Herman Lofton has been in Chicago real estate for 18 years, a business he says he was drawn to because he wanted to be his own boss. After finishing school, the West Side native worked in construction until he was introduced to real estate investment, where he has been buying, rehabbing, and selling properties around the city ever since.
Starting out, Lofton says there was a learning curve. His inexperience led him to overpay for materials until he learned the ins and outs of the business. And just six months after getting started, Lofton faced one of his biggest setbacks when his business took a hit due to the economic crisis of 2008. As a result, he says he learned not to overextend himself and buy too much property at once. Because even if the property is vacant, you will still be responsible for taxes and other expenses, which can become costly over time. “I tell people to take on one project at a time until you get your capital together. Then you can do more. Just take it step by step,” he says.
Location is one of the most important factors Lofton says he considers when buying a property. He suggests looking at the prices of comparable properties in an area to help you determine whether or not a project will be profitable after you invest in the rehab work. Lofton says even if you have to lower the price of your property once it’s
on the market, you should still make a profit. “The minimum profit you should expect is $40,000 for each property to make it worth your time,” he says.
Lofton’s construction background is helpful when it’s time for rehab. But if you aren’t handy, he suggests looking for construction workers on the job in the area. “If you see people around rehabbing, stop in, and ask to see their work. Let them know you have some projects coming up and that you might have jobs for them,” he says.
These days, Lofton says he’s more interested in buying and selling properties than being a landlord. “You have to deal with too many personalities when you’re trying to collect rent from people.” But if you are planning to rent your property, Lofton recommends doing background checks to get as much information as possible on potential tenants. “Don’t just go off of their word.”
“If you see people around rehabbing, stop in, and ask to see their work. Let them know you have some projects coming up and that you might have jobs for them.”
Lofton says the best business advice he’s ever received is to maintain your integrity, something that is extremely important to him. “My motto is be the best you can be and stay ahead of the game. That’s what I try to do,” he says.
Although real estate has its challenges, Lofton is confident that he’s in the business for the long haul. “There’s never really a bad time to buy real estate. It’s never going anywhere. Real estate will be here forever.”