Hi! New Investor considering section 8.

New to Real Estate · Member since 2019 · 9 posts · 0 votes

Hi, I've been living in the Chicagoland Area for 4 years now and am considering investing here. Currently living in Bridgeport and was trying to find a multifamily to house hack, but most seem to be too expensive with the property tax here. I was also looking into renting in Section 8 because there are some potential units in East Side, Chicago and both Bridgeport and East Side are considered "mobility areas" for section 8 which has added benefits for Section 8 landlords.

I'd like to network with others in the area and learn about any experiences you guys have had with investing in Chicago and learn more about Section 8. I look forward to learning and hearing from all of you!

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Jake FugmanBusiness Member

Real Estate Broker · Chicago, IL · Member since 2016 · 256 posts · 250 votes

@Edward Pang Welcome to the investor pool! House hacking is a great way to leverage low cash down, but like you have discovered the buildings in B+ areas like Bridgeport are pricey and make cash flowing tough. IF you are willing to live a bit outside of Bridgeport but still on SW side in decent mobility areas - I would recommend considering Cicero or Berwyn for a house hack where the #s can work well.

Section 8 is potentially great for cash flow from day 1 but you will need to put 20-25% down on pure investment properties with most loan packages. If that's not an issue I would say that the most important part of building wealth with section 8 isn't necessarily finding the deals, but more so finding a great property manager. Feel free to PM for a connection.

Good luck!

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Jake FugmanBusiness Member
Real Estate Broker · Chicago, IL · Member since 2016 · 256 posts · 250 votes
7y
@Edward Pang Welcome to the investor pool! House hacking is a great way to leverage low cash down, but like you have discovered the buildings in B+ areas like Bridgeport are pricey and make cash flowing tough. IF you are willing to live a bit outside of Bridgeport but still on SW side in decent mobility areas - I would recommend considering Cicero or Berwyn for a house hack where the #s can work well.
Section 8 is potentially great for cash flow from day 1 but you will need to put 20-25% down on pure investment properties with most loan packages. If that's not an issue I would say that the most important part of building wealth with section 8 isn't necessarily finding the deals, but more so finding a great property manager. Feel free to PM for a connection.
Good luck!
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Rj D.
Investor · Chicago, IL · Member since 2017 · 79 posts · 62 votes
7y
Hey @Edward Pang, I house hack in Bronzeville and love it. I also have a 6 unit in Washington Park with 3 section 8 tenants. So far everything has worked out very well! I'm also a broker and have put some friends into great homes with section 8 tenants. As long as you have the right tenant and can handle the necessary paperwork and hoops you have to jump through for section 8 you will be just fine.
My finance and I currently manage our own properties and it so far so good. As long as you are putting yourself in a good situation from the beginning, there are less obstacles on the back end. What I mean by that is buying right, vetting your tenants correctly, not ignoring repairs and/or initial capital expenditures, and setting up correct systems and boundaries with your tenants.
Good luck!
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Edward Pang
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New to Real Estate · Member since 2019 · 9 posts · 0 votes
7y
@Rj D. That's great! How do you vet your section 8 tenants? What kind of tenants are they usually? Families or just individuals? Do you do section 8 through CHA and was it difficult to get your properties certified for Section 8?
If you don't mind me asking, what were the numbers like for your house hack and your 6 unit? I'm trying to get a good idea of what to look for.
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Joseph Konney
Real Estate Agent · Forest Park, IL · Member since 2014 · 255 posts · 141 votes
7y
Hi @Edward Pang -
What to look for also depends in your risk-reward preference. Are you investing for cash flow, appreciation, or a blend? Personally, if I don't cash flow with 25% down, I'm not interested. A few months ago I purchased a 6-unit on the west side of Chicago for $215k (with 5K seller contribution to closing costs) grossing around $57k per year. I made some tweaks and if fully rented (which I am now) I will gross $67,800. You won't find those numbers in Berwyn or Cicero which are, in my opinion, B class neighborhoods. In any particlar area, 5+ multifamily will almost always have better numbers than 1-4 units.
I have 22 units I rent out, mostly in Chicago, with all cash paying tenants. If you have the time and patience for compliance, inspections, re-inspections, and paperwork, section 8 may be a good option for you.
Keep in mind that if you below what the county assessor office values the property at, you can appeal the taxes and have them reduced with ease.
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Edward Pang
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New to Real Estate · Member since 2019 · 9 posts · 0 votes
7y
Originally posted by @Joseph Konney:
Hi @Edward Pang -
What to look for also depends in your risk-reward preference. Are you investing for cash flow, appreciation, or a blend? Personally, if I don't cash flow with 25% down, I'm not interested. A few months ago I purchased a 6-unit on the west side of Chicago for $215k (with 5K seller contribution to closing costs) grossing around $57k per year. I made some tweaks and if fully rented (which I am now) I will gross $67,800. You won't find those numbers in Berwyn or Cicero which are, in my opinion, B class neighborhoods. In any particlar area, 5+ multifamily will almost always have better numbers than 1-4 units.
I have 22 units I rent out, mostly in Chicago, with all cash paying tenants. If you have the time and patience for compliance, inspections, re-inspections, and paperwork, section 8 may be a good option for you.
Keep in mind that if you below what the county assessor office values the property at, you can appeal the taxes and have them reduced with ease.

I'm personally most interested in something that will cash flow. I was hoping to find something that would cash flow for less than 20% down but that seems hard to find and the ones that do I don't personally want to live there to house hack haha.

If you consider Cicero B class does that mean you're looking in C class neighborhoods for these investments? And I was looking into East Side, Chicago neighborhood as section 8 considers it a "mobility area" and gives additional incentives for landlords. Do you have any experience getting certified for section 8?
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Steven Lowe
Real Estate Agent · Scottsdale, AZ · Member since 2019 · 448 posts · 320 votes
7y
Hi Edward,
Being a Section 8 landlord in Chicago is uniquely challenging, particularly in regards to the level of the improvements needed for the property to pass inspection. One of my investors has several Section 8 properties in Chicago and he's shared a few horror stories with me about it. I recommend you do a lot of research before jumping in. Talk to people locally who own Section 8 buildings and get some honest feedback. Good luck!
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John Warren
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
7y
@Edward Pang you should connect with @Ronan M. He specializes in that area and can help you figure out the best spots to house hack. I would recommend being very patient and focusing on the best neighborhoods you can afford. D class neighborhoods will look good on paper, but will horrible in real life. Stick to your B and C neighborhoods.
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Edward Pang
OP
New to Real Estate · Member since 2019 · 9 posts · 0 votes
7y
Originally posted by @Steven Lowe:
Hi Edward,
Being a Section 8 landlord in Chicago is uniquely challenging, particularly in regards to the level of the improvements needed for the property to pass inspection. One of my investors has several Section 8 properties in Chicago and he's shared a few horror stories with me about it. I recommend you do a lot of research before jumping in. Talk to people locally who own Section 8 buildings and get some honest feedback. Good luck!

I see. Would you be able to connect me with an investor that has experience with that? Thank you.

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Edward Pang
OP
New to Real Estate · Member since 2019 · 9 posts · 0 votes
7y
Originally posted by @John Warren:
@Edward Pang you should connect with @Ronan M. He specializes in that area and can help you figure out the best spots to house hack. I would recommend being very patient and focusing on the best neighborhoods you can afford. D class neighborhoods will look good on paper, but will horrible in real life. Stick to your B and C neighborhoods.

Thank you! I will follow up with that. Yeah I'm more looking to house hack in Bridgeport/Canaryville and maybe do the Section 8 as a investment property. Appreciate the advice!

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