Flipping Houses in Chicago: 7 Steps to Succeed

Flipping houses in Chicago is an attractive side hustle for many investment property owners.

While there’s a dip in home sales in Chicago, the location and overall work convenience make it an excellent destination for people looking for a place to settle. 

Let’s look closer at Chicago’s house-flipping market and see if it’s worth your time and money.

Why Should You Consider Flipping Houses in Chicago?

Besides its incredible architecture and vibrant music scene, Chicago is also a great place to start building your house-flipping business. Here are convincing reasons why:

Attractive Property Prices

Compared to other major cities like New York and San Francisco, Chicago has a more affordable median listing price of $350,000. 

This makes the city an attractive place for people looking to relocate and an opportunity for house flippers to advertise their offers.

Strong Economy with a High Employment Rate

Home to many Fortune 500 companies like Boeing, Goldman Sachs, and Microsoft, Chicago has one of the most diverse economies in the U.S. 

It also boasts an increase in employment, with 4.79 million employed residents as of 2023, an increase of 132,400 from 2022, according to the U.S. Bureau of Labor Statistics.  

This strong employment rate can attract more professionals to move and buy a house in Chicago.

Stable Housing Market

Amidst fluctuations in the national real estate market, Chicago has shown a stable annual median listing price growth over the years.

While it now takes 4.29 months on average to sell a home in Chicago, a 1.51-month increase from last year, it still proves more competent than the national average– six months of home inventory. 

Is Flipping Houses in Chicago Profitable?

House flipping in Chicago remains a strong investment prospect despite experts’ prediction of a real estate market crash in 2023. 

Appreciation rates for the Chicago housing market stood at a solid 5.37% over the last decade. House flippers can use the 2023 downtime to purchase a cheap house and sell it at a higher price after repair. 

Still, there are undeniable factors that can dampen the housing market demand. One is inflation, which contributes to the increase in interest rates. Buyers will find it challenging to get low-interest loans from private money lenders to fund their home purchases. 

For house flippers, this can mean increased property taxes and overall home-selling costs. Several people nowadays prefer rentals over home purchases, contributing to a longer wait time to make a sale. 

Where To Flip Houses in Chicago: Best Neighborhoods

Knowing where to flip houses in Chicago is key to making or breaking your bank account. Here are some of the best:

Romeoville

Romeoville is located in Will County and offers several properties for house flipping, like condominiums, townhomes, and single-family houses.

Median home value is at $292,000 as of July 2023, a 12.3% increase from last year. Most house flippers in this location can sell their properties within 43 days on average, making it an excellent place to start investing for beginner and seasoned house flippers. 

Wilmette

Wilmette is situated in Cook County and is known for its picturesque neighborhood, top-rated school districts, and proximity to Lake Michigan. The average cost of living is $2,085 monthly, placing it as one of the highest in the U.S.

Despite this, Wilmette’s strong sense of community and access to recreational facilities and parks make it ideal for families looking for permanent residence. 

Redfin records a median home market value of $999,000, with average homes sold within 46 days from availability. 

Wheaton

Wheaton is located in DuPage County and is known for its culture, history, and art. It has diverse housing options for homeowners with distinct living preferences and budgets. You can go for historic homes, townhouses, and contemporary residences, whichever fits your lifestyle. 

Realtor lists a median home sale price of $394,000, with average properties listed on the market for 26 days before they get sold. 

House flipping in Wheaton can be a game-changer, especially if you have enough money to purchase quality homes. Supply often pales against the high demand, which is your window of opportunity to provide profitable home deals. 

Greater Grand Crossing

Greater Grand Crossing is located in Cook County and is historically known as a railroad suburb. While initially made as a housing area for railroad workers, it has recently transitioned to a residential site featuring different home types.

The median sale price stands at $160,000, with properties selling within 81 days on average. Demand isn’t very competitive compared to other locations on our list, but with its growth and innovation, grabbing a piece of property is worth considering before the population outpaces the available space. 

Bronzeville

Bronzeville is one of the safest places in Chicago that sports an enticing mix of history, culture, and modern lifestyle. This is visible in their housing architecture, which is composed of newly built condo units and renovated historical homes.

With the increase of recently constructed shops and restaurants, it’s no surprise that more tourists and guests are eyeing the place for long-term residency. As of July this year, the median sale price is at $309,900. Homes often sell after 103 days. 

Auburn Gresham

Auburn Gresham is located in Cook County and is considered Chicago’s hidden gem. Most properties don’t have huge yard spaces, but their well-maintained apartments, bungalows, and brick townhouses make for a pleasing living environment, especially for couples and small families new to the city. 

This location also has strong community relationships, with various programs supporting local home and business owners to maintain and achieve excellent living. Median sales price is at $250,000, with properties selling on average of 79.5 days upon availability. 

Flipping Houses in Chicago in 7 Steps

Step 1: Learn the Do’s & Don’ts of House Flipping

Like any business, the real estate industry has its own set of rules. Location and property closing costs may vary, but the methods, prerequisites, and critical considerations remain similar. 

Essential factors to consider when home flipping include:

• Mortgage interest rates and down payment
• Real estate professionals’ fee 
• Best and slow season for home-selling
• Home value appreciation rates
• Property taxes and legal prerequisites

Step 2: Understand the Illinois Property Market Trends

There’s no substitute for knowledge when breaking into the Illinois housing market. Even when you work with a real estate agent, knowing how well the market is performing now and for the upcoming years is critical. 

Skimming through local housing directories like the Illinois Realtors and Redfin is a great way to get an idea of current inventory, price forecasts, and migration trends that can impact future demands. 

Step 3: Find a Great Location for Flipping Homes

The fastest and safest way to find homes to flip is to hire a real estate agent who can access multiple listings. They can provide info on low-cost properties within the city, like foreclosed homes and short sales. 

You can also go online and browse for local property auctions. It’s public information advertised by lenders who foreclose properties and open them up for bidding. 

Step 4: Get Funding for Your Deal

After handpicking a Chicago home to flip, find your source of funds. Many first-time flippers do it the other way around, where they first secure a pre-approved loan before finding a property. 

Today, you can tap into private lenders willing and able to fund the property in cash, provided you show them the profit potential. Compared to traditional loans involving lots of paperwork and a pre-approval process, getting a loan from a private individual is faster and more flexible. 

Step 5: Do a Property Inspection And Make the Purchase

Visiting the property with an inspector helps you determine areas you’d need to repair and the total renovation costs associated with it. 

Common structural issues you should be mindful of include roofing, electrical and plumbing systems, HVAC, and foundation. Experts recommend hiring professional home inspectors for bigger properties to ensure all critical areas are covered and accurate accounting of repair value is achieved. 

When purchasing, stick to seasoned flippers’ 70% rule. This means you only pay 70% of the property’s projected market value after repair, less the rehab costs incurred in beautifying it. 

For example, if your planned flipping price is $300,000 with an estimated repair cost of $20,000, you should only buy the property at $190,000. (Formula: $300,000 x 0.70 – $20,000). 

Step 6: Renovate the Property 

Once you’ve made the purchase and identified the required repairs, it’s time to put in the work. You’d want to make your property as aesthetically pleasing as possible but not too extravagant to exceed your budget. 

Cover the fundamentals like lawn landscaping and repainting. From here, you can work on kitchen remodeling, door and window replacement, etc. Repair can easily add up in cost, which brings us back to the importance of property inspection to assess if a purchase is worth it or not. 

Step 7: Use MLS (Multiple Listing Service) and Ressell

Once you’ve finished polishing the property, work on immediately listing it on top-rated MLS. This increases your home’s exposure to a larger group of clientele. 

Listing in MLS systems allows buyers to view comparable properties to help them decide, so getting your home in those systems facilitates more accessible buyer-to-seller match-ups. 

Another strategy you can employ is social media marketing. This can be effective, especially if you already have a solid social media presence or know someone with enough social following to spread the word. 

Costs of Flipping Houses in Chicago

As lucrative as house flipping sounds, there are associated costs that go beyond the initial purchase price you should be aware of: 

• Holding Costs: This refers to all fees incurred while you own the property. It covers taxes, maintenance, management, and utility bills. So, the longer the property stays in your care, the bigger your expense. 
• Real Estate Agent Fee: While hiring a professional real estate agent is optional, their expertise comes in handy in negotiating and connecting you with the right buyer. They can also help set up your property in MLS systems. On average, Chicago agents are paid a 6% commission from the property sale price, with a 50-50 cut each for the listing and buyer’s agents. 
• Marketing Costs: From yard signs to paid online promotions like social media marketing, this cost covers anything that concerns publicizing your property. 

Do You Need a License to Flip Houses in Chicago?

No, you don’t need a license to flip houses, but this means you can’t act as your real estate broker. Operating without a license also holds you liable for acquiring all the required construction or renovation permits. 

On the other hand, getting a real estate license gives you full knowledge of the real estate business, including regulatory technicalities, and you won’t have to pay commissions to third-party professionals. 

A license can help you land a high-paying side hustle by working as a consultant or offering your services to other homeowners or flippers. 

Other Cities to Look At for Profitable House Flipping

Interested in checking other profitable house-flipping locations? Don’t miss these cities! 

• Flipping Houses in Vegas: Take advantage of Nevada’s no-income tax and low property tax rates. Flip properties near the city’s best shopping and entertainment hubs! 
• Flipping Houses in Dallas: With a growing population, thriving economy, and low crime rates, Dallas is a perfect fit for flippers targeting a stable city to invest. 
• Flipping Houses in San Diego: Try out your luck with this city’s vibrant lifestyle, mild climate, and long beaches. It’s perfect for owners looking at fun-filled communities with high-income potential. 

Wrapping Up

There are many opportunities to succeed in house flipping, especially in an economic hub like Chicago. You only need to get the basics covered and find a great location to flip. 

Have you tried house-flipping? What are some challenges you encountered? Let’s hear them in the comments!