If you are looking for a comprehensive guide to start flipping houses in the state of Illinois, you’ve come to the right place.
Flipping houses is one of the simplest ways to get started investing in real estate. It might be a lucrative business enterprise. However, because it is a high-risk investment, you must take into account a number of factors.
But have no fear, I’m here to help you with your studies and decisions. This detailed guide breaks down market research, assessment, and technique for flipping properties in Illinois.
Flipping Houses in Illinois
Illinois has one of the hottest housing markets in the country. For house flippers, it’s a once-in-a-lifetime opportunity to make money. Despite the medium property market valuation, investors who choose the appropriate properties and flip houses in Illinois profit handsomely.
Every investment, including real estate, is highly specific to its location, and Illinois is no exception. Paying attention to current market happenings and knowing how to respond fast will assist you in determining whether you have made a profit or loss. You should always work with a local specialist real estate agent to understand the trends in these local markets and find investment possibilities. Their comprehensive understanding of the ins and outs of these particular property markets can assist you at every turn.
Related: Metal Detecting in Illinois: A Comprehensive Guide 2022
Analyzing the Illinois Housing Market in 2022
Illinois is the country’s 26th most inexpensive home market. As of April 2022, the average house value in Illinois was $260,000, which is much less than the national average home value of $344,000 Furthermore, housing prices in Illinois increased by 6.25 percent in 2021 and are anticipated to increase by a staggering 14.2 percent in 2022. Even within a state, these values generally fluctuate, illustrating how regional and localized property markets are.
This property market trend in Illinois has drawn real estate investors from all across the country. The demand for houses in Illinois has now outpaced the supply. This has resulted in a strong seller’s market in Illinois’ housing market. It’s easy to understand why investors are flocking to Illinois’ real estate market. Two of the key reasons for development are the expanding population and better employment and education sectors. Illinois has a high school graduation rate of 89 percent and a median family income of $64,00.
Furthermore, the affordability of houses in Illinois makes the market more accessible to first-time real estate investors. You’ll need less money to get started, implying that there will be more newcomers in the future, so be prepared for more competition.
How to know if the house in Illinois is a good investment?
You’ll definitely want to look into a more precise region and neighborhood to locate possible residences after learning about Illinois’s housing market and economy. Keep in mind that not every local real estate market has the same kind of investment opportunities.
In general, a variety of factors go into assessing whether or not a property is a good investment. While you’re just starting started, avoid local marketplaces with a lot of inventory and postings that have been active for a long time. Houses in Chicago sell after an average of 56 days on the market. If a home in the region is still on the market after 56-65 days, it is a no-go.
You’ll definitely want to look into a more precise region and neighborhood to locate possible residences after learning about Illinois’s housing market and economy. Keep in mind that not every local real estate market has the same kind of investment opportunities.
If the price of a property in Illinois is less than the local market average, it is another sign that it is a good investment. Looking for houses that are significantly less costly than past sales in the region is one of the simplest ways to detect potential value. Remember that the less expensive homes will require significantly more changes than the more expensive ones.
How much should I pay for a house in Illinois?
When selecting how much to spend on a house in Illinois, it’s typically a good idea to stick to the 70 percent guideline. This guideline states that you should never spend more than 70% of the house’s after-repair value, less repair and remodeling costs. Let’s assume you spend some money for a house in Illinois and invested another $30,000 in repairs and renovation. Upgrades increase the property’s market worth, so keep that in mind. Assume your home is now worth $350,000 following repairs.
According to the 70% rule, you should spend no more than 70% of the after-repair value minus repair expenditures on this property. When you add up the numbers, it only amounts to $215,000. This means the maximum you should pay for such houses in Illinois is just around $200,000.
It’s critical to keep in mind that the 70% rule is discretionary. It’s only an estimate of the house’s genuine worth. This guideline aims to create a profit margin that is substantial enough to pay all other costs while flipping houses in Illinois while still leaving you with a good profit margin.
Do you need a real estate license to flip houses in Illinois?
In Illinois, you don’t need a real estate license to flip properties. However, if you want to start flipping houses in Illinois full-time, getting both a realtor and a contractor license is usually a good idea.
If you don’t want to deal with the obstacles of getting an Illinois realtor or contractor license, that’s alright. In this instance, I strongly advise you to use a seasoned realtor and contractor with whom you can establish a positive working relationship.
Finally, if you are new to Illinois, finding a trustworthy contractor or repairman may be challenging. Furthermore, zoning restrictions and standards vary by city, and market trends shift often. Working with a trustworthy agent or contractor might help you foresee problems.
How to start flipping houses in Illinois and make a profit?
You’re ready to begin your home flipping journey in Illinois once you’ve done comprehensive research on the Illinois property market and are confident that the house is a solid investment. Follow these six steps to begin flipping houses in Illinois and benefit handsomely from this type of real estate investing.
1. Create a Budget and Secure Financing
When flipping houses in Illinois, the first thing to consider is your financial status. Before looking at prospective attributes, it’s usually a good idea to do the math.
If you have cash on hand, you should already know how much money you have. You may avoid financing charges, mortgage payments, and any other closing costs or fees by paying cash for your Illinois house flips. As a result, if you have cash while flipping houses in Illinois, you should always use it.
Using a loan or other kinds of financing to acquire and restore a property may lower your potential returns dramatically. You’ll continue making mortgage payments until the home is sold if you took out a $200,000 loan to buy a house in Illinois. Even a 10% down payment on a home might cost around $20,000 to purchase. Furthermore, you’ll need to invest an extra $30,000 for repairs and improvements.
Repairs and enhancements, unfortunately, take time. As a result, you may wind up paying your mortgage for a longer period of time, perhaps losing a large profit margin. Furthermore, after accounting for property taxes, building permits, utilities, marketing costs, closing fees, home insurance, realtor commissions, and other costs connected with flipping houses in Illinois, you may not be able to make any money at all.
As a result, having cash on hand may enable you to save money on all of these items while also allowing you to preserve as much of your earnings as possible.
But don’t worry if you don’t have any cash on hand. There are still a few more options for sustaining your house-flipping business on a tight budget.
2. Research the Cities and Neighborhoods
After you’ve found the homes that are listed below market value and taken into consideration other factors such as active days on the market, you can assess the neighborhood’s attractiveness. When it comes to flipping houses in Illinois, the quality of the neighborhood is crucial. Other quantitative variables, such as the quality of education, entertainment, parks and recreations, and the neighborhood’s shopping experience, should be examined in addition to the listing and sales price.
Existing housing stock in Illinois’ older villages, as well as a growing urban region, might benefit from rehabilitation and repair. In Illinois, you may make a nice livelihood by flipping properties. You must, however, learn to recognize the appropriate options.
Here is a list of the 4 best cities to flip houses in Illinois for 2022.
Flipping Houses in Chicago, IL
Chicago is the biggest city in the state of Illinois. This city is composed of 78 neighborhoods and offers multiple affordable duplexes, townhouses, and affordable multi-family homes. As of April 2022, the median listing home price in Chicago is just $350,00, trending flat year-over-year. The median listing home price per square foot is $264. The median home sold price was $365,000. And lastly, the sale to list price ratio is 100%, which confirms a strong seller’s market.
On Average, houses in Chicago sell after 56 days in the market. The city offers 1,174 public schools rated good and higher by GreatSchools and 424 private and charter schools. Chicago also offers hundreds of grocery stores, restaurants, and cafes. There are also a plethora of beautiful parks and gyms for a healthier lifestyle.
Out of the 78 neighborhoods in Chicago, Lincoln Park is the most expensive one with a median home price of $595,000. On the other hand, West Ridge is the most affordable neighborhood, with a median listing home price of just around $177,500. There are also some other great neighborhoods like West Town, Near North Side, and Lake View.
Flipping Houses in Springfield, IL
Springfield is the capital city of Illinois. It is composed of 30 neighborhoods and offers multiple affordable duplexes, townhouses, and affordable multi-family homes. As of April 2022, the median listing home price in Springfield is $138,800, trending up 6.9% year-over-year. The median listing home price per square foot is $88.
The city offers 53 public schools rated good and higher by GreatSchools and 46 private and charter schools. Springfield also offers hundreds of grocery stores, restaurants, and cafes. There are also a plethora of beautiful parks and gyms for a healthier lifestyle.
Out of the 30 neighborhoods in Springfield, Piper Glen is the most expensive one with a median home price of $392,500. Conversely, Pillsbury is the most affordable neighborhood, with a median listing home price of just around $35,000. There are also some other great neighborhoods like Springfield Northeast District, North End Association Take Two, and Oak Ridge.
Flipping Houses in Peoria, IL
Peoria is a city in Illinois that consists of 66 neighborhoods and offers multiple affordable duplexes, townhouses, and affordable multi-family homes. As of April 2022, the median listing home price in Peoria is $130,000, trending up 13.1% year-over-year. The median listing home price per square foot is $79. The median home sold price was $140,000. The sale to list price ratio is 100%, which confirms a strong seller’s market.
On Average, houses in Peoria sell after 43 days in the market. The city offers 65 public schools rated good and higher by GreatSchools and 22 private and charter schools. Peoria also offers hundreds of grocery stores, restaurants, and cafes. There are also a plethora of beautiful parks and gyms for a healthier lifestyle.
Of the 66 neighborhoods in Peoria, Weaver Ridge is the most expensive with a median home price of $350,000. On the other hand, Averyville is the most affordable neighborhood, with a median listing home price of just around $23,000. There are also some other great neighborhoods like Center Bluff, Moss Bradley, and Jackson Corners.
Flipping Houses in Rockford, IL
Rockford is a city in Illinois and is composed of 53 neighborhoods and offers multiple affordable duplexes, triplexes, and affordable multi-family homes. As of April 2022, the median listing home price in Rockford is $120,000, trending up 4.3% year-over-year. The median listing home price per square foot is $78. The median home sold price was $126,000. The sale to list price ratio is 100.4%, which confirms a strong seller’s market.
On Average, houses in Rockford sell after 42 days in the market. The city offers 53 public schools rated good and higher by GreatSchools and 30 private and charter schools. Rockford also offers hundreds of grocery stores, restaurants, and cafes. There are also a plethora of beautiful parks and gyms for a healthier lifestyle.
Out of the 53 neighborhoods in Rockford, Churchill Grove is the most expensive one with a median home price of $245,000. On the other hand, Church School is the most affordable neighborhood, with a median listing home price of just around $45,000. There are also some other great neighborhoods like Keith Creek, North End Square, and Churchill Grove.
3. Assemble your team
You’ll need a team of individuals to make each flip a success, whether you’re flipping houses full-time or part-time in Illinois. A real estate lawyer, a lender, a real estate agent, a general contractor, a few laborers, and an accountant will almost probably be required.
Working with a trusted team rather than a new specialist for each task is also great if you want to make house flipping a regular element of your investing plan.
4. Select and Purchase your Illinois House
It’s finally time to buy your property in Illinois after you’ve sorted out your finances and determined whether or not it’s a suitable investment. Another thing to bear in mind when buying a property is that properties that require more maintenance and upkeep are frequently less expensive to acquire. As a result, reselling them will take longer.
On the other hand, houses in good shape that do not require considerable repairs and renovations are much more expensive. You will save a lot of money in the long run and will not have to worry about house improvements if you spend more money upfront.
As a consequence, while looking for a property in Illinois, try to find a middle ground between these issues. Choose a home that is appropriate for your ability, budget, and time frame.
5. Repair and Renovate the House
Consider how much money will be required for repairs and upgrades, as well as how long they will take. Determine which upgrades will add the most value and whether or not they will appeal to potential buyers. Adding air conditioning and energy-efficient modifications to a home may quickly increase its value for homeowners who want to escape the hot and humid Illinois summers and harsh Illinois winters.
Furthermore, power washing the outside of the house, painting the inside, fixing a leaking faucet, reglazing and caulking bathtubs, and cleaning the floors are all small but vital jobs that will help your property sell faster.
6. Resell the Renovated Illinois House for a Profit
It’s time to re-list the property after you’ve finished fixing and restoring it. You have two options for reselling your home in Illinois. The first choice is to sell as a for-sale-by-owner (FSBO), while the second is to sell through a real estate agency.
Saving money on commissions is one of the numerous advantages of selling your home without the help of a real estate agent. Even if you sell your Illinois property on your own, you must pay the buyer’s agent a commission (3 percent ). You’ll need to be ready to bargain like a pro and fill out all of the paperwork correctly if you want to sell your property swiftly.
If you don’t want to deal with the hassle of selling the home yourself, you may always hire a professional real estate agent. The process of preparing contracts, discussing them, signing them, and closing them will all be expedited. However, you will be required to pay them a 3% fee for their services.
How much money do house flippers make in Illinois?
In the United States, the average revenue per flip is $60,000, whereas, in Illinois, it’s just approximately $47,000. As a result, Illinois’ average revenue per flip is $13,000 lower than the national average. That is to say, it makes sense. In this state, affordable housing and rising quality of life attract a large number of real estate investors, resulting in increased competition and, as a result, lesser revenue per flip.
It’s also vital to note that the revenue per flip is not the same as the net profit. You’ll also need money set aside for repairs and restorations. Depending on the existing status of the property, a broad variety of repairs may be required, but let’s assume you invest $25,000 on repairs. After deducting all additional fees and levies, you’ll have a net profit of $10,000 to $15,000 to work with.
Thus, it is safe to assume that on average you can make at least $10,000 by flipping a single house in Illinois. Furthermore, an average real estate investor flips around 4-5 houses per year. That means you can expect to make around $50,000 per year flipping houses in Illinois full-time.
Final Thoughts
Overall, flipping houses in Illinois is an excellent method to begin investing in real estate. Illinois is a fast-rising state with a lot to offer its residents since it is one of the most profitable states for property flipping. Furthermore, discovering lucrative flips in Illinois necessitates a blend of your skills, expertise, and chance. Once you’ve found a fantastic deal on a house in Illinois, be sure to follow a well-planned strategy, renovate the property if needed, and sell it to a high-end buyer.
