When I first started investing in real estate, the hardest part was finding leads on good investment properties. The Chicago real estate market is highly competitive and full of ambitious young investors who will do anything they can to beat you to a good deal. Even the more established real estate investors are often too concerned with generating their own leads to want to offer advice to up-and-comers. I tried every strategy in the book to find distressed properties for investments and ran myself ragged in the process.
Luckily, I met someone who was willing to let me in on their secret to finding Chicago’s distressed properties for sale. Without their advice, I never would have been able to quit my day job and invest in real estate full-time.
How To Find Chicago’s Distressed Properties for Sale
Every Chicago real estate investor dreams of getting into the next Logan Park before it gentrifies. That’s why the competition for distressed properties in Chicago’s up-and-coming neighborhoods is so fierce. There are a few common ways that investors find Chicago’s distressed properties for sale, including:
The Chicago area has a few government programs that investors can use to find distressed properties. The goal of these programs is to sell vacant, tax-delinquent, and foreclosed homes to Chicago investors who can rehabilitate them to create high-quality, affordable housing in struggling communities.
- The Cook County Land Bank Authority (CCLBA) gives investors access to cheap properties in 13 of Chicago’s “worst” neighborhoods. The CCLBA facilitates quick deals by clearing titles, simplifying fees, and offering fast closes on their properties, which makes this a tempting proposition for many new investors. However, there’s a catch—you need to complete your rehab under strict guidelines and very tight time frames, or else you could lose your entire investment.
- Chicago’s Forfeiture Program sues homeowners whose properties are in such poor condition they’re no longer habitable, then makes those homes available to investors for rehabilitation. You need to have such a property in mind and request that the City use the forfeiture program on your behalf, and you also need to prove that you have the expertise and resources to complete the necessary renovations. The actual process of obtaining property through this program can also take a very long time, and frequently leads to dead-ends when the suit is unsuccessful.
Any government program for distressed properties is going to come with a lot of red tape and strict guidelines for renovation projects. Personally, I don’t think they’re worth the hassle, especially if you’re hoping for quick turnarounds on your flips and like to do things your own way.
Real Estate Auctions
There are a variety of reasons why a property may go to auction, including a foreclosure, bankruptcy proceedings, a divorce, or simply a highly motivated seller. Often, these properties sell for a fraction of their market value, plus the closings are typically much faster than in a traditional real estate transaction. In terms of distressed properties, there are two major auctions—the Cook County Sheriff’s Sale, and the Judicial Sales Corporation.
The Cook County Sheriff’s Sale handles about 10% of all foreclosed properties in Cook county. The addresses of the properties and the dates of the sales are all listed on the website, but their inventory is fairly low. The opening bid and minimum winning bid amounts vary depending on the property, but can often exceed even the market value for the home. When there is a great deal, competition from other investors is fierce. Plus, you have little-to-no chance to conduct an inspection before the sale, which means you might not know the true condition of the property until it’s too late. If you do find a good deal and win your bid, then you’ll need to pay a 10% deposit immediately after the sale and then pay the balance within 24 hours.
The Judicial Sales Corporation (TJSC) sells the remaining majority of foreclosed auction properties in Chicago. The TJSC holds daily afternoon auctions on behalf of over 350 law firms in the state of Illinois, so their inventory is usually quite large. However, you probably won’t be able to conduct inspections on any of the homes you bid on, and the quality of the title is not guaranteed. If you win a bid, you’ll need to immediately pay a 25% deposit, and then pay the remaining balance within 24 hours. TJSC recommends that you bring your own attorney to the auction, probably because you won’t have any opportunity to back out of a deal once you’ve completed the sale. That means you need to be 100% confident in your contract and your ability to flip the property for a profit.
Real estate auctions are inherently risky because you’re essentially purchasing a property as-is without fully inspecting it first. It’s not uncommon for investors to discover major, undisclosed issues such as termite infestations and black mold after it’s too late to back out of an auction purchase. However, that tends to be a moot point because you’re unlikely to actually win a bid on a property at one of these auctions. Any of the properties that are worth buying will likely get snatched up before you’ve had a chance to bid at all.
Finding Chicago’s Distressed Properties For Sale Can Be Easier Than You Think
While government programs and foreclosure auctions are popular ways to look for distressed properties in Chicago, I never had much luck with them. My Chicago real estate mentor showed me that the best way to find Chicago’s distressed properties for sale is through inbound leads—motivated sellers who approach you, rather than the other way around. I know what you’re thinking—easier said than done, right? But it really is simple if you take advantage of an established, nationally recognizable, and trusted marketing program, like the “We Buy Ugly Houses®” campaign from HomeVestors®.
HomeVestors® is a national network of independently owned and operated real estate investment franchises that have bought and sold more than 140,000 properties. With their powerful marketing and lead generation tools, you’ll never have to attend another auction to find distressed properties in Chicago. Plus, all new franchisees get the one-on-one mentoring and guidance of a HomeVestors® Development Agent—a veteran real estate investor in Chicago who can show you the ropes and help you learn how to generate better leads.
Finding Chicago’s distressed properties for sale can be easier than you think—all you have to do is contact HomeVestors® today!
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