Accountant · Chicago, IL · Member since 2019 · 7 posts · 4 votes
Hello, my name is Raj Patel. I am 20 years old. I live in Chicago. All the properties here are very expensive. I have 30 thousand to invest. I have thought about buying a quad with 203k loan so I can wrap my rehab into the loan and still only pay 3.5%. Another thought was buying late in the year so, I would get the property tax from the previous owner. This would help eliminate some costs. I was wondering what you would recommend. I don't want to invest long distance since this would be my first investment. Thank you for all your help.
Investor · Chicago, IL · Member since 2015 · 154 posts · 91 votes
7y
@Raj Patel I would agree with @John Warren....stay away from 203K if possible. I would take that $30K and buy a nice 3-4 flat, owner occupied, in the western suburbs (Berwyn/Cicero/etc). This should leave you with $5+ grand in reserves in case anything happens. This will be much safer than investing in the south side at this point in your REI career.
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
7y
@Raj Patel you can find opportunities in Chicago, but you won't find them on the north side or in the most trendy neighborhoods with your budget. With that being said, 30k is enough to get you started on the south side or in the near western burbs near Berwyn or Cicero where I work. I think you could also find some areas a little further northwest as well. Where do you live now, and where have you been looking?
As for the 203k loan, I would personally avoid it. You should explore the 5% down conventional loan if you qualify. They recently changed the guidelines, but for a 1st time buyer it is still possible to use for a 3 or 4 unit. I have closed several of these loans out for buyers this year in the 2-4 unit space.
Accountant · Chicago, IL · Member since 2019 · 7 posts · 4 votes
7y
@John Warren thank you for your help. Why do you think I should stay away from 203k loans? Also, what would you recommend I do to get more familiar and learn? I currently live in chinatown but used to live in Lincoln Park.
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
7y
@Raj Patel the 203k loan is ok as long as you go into it with realistic expectations about the construction costs and how much can be accomplished through the construction. You will also need an excellent GC to pull it off.
If I were in your shoes, I would start hitting the networking groups that are all over Chicago! There are tons of fantastic groups out there, and I learned a lot (and still do) attending these types of groups.
Real Estate Agent · Chicago, IL · Member since 2019 · 46 posts · 29 votes
7y
Hello Raj,
In addition to John's comments, I would add this. The FHA 203k loan is only for owner-occupied properties. Were you planning to live in this next property or only hold it as an investment?
Investor · Chicago, IL · Member since 2015 · 154 posts · 91 votes
7y
@Raj Patel I would agree with @John Warren....stay away from 203K if possible. I would take that $30K and buy a nice 3-4 flat, owner occupied, in the western suburbs (Berwyn/Cicero/etc). This should leave you with $5+ grand in reserves in case anything happens. This will be much safer than investing in the south side at this point in your REI career.
New York City, NY · Member since 2017 · 43 posts · 174 votes
7y
Have you thought of investing in a different state where your money will go further? Just a thought, but that's what I've been forced to do, and have been fairly successful with it.
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
7y
@Raj Patel there are a bunch of good ones right here on BP. Check under the "networking" tab. I host a free one in Oak Park on the last Tuesday of each month. I also regularily attend the one hosted by @Brie Schmidt. John Casmon hosts a good one in the city. Honestly you have a ton of great options in Chicago!