When I met my friend, Josh, the other day for a drink over at Temperance, he mentioned how he and his wife had really taken to several of the house-flipping television shows on HGTV. Of course, their favorite episodes are those that show investors flipping homes in the Chicago suburbs. They live in Evanston, but both commute downtown to corporate jobs they’re not wild about. They’d already been thinking about investing in real estate off-and-on for years and some of the shows really got them wondering whether flipping houses is a good business for people with no investing experience–people like them. After all, it looks easy–and profitable–on TV.
I didn’t want to dissuade Josh and his wife from embarking on a career in real estate investing, but I also didn’t want them to get in over their heads by taking reality TV shows to be anything like reality. So, I ordered a second round and explained what it really takes to build a career out of flipping homes in Chicago’s suburbs.
The Reality of Flipping Homes in Chicago’s Suburbs
What every seasoned real estate investor knows is that buying, renovating, and selling houses for profit is hard work. Obviously, you can build a successful career out of it, just as I have. But, it takes more time, effort, and expertise than you might expect. It also takes a lot of houses. Few professional investors make big returns on a single investment house. Which is why, despite what’s shown on TV, flipping houses as a quick means of earning fast money is misleading.
First, you have to know how to find a great investment property that, after the rehab, has the potential to produce a good return. That’s not always as easy as it sounds, especially when you don’t have a team of television producers doing the legwork for you. So, some investors buy lead lists or attend foreclosure auctions, while others apply to get properties from the Cook County Land Bank or drive through neighborhoods to look for abandoned homes. Finding leads on distressed houses can be a tough, and tiresome, racket whether you’re a new or experienced investor–and the need for leads on good deals never ends for as long as you’re investing.
When you do find a distressed home for sale, and have an accepted offer on your hands, you’ve got to work quickly to make sure the numbers add up. Real estate investment analysis and valuation tools, like ValueChek™, help you calculate the price of the rehab according to local material and labor costs and estimate the after repair value. So, whether you’re investing in Chicago’s nearby neighborhood of Humboldt Park or further out in Oak Park, you’ll know if closing on the property makes financial sense. Unfortunately, sometimes it doesn’t. Home inspections often uncover expensive renovation issues, like cracked or crumbling foundations, that could bury any possibility of seeing returns if you don’t know how to accurately evaluate repairs. And, unlike well-produced television, surprise home renovation costs rarely lead to a high-profit ending.
Of course, making good real estate investment decisions depends upon more than simply knowing the numbers. You’ve got to find a team of rehab professionals who know their numbers as well as their craft so well that they make your job look easy. From project start to finish, having reliable experts on hand that you can trust to get the job done within budget and on time is critical to realizing a return on your investment. This is as true for designers as it is for contractors. And, the choices you make will depend largely on whether you’re investing in the family-friendly village of Winnetka or the up-and-coming hipster neighborhood of Logan Square. Renovate with the wrong target market in mind in either of these areas, for example, and your investment property marketing techniques could fall flat. The right team will work to keep your rehab on track and in line with what’s trending in the area, not just with what’s hot on TV.
Assembling the right team and having access to the best tools is the only way to meet and overcome the real-world demands of flipping houses in Chicago and its suburbs. And, despite what you might see on TV, tackling these challenges over and over again is how you make a career out of real estate investing. But, getting started can also be a challenge if all you know is what you’ve seen on a house-flipping show.
Meet Challenges Head-On With the Right Team and Tools
When I started investing in real estate years ago, the reality of the hard work involved hit home pretty fast–faster than I was able to realize good returns. On my first rehab, I had trouble finding a good contractor and overspent on a fancy renovation that didn’t suit the neighborhood. Not only did I not make a profit, I actually lost money. My second rehab was better, but barely. I bought too high. Determined to turn things around, I became an independently owned and operated HomeVestors® franchisee. As a franchisee, I gained immediate access to the proprietary property valuation tool, ValueChek™, as well as a strong network of other franchisees who helped me find the experts I needed. Now, as a seasoned investor, I meet each new day wondering what challenges me and my team will get to conquer next.
Before we’d finished our second beer, Josh had already made two calls–the first to his wife and the second to HomeVestors®. If you feel challenged about starting a real estate investing career, contact HomeVestors about joining the team today!
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