Saving to circumvent "1st Time Property" issues.

7 Replies

Hello All,

DB from Chicago here! I have a question for anyone willing to provide wisdom and honesty. 

So, I consider myself in the "pre-newbie" phase (the phase where most people decide to take action, become an investor, educate themselves, pay off/down debt, build their credit scores, save up money, network, etc.). I am currently paying down debt and saving towards my 1st Income Property. 

I desire to do the following:

-Purchase a distressed 3/4-unit Income Property, Owner Occupied (House Hack)

-Rehab the property via a 203K loan (Chicago is an appreciation market)

-Once the property has tenants and the necessary systems to run effectively, save reserves for that property AND build savings for the next property (I am aware of the equity earned, but I DO NOT want to rely solely on equity & appreciation. I love saving and having that extra cushion).

I question what hidden fees may come with the aforementioned approach? I am greatly considering NACA in financing my first property and I am diligently looking for Down Payment Assistance Programs offered to first time home buyers and Chicago Public School educators.

What were the unforeseen fees, costs, and needs that you experienced? Of course the answers will vary per each situation, person, state, and county. 

Thanks for the wisdom and advise! 

DB from Chicago 

Peace and Blessings

I did a 203K for the house I live in.  It worked pretty well, but does have some serious headaches.  I wish I had done a small multi-unit.  We did a SF.  I would be happy to pass on a contractor that is good at 203K's if you want.  The best advice I could give would be to find a lender that really knows 203K's.  Unfortunately, I am not sure I could recommend by lender. . . .  I know they are out there.  I also know a realtor that does a lot of 203K's.  He might have a good suggestion for a lender if you need it.  Good luck!  The 203K really helped us build some good equity.

No company avatar mediumDerek Walvoord MBA, Paxton Properties

Originally posted by @Dyryl Burnett :

Hello All,

I desire to do the following:

-Purchase a distressed 3/4-unit Income Property, Owner Occupied (House Hack)

-Rehab the property via a 203K loan (Chicago is an appreciation market)

-Once the property has tenants and the necessary systems to run effectively, save reserves for that property 

When you implement your plan consider paying for a warranty program from companies that cover multifamily up to 4 units.  Why?  You should really have your reserves set aside when you complete the purchase.  If you don't and something happens then you need a risk mitigation plan.  

@Derek Walvoord

Thanks alot sir! I appreciate the advice and yes, I would love to receive the contractor referral. I am attempting to put together a list/booklet of RELIABLE and QUALITY general contractors and sub-contractors. 

As I am studying/researching the 203K process, I will definitely keep in mind a lender that is 203K savvy. NACA seems to be very savvy with dealing with realtors and contractors in the 203k process.

@Crystal Smith

Thank you! I honestly did not think about any type of warranty programs aside from home appliances warranties. I will definitely add this to my list. Thank you

DB from Chicago

@Dyryl Burnett Please make sure you find a mortage broker that doesn't mind doing 203k because most dont and will attempt to talk buyers out of them.  Find a way to make it happen sooner than later.  Deals get less and less secy compared to a few years ago each month.  

I never like to push people to move faster than they feel comfortable with but figure out what you comfort level can extend to and be aggressive vs waiting and waiting.

Medium untitledMark Ainley, GC Realty & Development LLC | [email protected] | 630‑587‑7400 | http://www.gcrealtyinvestments.com | Podcast Guest on Show #72

27 windows that need to be pulled, scraped, and painted to pass a lead based paint test for a new CofO. Live, learn, then buy a house that already has vinyl windows.

@Mark Ainley Thanks alot. 

I starting to really see that this 203K comes with some "hassles" depending on the person.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you