My pal, David, and I have been investing in real estate for years. Neither one of us really wanted to do anything else with our time, not even when we both got desk jobs right out of UChicago. We’ve gone about it differently, however. I’ve been buying, renovating, and selling houses; he’s been managing a couple of multi-family units in his spare time. Wanting to change up his strategy in an effort to make a career of real estate investing, like me, he recently called up to ask how to find houses to flip in Chicago. Apparently, he’d already been spinning his wheels trying to do things the hard way.
Finding Chicago Houses to Flip
The term “house flipping” makes the work of rehabbing and selling homes for profit sound easy, but in reality, it’s tough–especially in a city like Chicago. Competition for leads on distressed homes can be fierce among investors here. Plus, you’ve got to plan your buying and renovation timeline carefully so that when it’s time to sell your investment property, you’re not trying to do it in the middle of a cold Chicago winter. Unfortunately, the seasons are here to stay and, if you want staying power as a real estate investor, you’ve got to learn to deal with them and the timeline constraints they can put on your rehab projects.
But there are some things you can do about finding leads for flipping houses in Chicago. In the aftermath of the housing crisis, some government agencies are helping real estate investors buy cheap houses, oftentimes in exchange for improving struggling neighborhoods. As you’ll see, some of these programs are easier to navigate than others. Let’s check out the options.
Buying a house through Chicago’s forfeiture program can be a complicated process, but not an impossible one if you know how the program works. As long as you provide details on your finances, your investing background, your intentions with a property, and agree to renovate according to the program’s terms, your application has a decent chance for approval. The houses in this program, which are acquired after the city sues the homeowners, are in bad shape at best and extremely hazardous at worst, which is why the city seeks to obtain them. As a real estate investor, you have the chance to buy and rehabilitate these homes cheaply to help reduce neighborhood blight.
Unfortunately, the process of qualifying a property for forfeiture takes time and a lot of patience. If the homeowner is still living, they have to agree to forfeit. All liens have to be released as well. Even then, there’s a chance the case could get contested by family members or other stakeholders by the time the case goes to court. And getting the case before a judge, by the way, can take a year or longer since the court has been backlogged since the program began. But, once the property is yours, make sure you’ve got everything lined up so you can move on the rehab. The program has strict renovation guidelines and timelines that, if not met, could cost you some hefty fines. So, in the end, you might not get the good deal you hoped for.
Buying a Chicago city-owned property looks like a pretty straightforward process on the surface. The Department of Planning and Development (DPD) requires proof of investing experience as well as the funds for buying and renovating a property in order to process your application. If approved, you then have the opportunity to purchase one of their properties at a discounted rate. But the discount comes with strings attached. You have to agree to create affordable housing, renovate with environmentally- friendly options, or contribute to the benefit of the community in another way that falls within the city’s guidelines.
And getting your application passed, even if you’ve done everything right, can take months. In fact, it can take so long that, by the time you’re approved, your renovation timeline could be way off and well into winter. Also, the DPD won’t let you buy a property just because you’re an approved buyer. They’ll advertise the proposed property first for 30 days to increase interest and, potentially, the purchase price. It’s only after no one else shows interest or submits a better offer that you can finally close. And, because timing is everything in this business, the long wait to buy a city-owned property could be too close for your financial, or seasonal, comfort.
Cook County Land Bank Houses (CCLBA)
Buying a house through the Cook County Land Bank Authority is a little less frustrating than buying through some of the other programs. That’s because these houses, acquired through donations, grants, and county revenues, have been cleared of any red tape. As a result, the CCLBA offers clear titles and fast closes on homes in 13 different Chicago neighborhoods. Their goal is to rejuvenate some of the city’s most neglected neighborhoods by giving investors the opportunity to renovate distressed houses.
As easy as buying a property through the CCLBA sounds, rehabbing it is often another story altogether. Like the houses available through Chicago’s other government programs, the condition of these homes is sometimes the worst you’ll ever see. It can take a great deal of time and money to renovate them, both of which you may not have or could run out of. The CCLBA requires that investors follow their guidelines for the rehab and sets the timeline for which it should be completed. If you don’t comply, they can reclaim the property.
Though each of these options increase your chances of finding distressed homes for sale in Chicago, none really increase your chances of getting great deals that are easy to buy, renovate, and sell for potentially good returns. For that, you need a lead generation strategy that finds motivated sellers and brings them to you—especially if you want to make flipping houses a good business to be in and not a frustrating one to deal with.
Flip Your Strategy for Investing in Chicago Real Estate
As a new investor, I use to hunt down leads on distressed houses the hard way too–much like David was doing. But by the time the housing market crashed, I’d found an easier way to get good deals. Even after local government agencies started picking up some of the pieces and offering them to investors, I was already well on my way to building a career with a nationally-recognized and trademarked “We Buy Ugly Houses®” marketing campaign that generates distressed property leads in any economy. It’s a proven system that’s helped independently owned and operated HomeVestors® franchisees like me improve our neighborhoods while we improve our bottom lines. And, as David found out, learning how to become a franchisee and flip your investing strategy only takes one call.
Don’t get left out in the cold. Cut through the competition and contact HomeVestors today to convert your part-time passion for real estate into a full-time career.
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