International student trying to house hack in Hyde Park (!)

[Chaplin Huang]

Hello BP community,

I am an up-coming junior in University of Chicago and am looking to purchase my first rental property through house hacking in order to get in with a low down payment (also just to save money on renting for the next two years). I have been fascinated by this whole idea and really want to jump in (ofc! I will take my time and make a good decision). However, I do have a couple of questions, and any input form the community would be so so appreciated!

1. Seasonality of tenant’s demand outlook?

UChicago is mainly setting housing by year, so I am worried that if I purchase a place in between April and July it would be hard for me to find enough tenants (since students usually get their lease by May by my very limited experience). Does anyone have insight on that on what the demand will be starting summer?

2. International student (!) and loans

Yes, so I am an international student. I got so excited when I see the details of FHA loan, but the hype disappears when I realize that it's for U.S. citizens only. However, I am trying to look for other friendly loans. I was wondering if people have any recommendations for international student? Or even should I just find an American friend an co-sign?

3. Recommended Agent?

Last but not least, any recommended agents in hyde park?

P.S. I am currently preparing for required documents to see how much I can borrow based on my current amount of deposit.

Thanks!

[Ryan Thomson]

@Chaplin Huang 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.

[Ryan Thomson]

@Chaplin Huang I like @Paul De Luca in Chicago he helps a lot of house hackers there!

[Paul De Luca]

Thanks for the tag @Ryan Thomson!

@Chaplin Huang - I agree with Ryan's point about find a co-signer like your parents. Without a co-signer it's unlikely you'll qualify for a loan unless you're also working full-time while going to school. If you want to review your options with a lender, send me a PM.

Seasonality is a component in areas around colleges of course but since UChicago isn't an isolated stand alone college town I think it would have less of an affect. You still can draw from the wider Chicago tenant base and I doubt you would have issues finding the right tenants if you have the right rent amount & criteria. But depending on the exact location, the seasonality effect could be stronger.

[Jonathan Klemm]

Hey @Chaplin Huang - I think it's amazing that you are jumping into real estate while you are still in college -good for you!  The University of Chicago is a great school too btw......what are you studying?

1.  I wouldn't be overly concerned with seasonality......you get to set the lease and if it's one year that's what your tenants will need to pay.  Some students will sign the one-year lease and not even live there during the summer months as crazy as that sounds.

2.  I'd connect with @Andy Smith or @Michael Facchini to see if they have any loan programs that would work well for international students.  They are both local Chicago lenders that work with a ton of investors.

3.  I like @Paul De Luca, @Eudith Vacio, @Edgar Barbosa, @Michael J Scanlon, @Jake Fugman and the list can go on of awesome real estate agents on BP.

I love Hyde Park and you won't be disappointed long term if you invest there.  If you want to talk strategy or I can help out in any other way (maybe rehabs) feel free to reach out any time.

[Tanner Pile]

@Chaplin Huang 

@Ryan Thomson gave some great advice! One thing I would add is to get with a lender asap to see what they have to offer for you. A client of mine is also an international and he was delayed to purchasing because he does not have any credit history here in America. 

A Lender has told me it can take up to 2 years to get international borrowers enough credit history for a purchase. I'm not sure how accurate this is so asking these tyepes of questions with a lender will help clarify a purchase for you!

[Crystal Smith]

Quote from @Chaplin Huang:

Hello BP community,

I am an up-coming junior in University of Chicago and am looking to purchase my first rental property through house hacking in order to get in with a low down payment (also just to save money on renting for the next two years). I have been fascinated by this whole idea and really want to jump in (ofc! I will take my time and make a good decision). However, I do have a couple of questions, and any input form the community would be so so appreciated!

1. Seasonality of tenant’s demand outlook?

UChicago is mainly setting housing by year, so I am worried that if I purchase a place in between April and July it would be hard for me to find enough tenants (since students usually get their lease by May by my very limited experience). Does anyone have insight on that on what the demand will be starting summer?

2. International student (!) and loans

Yes, so I am an international student. I got so excited when I see the details of FHA loan, but the hype disappears when I realize that it's for U.S. citizens only. However, I am trying to look for other friendly loans. I was wondering if people have any recommendations for international student? Or even should I just find an American friend an co-sign?

3. Recommended Agent?

Last but not least, any recommended agents in hyde park?

P.S. I am currently preparing for required documents to see how much I can borrow based on my current amount of deposit.

Thanks!

 Regarding the Seasonality of Tenants- Lots of students attend summer school.  The demand may not be as high and you may have to reduce your lease price but you should still be able to lease the units or rooms.  Also in the summertime, there will be vacationers and high school students visiting from out of town.  You don't have to limit renting just to students

International loans- There are loan products for internationals such as the EB-5 Immigrant Investor program or a company like Tiger Loans. There are also private lenders and mortgage brokers that will work with internationals, but it will require much more cash than FHA. I'm not sure having a US person as a co-signer for you on an FHA loan will work. My recommendation is to research companies and mortgage brokers. While researching also see if you can find a partner or two that may have the cash required for a downpayment and to handle the closing costs. Don't be totally dependent on one strategy to fund the property.