Getting Started in rental property investments in Chicago

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Getting Started in rental property investments in Chicago

Steven Antola
Investor · Chicago, IL · Member since 2022 · 4 posts · 2 votes

I am looking for any insight with getting started in rental property investments. Based on my initial research, I believe that the "house hacking" method is my preferred choice. My 5yr plan is to acquire several 3 - 4 flat properties in the Chicago area. If I'm understanding the basic principles of that method, I would purchase under an FHA loan, live in it for one year, refinance to a conventional and purchase another under FHA live in that for 1yr, repeating the process until I achieve my investment goals. The long term vision is to build financial freedom, generational wealth, leverage the tax advantages of becoming a real estate investor and potentially cultivate it into my main source of income. I would appreciate any and all guidance.

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Travis TimmonsPro Member
Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
4y

You're in a good city for multi-family. The supply and commonality of 2-4 unit properties in Chicago is better than most cities. Familiarize yourself with owner occupied short term rental laws. I'd recommend medium term furnished rental (furnished finder, etc.) in the winter and short term renting from April to Oct-Nov. You take advantage of the cash flow from seasonal pops of airbnb occupancy and have a steady medium term (likely 13 weeks - standard contract length for travel nurses) premium rent in the off season.

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  • Travis TimmonsPro Member
    Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
    4y

    You're in a good city for multi-family. The supply and commonality of 2-4 unit properties in Chicago is better than most cities. Familiarize yourself with owner occupied short term rental laws. I'd recommend medium term furnished rental (furnished finder, etc.) in the winter and short term renting from April to Oct-Nov. You take advantage of the cash flow from seasonal pops of airbnb occupancy and have a steady medium term (likely 13 weeks - standard contract length for travel nurses) premium rent in the off season.

    1Reply
  • Amelia Foronda
    Real Estate Agent · Lexington, SC · Member since 2022 · 13 posts · 9 votes
    4y

    I have no even begun my own personal journey, but financial freedom is the goal. Congrats on getting this far.  My only advise to you (that so many others on this forum have gave to me) is, "Don't get analysis paralysis ! Your plan sounds so solid.  Excited for you and your journey, good luck :)

    0Reply
  • Paul De Luca
    Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes
    4y

    @Steven Antola

    House hacking is definitely a great strategy for getting started with building a rental portfolio. However, you will only be able to refinance from your FHA loan to a conventional loan if you have enough equity in the property (20%). This is a common issue house hackers encounter because putting 3.5% down is so appealing and there aren't a lot of obvious alternatives.

    But there are actually other financing options for house hacking besides FHA, VA, Home Possible, etc (we used Home Possible twice, FHA once so far) such as using portfolio loans where you can put down 5-10% and there are even loans for 15% down conventional as a pure investment loan (non-owner occupied).

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  • Victor SoBusiness Member
    Real Estate Agent · Chicago, IL · Member since 2017 · 325 posts · 193 votes
    4y

    Hey @Steven Antola ! Welcome to the forums! As I was reading your post, it reminded me of myself 5 years ago when I first got into real estate. I’ve househacked one property per year since then and acquired 10 properties this way. Your plan in theory sounds great but it may not pencil out exactly as you planned. Going the fha route is fine but it may not be as easy refinancing after a year since rates have been pretty volatile. Keep in mind, you can only have one fha loan out at a time so you’d have to refinance into a conventional for you to use the fha product again. There are other options like 3-5% down conventional for single family homes, townhomes, etc. For 2-4 units, I know a lender who has a 10% down product. DM me for more info! 

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  • Riley Ricobene
    Real Estate Broker · Elmhurst, IL · Member since 2019 · 41 posts · 10 votes
    4y

    Steven feel free to DM me

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  • Crystal SmithPro Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
    4y
    Quote from @Steven Antola:

    I am looking for any insight with getting started in rental property investments. Based on my initial research, I believe that the "house hacking" method is my preferred choice. My 5yr plan is to acquire several 3 - 4 flat properties in the Chicago area. If I'm understanding the basic principles of that method, I would purchase under an FHA loan, live in it for one year, refinance to a conventional and purchase another under FHA live in that for 1yr, repeating the process until I achieve my investment goals. The long term vision is to build financial freedom, generational wealth, leverage the tax advantages of becoming a real estate investor and potentially cultivate it into my main source of income. I would appreciate any and all guidance.


     Basic plan is fine but be prepared to be flexible & learn about other methods to support your financial plan.  This is a business where continuous learning is essential. 

    312-681-7487
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  • Eudith VacioPro Member
    Real Estate Agent · Chicago & NWI · Member since 2015 · 860 posts · 521 votes
    4y

    Hey @Steven Antola - I think that is a great, solid plan but definitely great advice on the fact that there are some nuances to refinancing into conventional financing. One that @Paul De Luca mentioned on having 20% equity AND the other that once you refinancing from FHA to conventional, you have to wait another year to get an FHA property. So you just have to wait some time before getting the other one. I've done that on my side pretty much every year OR every other year :) where are you looking to buy?

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  • John Warren
    Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    4y

    @Steven Antola welcome to the forums! You are in an amazing city for investing in 2-4 units for sure. House Hacking works well if your life stage allows for it. Bigger Pockets has demystified the process in a lot of ways, so you can learn quite a bit from podcasts and blog posts on here. I think your first move is to synch up with a lender like @Joshua Jones. Once you have the lending strategy together, you can focus on which areas make sense for you. 

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  • Joshua JonesPro Member
    Member since 2020 · 70 posts · 32 votes
    4y

    @John Warren thank you. @Steven Antola in terms of this idea, possibly it could work. However, there are many other factors when it comes to this. We can always talk more in depth about this along with a proper blueprint for success. Working within the loan guidelines is possible but being aware of all facets (pros/cons) is important. Feel free to private message me to discuss further. 

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  • Steven Antola
    OP
    Investor · Chicago, IL · Member since 2022 · 4 posts · 2 votes
    4y
    Quote from @Joshua Jones:

    @John Warren thank you. @Steven Antola in terms of this idea, possibly it could work. However, there are many other factors when it comes to this. We can always talk more in depth about this along with a proper blueprint for success. Working within the loan guidelines is possible but being aware of all facets (pros/cons) is important. Feel free to private message me to discuss further. 


     Hello John,

    I am in the beginning stages of researching how getting into real estate investing works. My current situation is that I unfortunately had to short sell a property a little of a year ago. I am looking for alternative investment strategies since I would not qualify for an FHA or conventional. I have a fair amount of savings in the bank but am trying to avoid 20% or greater down as I want to leave some in reserves. Open to hear what you think my options are given the circumstances. Long term vision is to build a strong winning relationship with a realtor that can help me grow my portfolio over the next 15 yrs.

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  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    4y

    @Steven Antola look into using FHA 203(k) loan to buy fixer upper and finance improvements in purchase loan.

    Also, look for 2-4 unit properties, which will allow you to scale faster, as well as give you helpful experience if you want to later get into MF.

    [email protected]248-209-6824
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  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    4y

    Hey @Steven Antola - Sounds like you have a great plan in place and I think Chicago is a great city to get started in.

    Do you have a particular area or neighborhood you are targeting?  You should connect with @Andy Smith w/ A&N mortgage to figure out your purchasing power.

    Happy to connect and talk more real estate.

    [email protected]
    Quality Builders4.966 Reviews
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  • Andy Smith
    Lender · Chicago · Member since 2020 · 29 posts · 26 votes
    4y

    Thanks for the mention @Jonathan Klemm. Steve and I are already in touch, looking forward to helping him get started on this adventure!

    1Reply
  • Melanie ThomasBusiness Member
    Real Estate Broker · San Antonio · Member since 2022 · 1k+ posts · 489 votes
    4y
    Congrats on building your path to where you want to be! Big step a LOT of people are too afraid to make. Happy investing, good luck!
    [email protected]
    RentWerx Property Management4.73300 Reviews
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