First Time House Hacker in Chicago

9 Replies

I currently live in Chicago and I want to get started with real estate investing, specifically house hacking. Does anyone familiar with the area have any tips on getting started? Mostly I want to know more about how to find a good deal. Would it be better to find a cheap place and fix it up, or should I find a place that's in decent condition already? Once I find a place, what's the best way to find tenants? Any advice would be appreciated!

@Zach Taylor welcome! Congrats on choosing to house hack. I believe it's an amazing way to invest into a property. I am currently house hacking in the near west suburbs of Chicago (La Grange). I suggest you reach out and get together with realtors and lenders that make deals around the city. Preferably some that deal with investors and house hackers. Biggerpockets is a great place to look for them. The good ones will help you zone in on major points needed to move forward. I think you should figure out what specific areas you want to start looking to buy in, what kind of property you can mentally and financially afford to get into, and other things that will help you gauge where you stand. All these things can be figured out through guidance from a good realtor and lender.

A lot of this depends on where you personally stand, level of risk you're willing to take on, whether you have a network of contractors and professionals that can help you, how handy are you, your previous experience, and a lot more. Again, if you lay all this out with your realtor/investor contact they should be able to help you figure out what you really want to shoot for.

If you have access to cash, then a fixer might be a good place to start to force appreciation. If you don't have much cash but your lender says you can afford a fixed up property with an FHA loan then that might be the way to go. If you have friends looking for a place to stay, then maybe hacking by the room might be something to look into. If you want great, long-term, tenants then you might have to look in particular areas and particular types of units. There is a lot that can go into these things but I think by going the house hacking route you're already thinking the right way.

I chose a property with very little repairs needed in a great neighborhood. There was a lot of reasons for me choosing the property I did and I didn't find it very easily. If I would of had more risk tolerance I might have been able to get a higher income to expense ratio but I preferred going with a safer neighborhood and a better possible tenant pool.

Thanks for the reply, @Alejandro Calixto. I'm curious, you mentioned finding your property was difficult. What was difficult about it? What methods did you use to find the deal? This is one of my biggest questions right now. I'm not sure how to go about looking for a property. I've looked around on Redfin, but that's it. I'm very new to the Chicago area, and it's a bit overwhelming since I don't really know which neighborhoods/suburbs are desirable. Do you think an agent could or would want to help me answer all these questions?

I'm also wondering about lenders. I know there are sites like Better and Quicken Loans, but I could also go to a bank like Chase. Do you think it makes a difference which one I go to? 

I appreciate your time in answering some of my questions. 

Congrats on choosing House Hacking! It has changed many people’s lives! You should connect with @Shaye Mora who’s doing big things out there! He came on our podcast and shared what he’s doing. Good guy to know!

@Zach Taylor house hacking is a great strategy, and you are definitely on the right track. I would recommend that you find a lender who is very well versed in the investing space. @Alejandro Calixto already knows my lender as I made the introduction, but when I was starting out the my lender literally changed my investing career. There are tons of terrible lenders out there who don't "get it", but when you find the right one it can change the trajectory of your investing career. 

As for your other questions, I would recommend that you spend some time thinking through your goals. Do you want to buy multiple properties in an area and building a portfolio? Do you just want one property where you can reduce your cost of living? Will you self manage in the long term, or will you use a PM company? These are the questions that will direct you to the right area. If you select A and B areas, you can easily self manage a few buildings. If you want to go after cash flow, you may decide to jump into C class areas but these require more time. 

It all goes back to your goals and your "why". 

@Zach Taylor - Definitely go the house hacking route!

Finding a good deal is tough but building a team that knows the market is the best way to find a good deal.  You are on the right path with @John Warren if you are looking in the Western Suburbs.  If you were looking on the North/Northwest side you should connect with brokers like @Brie Schmidt or @Henry Lazerow , they both work with a lot of house hackers and know this area very well.  Lastly, if you were looking on the Southside like Bronzeville or Hyde park I'd connect with @Rinee John de Leon who's helped a lot of house hackers in those areas.  

Talk with some great lenders like @Michael Barbari or @Michael Facchini who we are able to help you with your upset limit for purchasing, which will be a great place to start for your search. They'll also be able to advise you the best loan solution for you such as FHA or the home possible loan program.

More than anything I'd just stress getting started.  The deal doesn't have to be perfect when you are house hacking, that's the nice thing about the strategy.  

P.S.  Once you are up and running if you need help with maintenance in the Chicago area shoot me a PM.

@Zach Taylor Sure thing. It's easy to get overwhelmed by this and I assume most of us do.

The reason why finding my house hack didn't come easy to me was due to the list of things that I needed to check off before putting an offer on a property. As I mentioned, this has a lot to do with your place in life and your needs/goals. I have a family that I needed to consider when looking for properties. That was probably my main navigation system. I needed to find something that would be a good financial move while maintaining a lot of requirements that I chose in order to keep my family safe and happy. Therefore, I was looking in the better towns/neighborhoods with good schools. I also needed to make sure it stayed withing a certain distance from my job location. I started looking in the best suburbs that I have lived around. Luckily I am from the Chicago area and suburbs so I knew where to stay away from for the most part. Many other things went into the areas and types of properties I was looking at. It took months of constant looking at properties on Redfin/Zillow/Realtor/etc. in order for me to get a good gauge at what properties were decently priced. Thankfully @John Warren was able to guide me and speed up the process. He helped me focus on properties that made sense for what I needed. As he mentioned, he got me connected with an amazing lender and that made all the difference. He also got me connected with everyone else from inspectors, contractors, and a ton of other folks I never knew I may need. The right agent will definitely help you figure out all you need.

The right lender definitely makes a huge difference. I would get references from more experienced investors here instead of just calling whoever you see on TV commercials, if I were you.

You say you just moved here. Maybe that is where to start. Why are you here? School, job, family?

Is there an area of the city that you have to stay close to?

How long do you plan to stay in the area?

@Zach Taylor , as others stated, it's key to find the right team, especially when house-hacking and investing in 2-4units.  Redfin/Zillow will only get you so far...not only will you miss out on the good opportunities, but there is a lack of education you absolutely need that the right professionals on your side can provide.  Find a great agent that specializes in multi-units....not just someone that does a handful per year, but multiple per month and invests on their own as well.  Hope that helps!