Q: | Why Chicago?
A | Chicago is a unique City for the fact that it is the 3rd largest City in the U.S. and one of the most economically powerful cities in the world. Housing demand is very high and the job market is very diverse. These are very positive items for landlords. If your tenants have the option of seeking jobs from several different industries you wont be out of luck if tenants were to lose their major industry of jobs dominate that marketplace. Chicago in relation to other Cities has a very high rent to purchase price ratio so investors can buy more homes than similar Metropolitan Cities. A large percentage of the city are renters making it very favorable for owners. Additionally, Chicago is known for its ample supply of 2-4 unit residential properties.
Q: | What types of properties do you sell?
A | We sell mostly 1-4 units with a higher concentration being 2-4 units. We do have single family homes available for sell as well as 5-12 unit buildings available upon request.
Q: | Why are Multifamily Residential (2-4 units) so attractive?
A | MORE INCOME. The more units you have the more cash flow you have per month. Most buyers are limited to the number of loans they can get from a bank so buying 2-4 units give you more units for the same number of loans. Also, when you have more units you minimize your risk of having income during a vacancy. For example, if you own a single family home and a tenant moves out, your occupancy rate goes from 100% to 0% with no income coming in and only income going out (mortgage payment, taxes, insurance and utilities) during the vacancy period. If you have multi units while one tenant may move out, you still have income being generated from the other unit(s) to subsidize any monthly expenses.
Q: | How does Elite select their properties and what do you look for?
A | We look for properties in opportunistic areas. We look to buy properties that are solid in structure and also have good characteristics for a long-term buy and hold strategy. Mostly all of our properties are close to a school, church or public transportation. Tenants enjoy being close to these and if your tenant ever moves out, replacing the tenant will be much easier. Every property we purchase must go through a very specific and rigorous selection process and meet a series of checklist items in order for us to purchase the property. We select all properties as if we were to own them ourselves.
Q: | What type of neighborhoods are these properties in?
A | We buy in working class Blue Collar areas. We strategically purchase in areas that are lower income where we can increase efficiencies and minimize risk. To some others these areas may appear to be more risk, but we have a different philosophy and strategy that enables us to be more successful. We utilize our on the ground resources and economies of scale to mitigate risk as well as a property management philosophy that is different and unique to others.
Q: | Do you rent to Section 8 tenants?
A | Yes, we have a large percentage of Section 8 tenants and are very happy with them. We welcome all tenants and cannot legally discriminate against any tenants. To learn more about Section 8 FAQs specifically, (click here)
Q: | Do the Principals of the company own properties themselves in these areas?
A | Absolutely. We own a lot! We continue to buy in these areas because of the cash flow. Like you, we have the same goals to accomplish. Cash flow is great and we have yet to find an area that can give us the same positive monthly cash flow on a consistent basis.
Q: | Is this purely a Cash Flow play or can I assume appreciation?
A | This is mostly Cash Flow with economic fundamentals indicating substantial appreciation. We buy in strategic areas that have gentrification trends and large scale development projects surrounding our properties. Furthermore, we sell mostly to investors and have to keep our prices low to sell a higher expected ROI to our investors. If we raise prices then our buyer’s ROI goes down. Now, on a positive note, our clients buy fully rehabbed turn-key properties for a fraction of their replacement cost and based on the income generated, our homes can and will eventually sell for much more. As an example, the cost to build our properties is approx. $125.00 per foot and our average 2 unit is 2500 square feet. If you do the math, the cost to build this property new is $300,000+ we sell for almost half of that number. As supply goes down and banks liquidate their inventory of foreclosures, it is safe to assume that demand will push prices up to at the very least what it cost to build them. Therefore, our clients should experience a substantial value increase within the next 5-10 years otherwise builders cannot build new homes and keep up with the demand for housing.
Q: | Why not buy higher end condos or suburb properties?
A | Owning any investment property has risk and most of that risk can be mitigated if the operator is strategic. Whether you are buying a rental in Chicago, IL or Beverly Hills, CA the risk is still present in both. When we evaluated many markets across the United States, we noticed that Chicago by far had the most positive trends for undervalued real estate with wonderful cash flow. We looked at the price of the homes, rental rates, housing demand, job market, population, replacement cost, census information and proximity to jobs. Historically speaking, tenants have always wanted to be close to the City life and where the jobs are. Our properties are located in Chicago, IL proper and commute time to the City is low. The returns are substantially lower going into the suburbs and Condos are over priced with additional monthly costs for HOA dues, etc.