I remember feeling frustrated when I first starting investing in real estate. Sure, as a Chicago native I knew which neighborhoods were up-and-coming and I had access to my fair share of real estate agents listings. But finding inexpensive properties in this city was more difficult than I bargained for. I’ve been around the block a few times at this point, however, and have a solid lead generation strategy in place now. But let me share with you some of the local resources that I tried, how they work, and what they’re worth as leads when trying to buy distressed homes for sale in Chicago.
Leads for Buying Distressed Homes in Chicago
When building a real estate investment business, there’s simply no way around the need for good leads. You can’t get a deal until you find one, right? And this is especially difficult in Chicago where investor competition can be tough. To get ahead of the competition, many investors check out different local government or bank programs to find a deal, just like I did. Let me share what I learned about a handful of them along the way.
Chicago holds a range of city-owned residential properties and sells them at market value– but investors can qualify for a discount if you are willing to contribute to the good of the community by creating affordable or green housing. As long as prospective buyers can prove they have the capital and competence to take these properties on, you’re eligible to buy.
However, when I looked into it, I discovered that the long, detailed application process can wear down even the most patient of investors. First, the city can take up to nine months to review applications. Then, if an application is approved, the city publishes an intent to purchase in the paper for 30 days–giving other potential buyers time to see the deal and grab it for themselves. To me, the time and risk just weren’t worth it.
Chicago’s forfeiture program.
Chicago’s forfeiture program was devised to improve property values by addressing neighborhood blight. The city first sues homeowners whose properties are in extreme disrepair or are uninhabitable. It then helps real estate investors acquire ownership of the homes provided you are accepted to the program, can show adequate funds to pay for the rehab, and commit to completing work within a strict timeline.
But the housing court regularly has a backlog of cases so it can take a year or more to get a case heard. If and when a property is awarded by a judge, you must complete the renovation on time or potentially face fines. Who has time to wait that long to see if an investment opportunity might pan out?
Cook County Land Bank Authority (CCLBA).
Also designed to rehabilitate run-down neighborhoods and boost property values, the Cook County Land Bank acquires houses primarily through donations and forfeitures. Titles are cleared and the properties put back on the market. Most of the red tape that can complicate the purchase of a distressed property is removed, making it possible to close, sometimes even in just a matter of days. Sounds pretty good, right?
Unfortunately, the CCLBA can reclaim a property if the renovation is not done to their specifications or during the specified time. Of course, the homes available through this organization require a lot of work, a lot of money, and, yes, a lot of time. So buying a property through the Cook County Land Bank can be a risky proposition, especially for newer investors who might not have experience managing extensive rehabs.
When a home is foreclosed by a lender, the property may end up as an active listing on the MLS or go to auction. Whichever a lender chooses to do, foreclosed properties in Chicago can be severely distressed and, therefore, significantly discounted. This is what attracts many investors.
What’s ugly about REOs, though, is considerable. With auctions, home inspections are not always available and cash payment may be immediately required. If the foreclosed property is actively listed, the bank can take months to move on an offer or bog down the accepted buyer in excessive paperwork. Then there’s the risk that the property has prior liens or overdue taxes and may have tenants or squatters in place that need to be evicted. Add in the high cost to rehab and you could face a money pit in the end.
Where I Found the Best Leads in Chicago
After trying each of these available resources for buying distressed homes in Chicago, and facing some of the challenges other investors face, I found the best source out there by becoming an independently owned and operated HomeVestors® franchisee. I not only received comprehensive training with actionable steps to buy, rehab, and sell homes, I also get the best leads for real estate investors through the widely-recognized “We Buy Ugly Houses®” national advertising brand. This lead generation system has helped investors like me close on over 75,000 houses nationwide since 1996. I’ve been able to skip spending too much time chasing leads and land exactly where I want to be: investing in Chicago real estate.
If you’re ready to access the best real estate investing leads too, get in touch with the HomeVestors team today!
Each franchise office is independently owned and operated.
I first became a Homevestors Franchisee in October of 1999 when my cousin and I bought a Franchise in Dallas in the great state of Texas. We did well and were ‘Rookies of the Year.
In 2003 Homevestors opened up in the Chicago market and along with my daughter, son and wife moved back ‘home’ to open the first Franchise in the greatest city on earth.
In 2010 I became a Development Agent to help mentor and teach new franchisees this incredible business and to this day I still love the career path I chose and the opportunities that continue to be available.