How To Find Rehab Homes for Sale in Chicago More Efficiently

When I first started with real estate investing, my lead flow was closer to being a joke than being fuel for the engine of my business. I would clumsily scroll through real estate listing websites, clicking on each entry to evaluate whether it might be worth flipping. Plugging all sorts of numbers into my valuation spreadsheets, I quickly found that most homes on offer were not suitable for buying and rehabbing.

My next move would be to call up one of my fellow investors, a guy who’d started his business just a couple of years before me. He’d throw me a lead or two on the months when his deal book was overflowing, but most of the time, I knew that I was getting the scraps. Eventually, I wisened up and started being more proactive about hunting down leads that were likely to make for profitable deals down the line. 

If you’re struggling to get your business off the ground because you’re having a hard time finding rehab homes for sale in a competitive market like Chicago, don’t worry, it gets better. Follow along, and I’ll explain how you can kick your lead funnel into overdrive while also building the human connections that’ll power your company for years to come. 

Why Do You Need a System for Finding Leads?

If you want to make a living from your real estate investing business, you can’t just expect to wing it over and over successfully. Especially when you’re looking for rehab homes for sale in Chicago, a complex and dynamic market, you need to have a process that will reliably get you the type of leads you want.

With experience, you’ll find the exact process that works best for you. 

You can generally think of your lead-finding system as a group of sources that can be easily checked periodically. From each source, you should be able to gather quite a few different leads. You can then quickly vet those leads individually and determine which are worth keeping as serious prospects to investigate under a purchase. After that, it’ll be on you to decide which prospects belong in your deal book.

Many real estate investors start their careers with the idea that they only need to specialize in scrounging up leads from one or two particular sources. Indeed, you’ll probably have favorite sources which tend to work out the best for you or sources that yield leads with the least friction, but you’re doing yourself a disservice if you don’t incorporate a broad selection into your routine. After all, websites can go down, your associates can move away or be busy with other parts of their business, and additional lead sources can sometimes just not have anything worth following up on.

It’s much better to have a cornucopia of suitable homes to choose from and be limited by your own time and capital constraints rather than being limited by a lack of leads. If you genuinely cannot find anything, your business will grind to a halt. Of course, if you can’t find any rehab homes for sale in Chicago of all places, the problem will be with your process rather than with the actual availability of the right type of properties on the market. 

4 Common Ways To Find Rehab Homes For Sale In Chicago

So, owe it to yourself to develop a protocol for lead-hunting. Don’t worry if you’re not sure where, to begin with compiling your list of hot sources to find rehab homes for sale in Chicago. Let’s take a look at four of my favorite methods for finding leads and investigate the pros and cons of each so that you’ll understand the role that they might play in your business.

  1. Look for Foreclosure Auctions

Foreclosure auctions and other county-based property auctions are perhaps the most notorious source of flippable housing leads. No matter the time of year, foreclosures will be taking place and creating a steady stream of rehab homes for sale in Chicago. If you’re willing to travel to investigate your leads, you can even look at the foreclosure listings in several of the nearby counties to widen your net even more. 

The advantages of using foreclosure auctions to pad your deal book are that you’ll get access to many bargain-basement buys, which can be very helpful when you’re just starting. At the same time, the county government or sheriff’s department will be the counterparty if you win the auction and close the deal, which can save a lot of hassle.

But, foreclosure auctions are far from a perfect source. The line between bargain-basement shopping and dumpster diving can often feel far too thin, as many foreclosure homes tend to be in positively terrible condition. That isn’t an insurmountable problem if you have the extra capital to throw into extensive renovations, but it’s still a bit of an impediment. 

Likewise, foreclosure auctions occur on specifically scheduled days, after which the winner of the auction must disburse their funds, and the counterparty must close the deal. The trouble is that sometimes the local government has a leisurely timetable for transferring the assets to your control. It isn’t that they run behind schedule, so much as their schedule takes a long time to work through before the home is in your hands. 

Especially if your deal flow or your financing needs to proceed at a certain pace, you’ll need to budget time carefully or find yourself in a pickle. Thankfully, it’s much easier to get the hang of the timing of a foreclosure transfer in a given county once you’ve made a deal there.   

Pros:

  • Lists lots of undervalued properties
  • Consistently lists new homes throughout the year
  • The local government is the seller, so there won’t be unforeseen delays
  • Potential to get properties at much lower than the market rate

Cons:

  • Properties are often in deplorable condition
  • There may be significant competition to buy certain properties
  • Auctions may be poorly timed for your deal flow
  • The local government may be slow to close the deal even if there aren’t any delays

2. Check the MLS

Your area’s Multiple Listing Service (MLS) should always be one of your primary sources of leads. 

Becoming fluent with MLSs should be one of your top priorities when just starting out. The beauty of MLS is that it’s a platform that you can operate to fit your exact quantitative preferences for leads. If you want to only view properties with three bedrooms and precisely 1,000 square feet of floor space, you can see them, provided they exist. If you’re going to view homes selling for less than $100,000, you can do that. You can even set an alert that will send an email with the link to any type of listing as soon as it hits the market. 

Your MLS feed will even provide you with a few pieces of information about the valuation of the properties you’re looking at, which can be helpful. Or it can be a hindrance. Real estate brokers operate most MLSs, and they often use automated valuation systems that are opaque to investors who are browsing. The broker gets paid based on the value of the properties purchased via the system, which means they are incentivized to overcharge buyers by preferring higher valuations to accurate valuations. That means it can be hard to find undervalued and incredibly lucrative opportunities via MLS.

The other issue with MLSs is that everyone in your region will be using them to fill their lead funnel. And I do mean everyone. Whether it’s members of the public, real estate agents, other investors, wholesalers, private equity firms, or even sovereign wealth funds, competition for properties will be at the very maximum that is possible. As a result, you’ll need to be snappy when it comes to combing through your leads and determining which ones to advance with. 

Finally, most of the MLSs I’ve seen tend to have a minimum quality standard, which is both a boon and a drawback. It might be hard to find burnt-out skeletons of homes to buy and rehab, even if someone is trying to sell them for pennies on the dollar, and you’d be making money hand over fist on the rehab. In other words, flippers are only a small constituent of most MLSs. Some of the opportunities that would be the most profitable for flippers—but an irrelevant annoyance for anyone else to see—are left off the feed.

Pros:

  • Has a massive set of properties to peruse, at least some of which will be appropriate for a real estate investing business of practically any size
  • It’s possible to set up alerts for leads
  • Includes basic valuation information
  • Properties usually meet a certain minimum level of quality

Cons:

  • Broker fees
  • Valuation information may be deceiving
  • Guaranteed competition from other investors, wholesalers, real estate agents, and even the general public
  • It may not include the best opportunities
  • It may not have the most run-down properties

3. Work With a Wholesaler

Real estate wholesalers are excellent tools that every investor should know how to work with. When you team up with a wholesaler, they’ll be putting homes under contract and then handing the contract off to you to close the deal in exchange for a fee that’s usually a percentage of the property’s value. That means if you can build a relationship with a wholesaler and develop a rapport, you’ll have a powerful ally in your corner who can supercharge your deal flow and take your business to the next level. 

The other side of the coin is that you shouldn’t assume that you’ll be the only real estate investor working with your realtor. If you aren’t your wholesaler’s favorite, you’ll almost certainly still get to make deals with their help. But, the juiciest deals may be reserved for closer collaborators, which means that you’ll need to invest in the relationship consistently. 

That investment is going to have a solid financial component. Your wholesaler commands a fee for their services, and you need to close the deal for them to get paid. So, their incentive is to pitch you on deals that are highly likely for you to be able to tie up in short order. Those deals may not necessarily be the best out there from the perspective of someone who plans to make repairs or renovations and then resell the home for a higher price soon after that. There’s no guarantee that the slight mismatch in incentives will ever cause you a problem, but it’s worth remembering when considering the quality of the leads. 

Still, you should find a wholesaler to keep in your contacts. Keeping in regular communication with a wholesaler will expand your network considerably, especially because every wholesaler is sure to know a bunch of other real estate investors. 

One last thing: the best wholesaler for your business is probably someone accustomed to working with investors operating at roughly your scale in terms of deal size and flow. Larger scale wholesaling firms will indeed be able to link you to plenty of rehab homes for sale in Chicago, but if you’re small fry compared to their usual clients, you definitely won’t be at the top of the list for the most lucrative leads.

Pros:

  • Yields quality leads that are ripe for a quick turnaround
  • The wholesaler will be your counterparty
  • It probably increases the rate of processing your deal flow
  • Your relationship with the wholesaler may lead to getting access to the best leads before other investors
  • Expands your investor network

Cons:

  • Introducing a middleman means you’ll need to pay the middleman
  • The wholesaler’s incentives may conflict with yours
  • Your relationship with the wholesaler may lead to other investors getting access to the best leads before you do
  • Wholesalers vary in quality

4. Use Your Network

Every real estate investor needs to have a robust network of fellow professionals of all types who they can reach out to. Your network can team up with you on deals, help you access financing, answer your burning questions, send you leads they can’t handle, and keep you updated on hot sub-markets or other upcoming developments. And, like a fine wine, the links in your network will become more valuable as your experience deepens over time. 

In my experience, my network is how I find the very best leads which yield the most profitable flips. Nothing else even comes close. Especially as the people in your network grow to understand the scale you’re working at and the type of lead you’re looking for, they’ll be your most significant assets. 

But, using your network to find deals is extremely tough for new investors. Aside from not knowing anyone, it may be hard to find a niche among people who are likely working faster and on a much larger scale than you are. Furthermore, it takes years to build strong relationships with the members of your network who are the most likely to have access to high-quality leads. And getting other people to know what your business is capable of will also be a challenge. 

Then there’s the uncomfortable fact that people in your network may not have any incentive to help you because they might be looking for the same type of rehab homes for sale in Chicago that you are. Not to mention that it can take a lot of time to reach out to people and talk over what’s currently needed in your deal flow, even when you have an amicable working relationship.

My advice to new real estate investors is not to sweat their networks when they’re starting out. Just keep building it every year without any expectation of return. Once you find yourself talking to a colleague or two because someone else asked you for a tip, that’s how you know your network is developed enough to start bearing fruit.

Pros:

  • Provides exposure to leads you wouldn’t know about otherwise
  • Opportunity to learn about how other investors run their businesses
  • May open unforeseeable new doors in terms of leads, business scaling, or diversification
  • Builds stronger connections with other investors and increases your reputation

Cons:

  • Consulting your network is time-consuming
  • Not a valuable source of leads for investors who are entering a new market or just starting their business
  • The network needs to be quite large to support a consistent flow of leads
  • Your network may also be your competition

Get the Leads to Come to You

Once you’re in the habit of using multiple sources to gather leads for your business, it can still be helpful to have one place where you get exposure to a smattering of different opportunities from a composite of similar places. 

When you become a HomeVestors® franchisee, that’s exactly what you’ll get. Between the HomeVestors® lead platform and the sources that I’ve already discussed, you’ll never be wanting for quality leads for rehab homes for sale in Chicago, or for anywhere else. 

Plus, when you work with HomeVestors®, you’ll get many other proprietary tools like valuation software, access to complex money financing, and even ongoing mentorship, which will help you grow your network and your business beyond what would be possible on your own. 

If you’re considering starting a real estate investing business, request information about becoming a franchisee today

Each franchise office is independently owned and operated.

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