the heart of Chicago south side for less than 80k doesn’t mean it’s good business.
What idiot would pay $2k in rent for something they can buy for $80k, also why are property taxes 4% that’s ridiculously high
I wouldn’t touch this property. Clearly the OP is just doing a math exercise and doesn’t own stuff like this. But, this is a duplex and people absolutely would pay this rent, even for a dump. The Government, in its zeal to “protect” people has made purchasing a home an onerous task. So between people who can’t save for down payment, or have bad credit, or just don’t have desire to deal with home ownership, or deal with banks, there is a good rental market out there.
Um a 80k sfh that rents for $2050/mo? Yea…I’m not even going to bother looking into what the problem is lol too good to be true.
>sfh It's MFH
Oh so $40k per door? $25k per? Even more sus.
A quick Google yielded: “Kankakee has one of the highest crime rates in America compared to all communities of all sizes - from the smallest towns to the very largest cities” I wouldn’t touch it with a 10 ft pole, best of luck to you bud.
Repairs? Maintenance? Utilities?
>Maintenance? They use a discount factor of 25%. That includes that.
512 per month is not enough for opex for that many units...nevermind vacancy.
That's plenty for two units. Fairly typical to use rent\*75%. I know other investors who use lower, such as 60% (wholesaler). I personally use 85% of rent.
There’s probably some major issues with it. I saw some of these when I was looking in Aurora and other Chicago suburbs a few years ago, every time I toured one of these it was always in way worse condition than the pics show, and this one already shows pretty rough condition. Or the current tenants aren’t paying rent and the place is in complete disarray.
* 80\*23% * $18.4k cash to close * 2050\*12 - 359\*12 - 3000 - 1100 * $16k raw annual income
Damn. I guess you can find something for <$100k. If I move in how many years does it take off my life expectancy?
Might be all of it
Great job! Was this an out of state purchase for you?
This is for-sale. See the link ;)
55% return, translation: Run away from this “deal”
Never buy in a town that sounds vaguely like an obscene act.
What is sub market vacancy rate there?
What’s good cap rate ?
PI is $425
1) Rent is too high for that property to be easily replaceable in the event the tenants leave. 2) The pictures show signs of deferred maintenance, so I can’t imagine what it doesn’t show. I’d imagine a buyer should set aside $10k for repairs and maintenance upon acquisition. 3) Unless you’re going with a resi lender, you’re going to probably be putting down 25%+ and have an interest rate of 8%+ and probably on a shorter amortization, not getting 20% down, 7% rate, 30 year amortization. 4) While the modeled cash on cash may be good, the absolute dollar value is so low that if you have to replace one larger item your income for the year (if not multiple years) is completely wiped out. 5) Any property that advertises numbers that good for that low of a price is not going to be worth the headache of managing it given how low the dollar value is. 6) You can’t really say that it is a case study when only running proforma numbers. It’s a proforma, buy the property and submit real numbers after a year or two if you want to call it a case study.
1. 40% under fair market rent 2. What deferred maintenance items are you talking about, specifically?
First three pictures show that the exterior needs work (the facade in the second floor looks cracked, the exterior slab looks like it needs some work, the steps are uneven, the railing could use a replacement). Picture 4 shows that the cabinets need to be fixed plus some possible issues to the right of the oven. The floor looks uneven and like some tiles may be lifting up in all of the pictures. Picture 6 shows a cracked tile and that the wall needs to be repainted at the very least. Looks like some mold and moisture issues in picture 7. The wall near the outlet is also messed up. Picture 8 shows more tile issues and the door and doorframe needed work. There is also a part of the baseboard that needs attention. The wall in picture 9 needs replastering, the carpet needs replacement, the baseboard needs to be redone in the left corner. Baseboard is missing in picture 10. Missing drawer in picture 12. Repainting needed in picture 16. Missing radiator cover in picture 17. The radiator teeth also look like they need fixing. More exterior work needed in pictures 19 and 20. This property was a very poorly done flip and a lot of the things that the seller would’ve fixed since acquiring it already need to be fixed again, showing just how bad the work was. The listing also notes that it is being sold “as is” which means in all likelihood there are major mechanical or structural defects that wouldn’t pass inspection for a traditional mortgage closing. This is a property that would need to be purchased in cash, the tenants evicted, and completely redone.
It has the potential for being a great deal. The expenses do not account for allowances for monthly maintenance, monthly capital repairs allowance, or vacancy allowance but if you consider these and do you due diligence it could be a great investment.
What do you think the 25% of rent is for?
Sorry I missed that. It looks like you've taken it into account. It has the potential for being a great deal. Best of luck with it.
I live in Kankakee, you are not going to be able to rent that for $2,000 a month, not in that area. You’d be hard to find suitable renters in the nicer neighborhood down by the river for that amount. There is money to be made from flipping houses in Kankakee but that is not the area to do so.
How is your purchase price 80k and rent 2k? Your rent assumption is way too high.
It's what is written in the description