House Hacking: Looking to do this for first time, any feedback?

1 Reply | Chicago, Illinois

Hello Chicago BPers! I'm a newer investor and got started all thru the power of the BP Forums about 1year ago. I'm currently looking to do my 2nd Multi-Family deal, this time in Chicago where I would "house hack" by putting down 5% on a 3 or 4 unit building (looking like 3 unit is most realistic). Any advice or war stories to share with me? All feedback and comments are welcomed.

Background:

I own my primary residence 1br/1ba in WLoop and would be looking to move out/rent it for 1yr to move into the new 3/4unit building. After year 1, I envision moving back into my WLoop so I can rent out the unit I was living in at the 3/4unit which allows me to secure a low-Interest Rate and a small down payment (5%) to get started on the new property. The numbers the first few years don't cash flow that well (damn PMI) so I'm currently letting that soak in and trying to model out what numbers make sense.

I also bought my first 2 unit property out in the West suburbs so have about 1.5yrs of experience as a "removed" landlord (property is about 45mins away from downtown). I'm happy to report it's currently a success from a cash flow perspective!

@Roderick McCleary - the 5% down program changes in 5 days, making it no longer available on the north side of Chicago. So unless you go under contract before the 28th you will need to do FHA or find an alternative



FREDDIE MAC HOME POSSIBLE® BORROWER INCOME LIMITS

Our Freddie Mac Home Possible® offering serves low- and moderate-income Borrowers looking for low down payment options with flexible sources of funds.

Currently, for all Home Possible Mortgages, with the exception of those secured by Mortgaged Premises located in a low-income census tract, the Borrower's qualifying income converted to an annual basis must not exceed 100% of the area median income (AMI). For Mortgaged Premises located in a low-income census tract which is defined as an area where the AMI is at or below 80%, Freddie Mac currently has no income limit.

We are updating our requirements to state that the Borrower’s qualifying income, converted to an annual basis, must not exceed 80% of the AMI for the location of the Mortgaged Premises. This change will apply to all Home Possible Mortgages, including those secured by properties in low-income census tracts.

This change will sharpen our focus on serving very low- and low-income Borrowers and First-Time Homebuyers. At the same time, the changes will help us better manage to the overall market environment, regulatory requirements and the interest of taxpayers.

We plan to update Loan Product Advisor® and the Home Possible Income & Property Eligibility tool on July 28, 2019, to reflect the updated Borrower income limits (80% of the AMI), as well as the 2019 AMI limits.

For Manually Underwritten Mortgages, the updated Borrower income limits and the 2019 AMI limits will be effective for Mortgages with Application Received Dates on and after July 28, 2019.

Freddie Mac remains committed to our mission, supporting housing markets with an array of products that provide low down payment options and other flexibilities designed to meet the needs of Borrowers.

The Guide will be updated with our July Selling Bulletin to reflect both updated Home Possible Borrower income limits and the 2019 AMI limits. We will also inform Sellers if there are any changes to the effective date in the July Bulletin.