To me, Chicago has always been a city for underdogs. When people think of the biggest and brightest cities in America, they always jump to New York or Los Angeles, completely neglecting our Midwest metropolis. I love our underdog city though, which is why I chose to build my real estate investment business here, and why I stayed here even when our housing market faltered in recent years.

Just like the underdogs always do in the movies, though, Chicago’s real estate market is bouncing back. Interest rates are low, and demand for properties is high, meaning now is a great time to be a house flipper in Chicago. You just need a comprehensive strategy for how to make the most of Chicago’s market high.

Trends and Forecasts for the Chicago Housing Market

Currently, the housing market in Chicago is slightly skewed in favor of sellers. This is because there has been a consistently low supply of available houses compared to the demand. For buyers, the mortgage rates in Chicago are at a record low, which is why the housing market is so hot right now. As a house flipper, the current market trends can favor you on both the buying and the selling end. As a buyer, you can take advantage of low-interest rates to keep your carrying costs low during renovations. Then, you’ll be selling the property at a time when other buyers are also trying to capitalize on low-interest rates, meaning you may be able to move your property quicker.

How to Be a House Flipper in Chicago During a Market High

Before you begin flipping houses in Chicago, you need a solid strategy for how to finance your investment, find the best deals, and avoid pitfalls. It can be difficult to get started during a market high because home prices are more expensive and there’s more competition, but there are a few strategies for launching your real estate investment business while the market’s hot.

Take Advantage of Regional Lenders

Real estate investors aren’t the only ones trying to capitalize on Chicago’s hot real estate market right now. In recent months, many local and regional real estate lenders have shifted their focus to house flippers specifically, dramatically increasing the amount of financing on offer to fix-and-flippers. That means it should be easier to obtain short-term loans from banks and credit unions than it is during market lows. You can take advantage of the increased availability of funding from regional lenders to jump into the house-flipping business while the market is hot.

Get to Know Your Neighborhoods

One of the best things about Chicago is how diverse the neighborhoods are. There are so many up-and-coming neighborhoods with distressed properties to invest in, allowing you to fuel your business and improve local communities at the same time. The city is constantly growing and changing, so even if you miss your chance to invest in the current hot neighborhood—like Humboldt Park, for instance—there will always be another opportunity to jump on the next wave. If you do your research and really get to know the city and its incredibly diverse neighborhoods, you’ll be better positioned to predict what the next hot neighborhood will be.

Chicago Real Estate Networks

One of the best ways to learn about new up-and-coming neighborhoods and hidden real estate gems is by networking within the industry. Chicago has a variety of professional associations and real estate investment clubs you can join to rub elbows with industry veterans who can provide guidance, advice, and tips on becoming a house flipper in Chicago. You’ll likely have to pay fees or dues to attend these kinds of meetings and events, but they can be a valuable strategy for new investors.

The Risks of Flipping Houses During a Market High

Investing in real estate in Chicago during a market high can be a risky endeavor. Before you get started, you should be aware of the risks so you can avoid potential pitfalls.

High Home Prices

One of the biggest downsides to becoming a house flipper in Chicago during a market high is that properties are more expensive to purchase. The more money you spend buying a house, the smaller your profit margins tend to be on the flip. Investing in real estate during a market high is inherently risky because of the larger up-front costs. The ARV (after-repair value) of your flip needs to be high enough to ensure your ROI doesn’t shrink. If you are counting on the market to continue to climb to make a profit, that adds another level of risk. What if the market slows down, or even drops?

Construction Costs

Chicago is notorious for being one of the most expensive cities in the U.S. for residential construction work. This means renovating and flipping a house here is going to cost you more, cutting into your potential profits. As a house flipper, you might decide to only purchase properties that need minimal renovations, which will save you money on construction but also means you may not be able to resell the property for much more than you paid for it. The other option is to budget for the high costs of construction in hopes you’ll be able to sell the property at a high enough price to make up for it, which could be a risky gamble.

White Elephants

In the world of real estate investments, “white elephants” are properties that seem like good investments at first glance but that have hidden issues that turn them into money pits. In Chicago, the risk of buying a white elephant is relatively high because of how many vacant and distressed homes there are in seemingly desirable neighborhoods. A house may seem like it only requires minimal renovations but actually has severe structural damage due to sitting vacant for so long. Or you may purchase a home that’s in an up-and-coming zip code, only to discover that the block it’s on is in the wrong school district or has an L track being built through it. Investing in a white elephant can be devastating for a Chicago house flipper who’s just starting out.

Better Tools and Support for House Flippers in Chicago

You may be thinking that all these risks make house flipping in Chicago during a market high a bad idea, but that’s not true. You just need the right tools and support to help you along the way. I got started flipping houses in Chicago by joining the HomeVestors® network of independently owned and operated franchises.

With HomeVestors®, you’ll have the one-on-one guidance of a Development Agent, someone who’s likely a veteran real estate investor in Chicago and can guide you through your first few flips. You’ll also gain access to innovative investing software such as the proprietary ValueChek™ property valuation tool and a sophisticated lending portal to connect you with some of the best hard money lenders in the business.

Don’t miss out on your chance to become a house flipper in Chicago’s hot real estate market. Request information today to learn more about joining the HomeVestors® network of independently owned and operated franchises.

Each franchise office is independently owned and operated.