House Hacking in Chicago, IL
Hey everyone!
Upon graduating college ( I am currently a sophomore), my goal is to immediately house hack. However, I am most likely going to be working in Chicago at a real estate company. How can I house hack in a market like Chicago? I don't want to live in a dangerous area and the property taxes in Chicago are insane!!!! Any ideas on what I should do here?
Quote from @Daniel Kaplan:First, look at entire tax burden, not just property taxes.
Hey everyone!
Upon graduating college ( I am currently a sophomore), my goal is to immediately house hack. However, I am most likely going to be working in Chicago at a real estate company. How can I house hack in a market like Chicago? I don't want to live in a dangerous area and the property taxes in Chicago are insane!!!! Any ideas on what I should do here?
Second, why must you be in Chicago itself? Try northern Indiana -- cheaper, better schools, lower taxes, short commute by train to Chicago.
Third, what do you know about Chicago if you are set on living in the city itself? Follow the Ls (all of them) and check out neighborhoods. I see a fair amount of potential in the southwest side, near Midway Airport
Fourth, what financial resources/burdens will you have?
@John Clark thank you so much for the response! I am from the suburbs of Chicago and have a great network there. I anticipate getting an internship in Chicago my junior year summer and then getting a return offer - hence why I'd end up in Chicago. Regarding financials, It will not be a problem as I have amassed a generous amount of money from my many ventures.
Quote from @Daniel Kaplan:How does any of that compel you to live in Chicago, or even Illinois?
I am from the suburbs of Chicago and have a great network there. I anticipate getting an internship in Chicago my junior year summer and then getting a return offer - hence why I'd end up in Chicago.
Quote from @Daniel Kaplan:
Hey everyone!
Upon graduating college ( I am currently a sophomore), my goal is to immediately house hack. However, I am most likely going to be working in Chicago at a real estate company. How can I house hack in a market like Chicago? I don't want to live in a dangerous area and the property taxes in Chicago are insane!!!! Any ideas on what I should do here?
Good for you on planning so far in advance! My advice would be to start building your savings now through working part time jobs and getting real estate related jobs/internships during the summer. Use these years before graduation to keep self-educating and then once you graduate secure a full-time job to maximize your income. Keep building your nest egg and use a low down payment loan to house hack somewhere in Chicago.
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@Daniel Kaplan nice job on being so far ahead in mindset. You are destined for success if you keep making decisions or you at least give your chance time to fail fast.
There are plenty of safe areas you can househack for less then you would rent but gone is the days of getting your payment covered. Ideally a good scenario is house hack a 2-4 flat and for the unit you are in have a roommate or two that covers $500-$1000 of your units expenses.
I will DM you our house hacking calculator.
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Property Manager IL (#471.003954)
- GC Realty & Development LLC
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@Daniel Kaplan - tons of people house hack in Chicago. I did it, I run a brokerage firm that works with investors and 95% of our clients house hack.
It really comes down to your expectations. I work from Pilsen to Jefferson Park to Evanston. I can tell you the days of living for free are long gone, unless you have roommates in your unit as well. Prices range from $600k-$800k for areas like Palmer Square, Avondale, Irving Park, Portage Park, Albany Park. Prices range from $800k-$1 million for areas like Wicker Park, Bucktown, Lincoln Park, Roscoe Village.
You will pay less than rent if you do at least 10% down, it is harder with FHA because of loan limits and the self sufficiency test. I have many clients that we have househacked 2-3 properties for
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Real Estate Agent Illinois (#471.018287) and Wisconsin (#57846-90)
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@Daniel Kaplan I love the vision! I can't speak to Chicago house hacking specifically, but I would recommend trying to find a real estate investor meetup group and network with people there. Look on Bigger Pockets, Facebook, Meetup.com and Eventbrite.
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Real Estate Agent Colorado (#100092341)
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@Daniel Kaplan congratulations on moving towards being an investor! I don't see any issue in house hacking in the Chicago market, and I don't personally think the taxes should be the main roadblock. I also think the market is big enough that most people can find what they are looking for. You normally have to find a balance between living on the lake front or living in a less desirable area. Somewhere in the middle is where most people land, and some people will chase more cashflow (with less desirable area) while others will chase quality of living at the expense of cash flow.
I disagree with some of the above posters that living for free is not possible in Chicago anymore. Its definitely more difficult and probably impossible in the popular and rapidly gentrifying areas though.
I'd say your best balanced area to look in general is the SW side of the city. Prices are high but they are less pricey than the north side or the south lakefront neighborhoods. They are relatively stable and there's also potential for growth. Bridgeport has high prices. Down archer there's McKinley park which has growth potential due to proximity to the orange line EL Station. There's also some redevelopment in planning stages in the former CMD district on pershing road. Those reasons and the demographic changes already occurring there lead me to be bullish on that area. With proximity to Chinatown and Bridgeport, the demographics of the neighborhood are changing.
https://mckinleypark.news/news...
Southwest of there you have Brighton Park which is a working class neighborhood with a stable tenant pool. There has also been some demographic change there to a smaller extent with some Hispanics moving out and Chinese moving in. Further southwest there's Archer heights which has a similar purchase price to brighton park and a stable tenant pool of working class families. The amount of house hackable 2-4 unit multifamilies drops off as you go SW of midway Airport.
In these neighborhoods you have the most likelihood to live for free in a relatively safe neighborhood by househacking. I bought two househacks in McKinley Park in 2021 and 2022 and after small cosmetic improvements, I live for free in the second property and bring in about $700 monthly cash flow from the first.My purchases were before the interest rates rose. I have found great renters in the neighborhood with good incomes and credit scores above 750.
Quote from @Daniel Kaplan:Hey! It looks like you’ve gotten a lot of quality responses to your questions but like what most people here eluded to, you most likely won’t be able to live for free househacking especially if you want a place on the northside of Chicago and north suburbs. However, you can significantly reduce your cost of living employing different strategies.
Hey everyone!
Upon graduating college ( I am currently a sophomore), my goal is to immediately house hack. However, I am most likely going to be working in Chicago at a real estate company. How can I house hack in a market like Chicago? I don't want to live in a dangerous area and the property taxes in Chicago are insane!!!! Any ideas on what I should do here?
6 years ago, When I first started, I had a duplex where I rented the 2nd unit and lived on the 1st. But this wasn’t quite covering my mortgage so I Airbnbed the extra rooms in my unit.
Right now, I Airbnb rooms in my basement which covers most of my mortgage. I’ve been househacking every year for the past 6 years and acquired ~10 units this way.
DM if you need some guidance on how to start.
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@Garfield M. hits the nail on the head. There are plenty of spots that make sense. We just helped a client house hack a three flat in Little Village.... he purchased it for 300k and leased his first unit out for $1440. All three units will bring in similar amounts of money. There are deals out there, but they are unlikely to be in the trendiest neighborhoods.
Most of our clients have had success by adding value as well, which few people talk about. If you want to house hack with an FHA loan and do literally nothing, then you are unlikely to live for free.
Quote from @Daniel Kaplan:
Hey everyone!
Upon graduating college ( I am currently a sophomore), my goal is to immediately house hack. However, I am most likely going to be working in Chicago at a real estate company. How can I house hack in a market like Chicago? I don't want to live in a dangerous area and the property taxes in Chicago are insane!!!! Any ideas on what I should do here?
Here's the wonderful thing about being your age. What's considered marginal today will be unaffordable a few years from now. So yes- you can house hack in Chicago. If I were you I'd explore some of the areas right on the edge of neighborhoods that have already gentrified and $ are starting to pour in. You have 2 years to do your homework to figure out which neighborhoods those are or- you can also explore neighborhoods that are already well established but you'll need to lower your expectations about cash flowing the properties.
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Real Estate Agent Illinois (#475. 112189)
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Another option if you wanted to get started sooner.
I wish I was thinking like you in College! Here is an interesting idea. Use your knowledge and drive to convince your parents (or other co-signer) to get a home near your college. Co-sign with them and put some money down with them if you can.
Buy it as YOUR primary residence with your parents as the co-signers. This would allow you and your parents to only have to put 3.5-5% down. Then you rent out the rooms to your college friends. This will probably allow you to live for free and your parents to avoid a dorm or expensive home payment while you are in college. Not to mention you can both cash in on appreciation and loan paydown.
If you really wanted to scale, you could do this each year. Rent out the last house to a new group and move with your friends to the next house. This is a great way to scale and you only have to put 5% down if its your primary residence each time.
You obviously need to convince your parents or (someone who would co-sign and help with the downpayment) about how good of an idea this is. But if they are savvy money people and they trust you (which I bet the do), then this seems very doable. Maybe give them part of the equity or a monthly fee until you refinance and get their co-signing off the loan.
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Real Estate Agent Colorado (#100092341)
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Hey @Daniel Kaplan - You can definitely start house hacking here in Chicago right away.
I'd right away get connected with an investor-friendly lender like @Andy Smith or @Zack Karp so you can get pre-approved. I tend to suggest looking for a two-unit so you don't have to meet the self-sufficiency list which is a challenge for most 3-4 units in the city.
After that, you've got some awesome real estate agents above......
I'd be looking in Hermosa, Belmont Cragin, or Portage Park.
Happy to connect and help out anyway I can.
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Contractor IL (#TGC116360)
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