I’m not much for television. I’m more of an internet guy (as if that’s any better)—following my out-of-town sports teams and troubleshooting issues such as why my dog growls at my sister-in-law, and no one else. There are times, however, when my wife and I watch the house-flipping shows on the tube. Every time I turn around, a new personality pops up, buys a property, and transforms it from a frog into a prince of sorts. I never quite understood that analogy because amphibians are pretty cool and I’ve never met any legitimate royalty, although the object of my dog’s ire is a bit of a princess. But, I digress.
Buying, renovating, and selling homes—it looks like a piece of cake on TV. Sure, there’s always that one unforeseen issue—a compromised foundation or an irreparable furnace— threatening to eat into that buyer’s return on investment. In the end, however, everything works out and it’s off to the next deal with pockets full of money. But, the networks don’t want you to see the inevitable failures that these celebrities encounter. When flipping houses in Illinois, there will undoubtedly be some setbacks. The key to making a good business from flipping houses involves mapping out a winning strategy and executing it consistently.
How to Find Good Deals for Flipping Houses in Illinois
Experienced and successful real estate investors make money because they follow a prescribed formula and rarely deviate from it. If you’re rabidly bent on doing the same, best practices in buying and selling homes need to be developed and followed. Let me tell you what the pros I work with do and how you might apply their tips to your own pursuits in the Prairie State’s real estate market.
First Thing’s First
I say it, and you certainly hear it all the time– if you plan on buying homes in Illinois, please don’t ever forget that picking the best locations lays the groundwork for your success. The ripe neighborhoods may not always be the ones investors currently flock to. Rather, investigate areas on the fringes, where a bit of new development may be happening and a spillover effect could be in the making. Some up-and-coming areas in Chicago include Bridgeport and Humboldt Park but there’s no rule against scouring the rest of the state for undervalued properties. Whether you plan on buying in Springfield, Aurora or Northbrook, stick to locations near good school districts, public transport, and established employers. Hot neighborhoods may be overbought but adjoining communities could yield a few properties that can be acquired at below-market levels.
The Price Is Right
Some sellers may be in a position to accept a reasonable bid and move on. You just need to find them. For distressed properties in and around Chicago, the Cook County Land Bank and Chicago forfeiture program stand out as two resources to dig up leads on undervalued or blighted properties. Once you’ve scouted out the neighborhoods that those agencies yield, be sure to study the comps and then look for outliers. There may be sellers who need to move fast and those folks may accept a quick offer-and-close for substantially less than the prevailing price points or auction bids. Regardless of the investment type, the idea is to buy low and sell high.
I called a painter out of the phonebook one time (I’m showing my age). He took a deposit to do some interior work in one of my properties and I’m pretty sure my money was promptly deposited with his bookmaker. I never saw him again but learned a valuable lesson: find reliable contractors who charge reasonable rates, show up on time, and finish the job when promised. You cannot afford to hire unreliable tradesmen who cost you time and dollars. It shrinks your bottom line and boosts your blood pressure. Consult with other real estate investors. One way to do this is to connect with others through Chicago real estate investing clubs that can refer quality contractors. Referrals cost nothing and word-of-mouth is the best form of advertising.
The current real estate market in Illinois is growing at a slower pace than a lot of the hot markets in the United States. Metro Chicago markets currently see more buying activity and subsequent growth than areas such Peoria or Bloomington. But regardless of where you buy, craft a plan and stick to your guns. Once those renovations are complete, set two sales prices: one that meets your projected ROI and one that represents somewhat of a reach. Naturally, you only want to advertise the higher price but lower offers might fall within your range of acceptability—ideally at the top but hopefully somewhere between the unadvertised price and the publicly listed price. Your ability to make money in this game hinges on quick sales. The longer a property sits on the market, the higher your initial investment becomes. Advertising, taxes, maintenance, utilities—they all combine to chip away at net gains. Time is indeed money. Manage it wisely. Take a solid offer and find another deal.
It’s Not So Bad
If you’ve learned one admittedly quirky thing about me, it’s that I don’t think frogs are ugly. In fact, under the right circumstances, I don’t think “ugly” is a bad word at all. When I first started my real estate investing venture, I had trouble locating motivated sellers of undervalued properties in promising neighborhoods. That all changed when I became an independently owned and operated HomeVestors® franchisee. I felt right at home as the HomeVestors team doesn’t mind unattractiveness either. In fact, we make the most of it. The nationally-known “We Buy Ugly Houses®” advertising campaign has helped franchisees like me find houses to flip in Illinois, numbering more than 100,000 real estate buys across the nation since 1996. And while the homes I have purchased weren’t beautiful, they were very lovely deals.
Contact HomeVestors® today to see how you find polliwogs or princes, whichever you prefer.
Each franchise office is independently owned and operated.