Hi all,

I hope this an appropriate post for this forum--if not, I apologize. My grandmother passed away earlier this year, leaving her house in Chicago (Old Irving Park) for sale. The house has been in my family for over 60 years, so let me admit that this would be a 100% emotional purchase, which definitely goes against my normal financial sense. However, since I'm not a complete idiot, I wanted to see if those experienced in the rental market in Chicago could help me think this through. I'm not in the place to move right now, and the house is more expensive than I'm ready for (I wouldn't have 20% to put down) as a residential purchase.

What I want to know is this: If I purchase the house and convert it into a duplex (it originally was one and my grandparents made it one house, so this wouldn't be an absurd task), is it likely that rent would cover the mortgage? My goal would simply be to break even on the mortgage. I would hire a property management company to take care of everything and essentially allow me to purchase and "hold" the house without losing money until I'm ready to move back to Illinois and live in it. Here are some stats:

• estimated monthly mortgage payment after 5% down at 4.379% interest: $1604
• square footage: 1040 (not sure on the breakdown on upstairs and downstairs, but probably about even?)
  • downstairs would be 1 bedroom, 1 bath
  • upstairs would be a studio with a separate bathroom, walk-in closet, and small entryway room
• features I think are "pros" for potential tenants
  • front porch
  • fenced yard (with cement and grass)
  • walking distance from Blue line
  • parking (one car garage, space for a car on the cement part of the yard, and permit on the street)
  • basement and a bunch of storage space
  • central air conditioning
• features I see as cons
  • downstairs, the kitchen and bathroom are outdated (both are functional, but they look like a grandma's house, haha)

Sorry for being so long winded, but I wanted to give as much information as possible. Based on all of that, do you think the place sounds rent-able, based on your knowledge of the rental market? Between the upstairs and downstairs, would it be possible to cover the mortgage, or would this labor of love put me in the red?

Thank you in advance for your help!

@Elizabeth Pecora who owns the house now? Also you can’t put 5 percent down on a rental and not live in it. All non owner occupied loans are 15-25 percent down. Since is single family it would be 15 percent minimum.

@Caleb Heimsoth - My aunts and uncles now own the house and have it for sale. I wasn't aware that conventional loans only applied if you were living in the home. I guess that answers that, then. Thank you!

Find a local agent and tell them this story. Let them know you need a lease comp for the area. Without knowing what your market rents at we can't know whether or not the math works.

As far as I know, your biggest cons are easily replaced fixtures. If you're going to finance the conversion you might as well add a few thousand to upgrade the fridge and stove.

Is this something where your siblings and relatives could carry a note? Your share of the house (assuming there is no debt against it) would be your down payment.

@Elizabeth Pecora it's still a conventional loan. You're taking about owner occupied (5 percent down conventional, VA, USDA, FHA etc) and investment conventional loans, which are what this is to your lender since you won't be living there. These are minimum 15 percent down for single family and usually 25 percent down for multifamily (up to 4 units).

@Elizabeth Pecora - you can't just add a unit and rent it out.  Before considering any of this I would order the zoning certificate and see if it comes back as two units.  

Thank you, everyone! I see this is much more complicated than I originally thought, which is enough to dissuade me from wanting to pursue it further. I appreciate everyone's time and input!

It is OK to make an emotional purchase. It is another to deal with the roller coaster of emotions that arise from tenant abuse.

If you are going to make this a rental property be prepared to say good bye to all of the little details that make this house an emotional treasure trove.

The tree that you planted as a child will soon have a tire swing hanging from it and the ground underneath will be barren. Those quaint stained glass windows in the living room, It may be time to remove and frame them for use in your personal residence.

That shelf grandfather built will soon be overloaded and collapsing with who knows what. Everything that is quaint and lovely will become a potential weapon against you.

Can you separate the emotions of the past from the duties of the present? If not, here is my advice: Time to consider if you should Buy, Fix, Flip and Walk. Would that make you a profit to build other memories with? If so do that and then buy the one across the street that you are not emotionally attached to.

If it's been in the family for over 60 years, why do you have to buy it? Old Irving Park will get pretty high rents, but probably best to let them sell it and split the proceeds. Families never agree on what to do with inherited property.