The Numbers Don’t Tell the Whole Story
When I first entered real estate investing, I believed the best opportunities came from properties with the highest projected returns on paper. The math looked great: low purchase price, high rent, strong cash flow. But over time—and now with years of experience as both an investor and a full-time property manager—I’ve learned that what looks good in a spreadsheet doesn’t always translate to real-world success. In fact, it often leads to frustration, losses, and unmet expectations.
The Hidden Risks of “High ROI” Properties
Some of the cheapest properties in the market come with the biggest hidden costs. They’re often located in neighborhoods with higher crime rates, unstable tenant demand, or long-term disinvestment. These properties frequently attract a tenant pool that—while not problematic by nature—can lead to more frequent turnover, rent collection issues, and greater wear and tear. And if the property also has significant deferred maintenance or outdated systems, the operational challenges can quickly erode any perceived profit.
So while the projected ROI might seem strong on paper, the reality is that those returns are nearly impossible to achieve once you account for the day-to-day complexities. The numbers still matter—but they rarely capture the risk, stress, or long hours that come with trying to make those numbers work.
Lessons From the Management Side
Now that I run a Chicago property management company full-time, I see investors making these same mistakes regularly. They’re drawn to deals that promise high returns, but they underestimate the operational demands. In some cases, I’ve had to decline management for properties when it's clear that the investment strategy is fundamentally flawed. If a client’s goals are unrealistic based on the asset they’ve purchased, it becomes my responsibility to advise them honestly.
I don’t want to be in a position where I’m managing a property that I know won’t succeed. That’s not good for them, and it’s not good for us either.
The Three Pillars of a Sound Investment
Over time, I’ve developed a clear framework for what makes a solid rental investment. In my experience, a property needs to meet minimum standards in these three areas:
Property Condition – Does the building require extensive maintenance to correct deferred issues? Are there problems from a poor or partial renovation? Are there outdated building systems that will lead to ongoing expenses? Will the property need major capital improvements to operate sustainably?
Location Quality – Is the area safe, accessible, and appealing to renters? Is the block cut off by train tracks? Are neighboring properties vacant, abandoned, or overgrown?
Neighborhood Dynamics – What is the current and future rental demand? Are there signs of long-term growth or stability? What is the general quality of the tenant pool in the area?
If one of these pillars is missing, the investment becomes fragile—and often unworkable. These aren’t “value-add” deals; more often, they’re bottomless pits that consume time, money, and energy.
Renovation Isn’t a Shortcut—It’s a Full-Time Job
Property condition can be improved—and in cities like Chicago, where much of the housing stock is over 100 years old, full renovations often make sense. I’ve built a strategy around acquiring distressed properties and doing full-scale renovations before leasing them out. But let me be clear: this isn’t for the faint of heart. These projects take planning, financing, coordination, and a whole lot of problem-solving. For investors seeking a turn-key, passive experience, these deals are rarely worth the stress.
How to Choose Smarter Investments
If I were starting over today, I’d give myself—and my clients—this advice: Buy strategically. Focus on properties that are in solid condition or need only manageable improvements. Be cautious of superficial renovations by prior owners that appear updated but mask deeper issues. Always get a thorough inspection from someone who knows how to evaluate older properties.
Look for areas with steady demand, stable tenant pools, and manageable oversight. These are the properties that perform—not just in theory, but in practice.
Final Thoughts: Spreadsheets Don’t Pay the Bills
At the end of the day, real estate investing isn’t just about what the spreadsheet shows—it’s about how those numbers hold up against the real-world challenges of ownership. High turnover, ongoing maintenance issues, and neighborhood-related risks can quickly erode returns, no matter who is managing the property. Even with a professional property manager in place, some properties require so much oversight and expense that the projected returns simply aren’t achievable. If the investment can’t perform under realistic conditions—even with experienced management—then it’s not a strong investment to begin with.
This lesson continues to shape how I invest—and how I advise my clients. At Paragon Property Management, we’re not just here to manage rentals. We’re here to help investors make smart, sustainable decisions from the very beginning. Because when the foundation is solid, the results follow.
