This analysis models a typical BRRRR project in Hermosa at the neighborhood median ARV of $465K. Real-world projects vary substantially based on property type, condition, and submarket dynamics.
Acquisition and rehab assumptions
| Acquisition price (85% of median) | $310K |
|---|---|
| Rehab budget (midpoint) | $110K |
| All-in cost | $420K |
| After-Repair Value (ARV) | $465K |
Monthly cash flow model
| Estimated monthly rent | $4K |
|---|---|
| Property tax (Cook County investor classification) | −$969 |
| Insurance | −$194 |
| Vacancy reserve (7%) | −$277 |
| Property management (8%) | −$316 |
| Maintenance reserve (6%) | −$237 |
| Net Operating Income (monthly) | $2K |
| DSCR refi at 75% LTV / 7.5% / 30yr | $349K loan, $2K P&I |
| Monthly cash flow after debt service | $-479 |
| Cash left in deal after refinance | $72K |
What this tells us about Hermosa
At the Hermosa median, a typical BRRRR project produces approximately $-479 per month in cash flow after a 75% LTV DSCR refinance. With approximately $72K remaining in the deal after refinance, this represents a -8% cash-on-cash return on the remaining capital — before appreciation.
Hermosa is the western extension of the Logan Square gentrification curve. Properties trade at 60-75% of Logan Square comps for similar building types — the spread closes a little each year. Aggressive operators have done well; the window is narrowing.
How this scales across Hermosa
Hermosa's housing stock includes 2-flat, 3-flat, graystone, single-family. Multi-unit properties (2-flat, 3-flat) typically produce 30–60% higher gross rent than single-family at similar ARVs but carry higher tax burdens and management overhead. Single-family rehabs often have stronger exit liquidity (owner-occupant buyers) but lower cash flow.
Sensitivity considerations
- Rent assumption: Modeled at ~0.85% of ARV. Actual rents in Hermosa range from 0.6–1.0% depending on property type and condition.
- Property tax: Modeled at 2.5% of ARV for Cook County investor classification. Successful tax appeal can reduce this 15–30%.
- Interest rate: DSCR refi rates currently range 7.5–9.5% depending on borrower profile and leverage. A 1% rate change moves monthly cash flow by approximately $100–200 on this deal size.
- Rehab budget: Modeled at midpoint of $55K–$165K. Common considerations on Hermosa housing stock (tuckpointing, historic restoration) can push budgets higher.
Hermosa cash flow FAQ
Estimated monthly rent for a stabilized investment property in Hermosa at the $465K median ARV level is approximately $4K per month — a rough rule-of-thumb estimate at ~0.85% of ARV. Actual rents vary significantly by property type (2-flat, 3-flat, graystone, single-family) and condition.
On these estimates, a typical BRRRR project at the Hermosa median ARV produces approximately $-479 per month in cash flow after debt service (at 75% LTV DSCR refi, 7.5% rate, 30-year amortization). Cash left in the deal after refinance: $72K. Individual deals vary substantially.
For a property in Hermosa valued at the median ARV of $465K, expect approximately $12K in annual property tax (Cook County investor-classification, before exemptions and appeals). Chicago city properties were reassessed in 2024 — many neighborhoods saw material assessment increases.
Hermosa typically supports a rent-to-price ratio in the 0.6%-0.9% range depending on property type and condition. Multi-unit properties (2-flat, 3-flat) generally produce higher ratios than single-family. The 1% rule rarely applies in Chicago neighborhoods — but BRRRR works at lower ratios when appreciation supports it.
This is a directional cash-flow model, not personalized financial advice. Rent estimates, tax rates, and refinance terms are illustrative. Validate every assumption with current market data and your own underwriting before committing capital.