Best option to get started?

Question

Looking to figure out what option might be best to get started. Currently my wife and I are living in an apartment in Chicago with pretty affordable rent currently. I'd love to own a multifamily someday and live in a unit while renting out the rest. I'm not sure we can afford to house hack in Chicago. We do have some savings to get us started and I'd love to find some ways to generate cash flow and eventually get some more properties.

I'm open to suggestions. Anyone have any recommendations for how we should get started in real estate?

Joshua Janus · Answer

@Brad Knight Is a house hack a goal of yours in the future? Study the requirements for an FHA loan like a book and make sure to set yourself up for success. Examples would be building up your credit, getting the most recent tax returns for the last 2 years in the same field, building up capital for the down payment, closing costs and 6 months in reserves so you can use as much of the rental income from the other units as your own income when you getting qualified. These are some barriers I had to make sure to be able to climb over.  Let me know what questions you have.

Mason Hickman · Answer

@Brad Knight

Getting started with a househack gets my vote. With an owner occupied loan, you can get in for a fairly low down payment and start cutting your expenses and get your feet wet as a landlord.

John Warren · Answer

@Brad Knight you have so much great advice on here. Definitely you should be speaking with a lender who knows how to help people get prepared. I would contact @Joshua Jones if I were in your shoes. He has helped me with eight loans in my career, and I would not be where I am today without his guidance and mentorship. Make sure whoever you work with doesn't view you as a number, but instead wants to see you succeed. It took me five years before I was able to start investing from when I first read Rich Dad Poor Dad.

Paul De Luca · Answer

@Brad Knight

House hacking is one of the most affordable ways to get started in real estate investing so I highly recommend exploring that first. FHA is an option but you should speak with lenders to see what other possibilities are out there.

Jeffrey Albaum · Answer

HI @Brad Knight - House hacking is the way to do it! Even if you can't afford a multi family, you can look for homes with basements that can be converted into a separate unit to post on Airbnb/VRBO, as a mid term rental or even a long term rental. Best of luck and hope that helps!

Andy Smith · Answer

Thanks for the mention @Jonathan Klemm

@Brad Knight, a lot of the work I do is focused on helping first time investor like yourself house hack. There are programs out that will allow a range of 3.5% - 10% down, and there are also options to use credits to cover closing costs to help make the journey even more affordable.

I helped a client do a 2 conforming (4 unit) building recently, and he's living there now making a profit. Although interest rates are on the rise, as long as the numbers make sense for you, and the rents cover the portion you're looking it's a great time to start.

Hit me up if you're looking for answers on additional financing questions.

Jonathan Klemm · Answer

Hey @Brad Knight - I think you might be surprised how easy you can get up going.  If you found a 2 unit multifamily for $400k at 3.5% interest that is only $14k downpayment.

Some areas of NW Chicago may likely be out of reach with that price range, but there are definitely good properties out there that might work.  I'd take the next step and talk to some lenders like @Andy Smith or @Michael Facchini to see what type of purchasing power you have.

Also, if you aren't opposed to the western suburbs like Cicero & Berwyn, they have some great properties at reasonable prices.  Link up with @John Warren and he can surely help you find a solid spot.

Joshua Jones · Answer

@Brad Knight feel free to reach out. More times than not though a house hack multi unit is more affordable because of the fact that you get use the rental income to help qualify. Thank you @John Warren

Colin Olsen · Answer

@Brad Knight my wife and I just purchased our first House Hack in Berwyn. The housing stock here is full of two and three-flat properties and the rental market is strong. If you're willing to get outside of the city I'd definitely start looking around here. I'm not a broker but I'm happy to share more about how we got started if you're interested.

Steven Foster Wilson · Answer

I say house hacking would be the way to go. If you do not have all the money be willing to ask people in your network to invest with you. You could give them an interest rate back or even equity. I like to map out both options. The more people you ask the more opportunities you could have. In our first house hack we also rented out rooms while we did it for super cheap. We let them know that house would be under construction but they were getting the cheapest rent in Columbus.

Best option to get started?

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