Hello BiggerPockets,

After about half a year of learning and searching for my first investment property, I've finally found a property which I plan to “house-hack”. We are in contract now and the inspection period ends next week.

Here are the details:

Location: City of Chicago, Neighborhood of Avondale/Logan Square; 3 minute walk to a blue line subway station (26 minute door to door commute to the loop).

Market: The area has seen growth in both property value and development. If the historic pattern of real estate development follows its neighboring markets along the subway line (such as Wicker Park), this area will gentrify rapidly and see significant appreciation.

Property: Legal 2 units with finished basement and finished attic. In total, three rentable units: 1) Basement 2bed1bath, 2) Floor 1 2bed1bath 3) Floor 2 duplexed-up to attic 3bed2bath.

Numbers:

Purchase price = $460k,

Monthly Income: Basement = Occupy, Unit 2 = 1400, Unit 3 =1900, Parking = 100; Total Monthly Income = 3400

Monthly Expenses: PITI = (2800), Others (vacancy, repairs, utilities) = (530); Total Monthly Expenses =

(3330)

Monthly Net Cash Flow = 74 (essentially break-even)

Property Details & Issues:

HVAC = None. The house has one shared gas bill with a steam-powered boiler providing heat through radiators in only floors 1 and 2, leaving the basement and attic floors with no heat. For electric, the house has two electrical meters (one for floor 1 + basement, one for floor 2 + attic). Currently the owners use space heaters for the attic and claim minimal space heaters are needed for the basement because the boiler located there provides enough heat from itself. During warm seasons, AC window units are used for all units.

Water Plumbing = There seems to be weak water pressure particularly in the attic floor when multiple drivers (toilet, shower, sink) are used at once. Pipes are generally galvanized in material.

Water Heater = There is only one 40 gallon tank in basement for the whole house.

Questions: I don't have money for too large of a rehab project. Therefore, I'm planning to minimize rehab costs and bring the property to rent as quickly as possible.

• 1) Since it’s impossible to separately meter radiators, and too costly to convert to forced air, I’m thinking of footing the gas bill and covering the cost through an upcharge of rent (these values are reflected in “numbers” portion above). Would tenants find this attractive? To counter the risk of tenants running the bill over my estimated average, is there a way to implement a sort of pay-for-extra comfort bill?

• 2) Currently there is one master thermostat for the radiators in the 2nd floor – is it an easy/cheap process to change that master to the basement where we will live? How would I manage controlling heat once I move out?

• 3) For electricity, I’d just have to split the meters between floor 1 and the basement. Is this easy to do?

• 4) For the water, I’ve been suggested by a plumber to install a booster pump to fix the pressure issue. Can anyone attest to the effectiveness of this addition? Also, would it be advisable to install a 2nd water heater or can I replace the 40 gallon with a 75 gallon?

• 5) Finally, this question isn’t related to the property, but the scalability of my future real estate portfolio. My partner and I currently have contracted to finance this property through a 5% down owner-occupy conventional loan. The restriction of concern is that you can't use this loan if you have any other properties under your name. With this property’s current numbers, my partner and I would BOTH have to put our names on the mortgage in order to qualify the debt-to-income ratio. Would it be advisable to skip this property to look for another one where only one of us would title the loan? This way, the other partner can leverage the same low money down program for a 2nd property relatively quickly thereafter? Multi-family properties are expensive in Chicago so future purchases through standard 20% down conventional loans would take me years of savings.

If you took the time to read through my wall of text, I want to thank you for your time and consideration! Any bit of advice/information would be greatly appreciated.

Thanks,

Elliott