Chicago House Hacking

[Ethan Tramel]

Hello, does anyone have any experience with house hacking in Chicago? I will be graduating college in May 2025 and would like to work/live in the city. I am considering buying a 2 bedroom condo near the loop and renting out the other bedroom. Would it still be worth it if I'm still having to pay around $1,500 a month to live there? Is house-hacking a condo in Chicago a feasible option to begin with? I'd love for any opinions and feedback!

[Connor O'Brien]

with an 1880s wood building (age of many 2 flat buildings) it’s not if you have rotted wood but where. for me it was a constant battle caulking/replacing windows spraying insulation to keep cold air out and conducting yearly termite inspections. you might still have some of these issues with brick buildings but you have more time (fix it this year as a opposed to right now) 

@Mark Ainley curious if you have any other anecdotal reasons why brick is better than wood- i know i’ve heard this come up on the podcast numerous times

[Ko Kashiwagi]

Hi Ethan,

If the $1,500 is lower than the rent you would have paid without house-hacking, it's worth considering. Generally you want to be closer to break even if you are in negative cash flow, but if you have good income this could still make sense.

It's also really important to make sure what you are getting into when it comes to condos. As an owner of 1 unit, you have a lot less control and extra fees like HOA fees. Warrantability of properties is also another issue many investors don't consider.

[Connor O'Brien]

why not buy a 2 flat? chicago has some of the best small multi unit stock in the country. I suggest buying a brick building if you go that route- was in a similar situation in 2018 and bought a wood building but wish i had gone with brick

straight up chicago real estate investor podcast is a great way to learn what others are doing all over the city

[Jonathan Klemm]

Hi @Ethan Tramel - I have experience with house hacking in Chicago.  I have done it several times now and have also tried long-term rentals vs. short-term rentals as I've house hacked.

My response to your question may differ from others, but my advice would be to pull the trigger on the condo if:

1.  It's the area you want to be living in (and love it)

2.  You are paying less overall than you would if you rented in the same area without buying

Generally speaking, I think getting started and getting some experience under your belt is the most important thing you can do.

[Derek Brickley]

Although not househacking in Chicago, I think the principal is similar.  If what you pay to live there is equivalent to or less than what you would be renting for, it is definitely a win.  Work on narrowing down an area and strategy in the meantime too that can maximize your investment.  Getting out of college, one benefit is you can close on your househack before you start your job.  All you would need is a full-time offer letter.

[Mike Scaccia]

@Ethan Tramel Welcome to the forums man! Congrats on the finishing up of your education and journey into real estate investing. As many of these othre great moderators have pointed out, house hacking is an incredible tool to leverage when starting out in real estate.

House hacking a condo, with a buddy is always a solid option. If the mortgage on the condo costs you $2750 and you can get half that from a roommate, you guys have the ability to stay somewhere you actually desire, and you're only footing half the bill but getting all the benefits. Principal paydown, equity, appreciation etc. I think there is greater value in more doors though, so findings something like a 2-4 unit property, where you will live in one unit and rent out the remaining units likely would allow you to live cheaper as their is more opportunity to increase cash flow. As someone above had mentioned you have to be weary of the HOA in any given building and what the implications are for you renting out that condo or short term (Air Bnb) when you decide to move out, pending you didn't want to sell!

I am a local lender and investor myself here in Chicago. Myself and my team work with tons of investors and first time buyer/hackers to get them on the right path and ensure you're properly educated on all the FACTS to make certain you will be a successful homeowner! I shot you a message to connect. Feel free to PM/DM me if you wanted to connect further! Thanks!

[Ryan Thomson]

@Ethan Tramel

I can't give advice for Chicago as I am located in Colorado Springs, but House Hacking is amazing. Here are some resources I found really helpful on my journey:

1. For podcasts I really like the House Hacking episodes on Bigger Pockets Podcast and other channels. Here is a playlist with the best House Hacking Podcasts I’ve found: https://open.spotify.com/playlist/4A6uLsPfdWEMmJhG4TSjyb?si=743bb403548f47fb

2. Great beginners guide: https://www.biggerpockets.com/blog/wp-content/uploads/2022/08/Ultimate_Beginners_Guide_BiggerPockets.pdf

3. The Book on House Hacking Strategies by Bigger Pockets is also a fantastic book

4. Happy to talk if you want more advice

5. Connect with a realtor who understands house hacking and has invested themselves

6. Connect with a lender to see what you qualify for and how you can improve that situation

7. Go to local Real Estate meetups and learn from people there

[Ryan Thomson]

@Ethan Tramel

Depending on what you would pay to rent somewhere else I would say it might be worth it. 

House hacking is tough to break even with in year one (with current house price run-ups and interest rates) for a couple reasons:

1. You are living in one of the rentable units

2. You are only putting 5% down so your loan amount is much larger and therefore your mortgage payment.

I would consider your net worth ROI. What I mean by this is considering how much your down payment returns to your net worth (appreciation, loan paydown, tax benefits, AND rent avoidance). Don't forget to include rent avoidance in your numbers! You have to live somewhere.

You may need to lower your return or cashflow expectations so you can get into a house hack that will allow you to avoid throwing rent money away every month. You know this, but don't forget all the other ways real estate makes you money. Paying down your mortgage and owning an asset that will appreciate over the long term.

[Victor So]

Quote from @Ethan Tramel:

Hello, does anyone have any experience with house hacking in Chicago? I will be graduating college in May 2025 and would like to work/live in the city. I am considering buying a 2 bedroom condo near the loop and renting out the other bedroom. Would it still be worth it if I'm still having to pay around $1,500 a month to live there? Is house-hacking a condo in Chicago a feasible option to begin with? I'd love for any opinions and feedback!

Hey Ethan! I’ve done a handful of house hacks for the passed 7 or so years on the northside of Chicago. Whether or not househacking would be “worth it” depends on your criteria. For me, $1500 a month to live in the city would be awesome. However, keep in mind, if you were to househack a condo, that you may be restricted by the HOA to execute certain things like renovations and there may be rental restrictions as well. Also, they could raise HOA fees and hit you with special assessments at any time. The lack of “control” turns off some investors. If you’re willing to look a little outside of the city, you can find some great 2-4 unit multi unit options that you could get into with only 5% down. You could use a mix of short-term, mid-term, and long-term options as well as rent by room strategies to cash flow a little better. If you want to have a conversation, DM me, and I’d love to fill you in on some of the things I did! Hope this helps! 

[Jeremy Jareckyj]

Quote from @Connor O'Brien:

why not buy a 2 flat? chicago has some of the best small multi unit stock in the country. I suggest buying a brick building if you go that route- was in a similar situation in 2018 and bought a wood building but wish i had gone with brick

straight up chicago real estate investor podcast is a great way to learn what others are doing all over the city

 Totally agree with Connor here. 2 and 3 flats in chicago are great options. A higher potential to earn more rental income

[Paul De Luca]

Quote from @Ethan Tramel:

Hello, does anyone have any experience with house hacking in Chicago? I will be graduating college in May 2025 and would like to work/live in the city. I am considering buying a 2 bedroom condo near the loop and renting out the other bedroom. Would it still be worth it if I'm still having to pay around $1,500 a month to live there? Is house-hacking a condo in Chicago a feasible option to begin with? I'd love for any opinions and feedback!

Yes, I've house hacked in Berwyn and Chicago for the past four years. If you're going to house hack, I recommend buying a 2-4 unit. Personally I don't like the idea of an HOA having control over my investments. Whether it's worth it if you're still having to pay $1500/mo to live there after renting out the other bedroom is entirely up to you & depends on your finances and lifestyle expectations.

[Jack Matthias]

Hi Ethan,

As someone who's graduated in the last 2 years, this is a great idea! One thing to consider if house hacking this way versus say a 2 unit building. Is you would have to qualify yourself carrying the whole mortgage, as if you did a 2 unit building we can count 75% of the rental income to help you qualify. Either way is a win for you, but also a key thing to consider when looking at different price points and such. I'd love to stay in contact with you and help you through the financing process when the time comes.

[Aaron Hurley]

Quote from @Connor O'Brien:

why not buy a 2 flat? chicago has some of the best small multi unit stock in the country. I suggest buying a brick building if you go that route- was in a similar situation in 2018 and bought a wood building but wish i had gone with brick

@Connor O'Brien Could you elaborate on why you prefer brick to wood? Were there particular surprises or maintenance costs? I'm new to Chicago real estate :)@Connor O'Brien

[Martin M.]

@Ethan Tramel

Sounds like you're hoping to combine two things... where you want to live... with wanting to make a few bucks through a house hack.

A couple of random things to consider...

The loop is very office ish (if that's a word). Walk around there on a weekend if you haven't done that already to see if you think it's for you. The lakefront nearby is really nice of course.

A lot of recent college grads prefer areas like Lakeview, Lincoln Park and Old Town... but condo prices will also be much higher there than in the Loop.

If you're hoping to rent the condo out after you move out of it... this is limited or pretty much prohibited with many HOAs downtown.

When you go to sell, selling a downtown condo is possible of course but takes longer because it appeals to a smaller buyer pool than most other types of residential real estate.

Here's some good news though.... condos are generally so much simpler and cheaper than SFHs to house hack because they're smaller. (But you'd likely be limited by HOA - as far as which days and hours you can make noise in it remodeling)

If you do stick with the plan for buying in the Loop, and have access to cash, whether yours or you borrow.... family, hard money lender etc...

I'd look on the 'Judicial Sales Corporation' website. They auction properties for Cook County. I've seen a handful of Loop condos on there in the last year or so. A lot of investors steer clear because of HOAs and the potential long hold when trying to sell.

From what I've seen you won't see much in those other areas mentioned by a few downtown ones do pop up.

Good luck!

[Connor O'Brien]

with an 1880s wood building (age of many 2 flat buildings) it’s not if you have rotted wood but where. for me it was a constant battle caulking/replacing windows spraying insulation to keep cold air out and conducting yearly termite inspections. you might still have some of these issues with brick buildings but you have more time (fix it this year as a opposed to right now) 

@Mark Ainley curious if you have any other anecdotal reasons why brick is better than wood- i know i’ve heard this come up on the podcast numerous times

[Mark Ainley]

@Connor O'Brien 

1. Will appraise higher then frame

2. Better Aesthetics

3. Insurance premium is supposed to be less because risk of total loss is lower

4. Big bad wolf aint got S#@* on you!

5. Will last longer

6. If you control your water drainage from roof and reduce risk of tuckpointing the upkeep will be less so should be more cost effective

[Connor O'Brien]

@Mark Ainley episode 278 was iconic! thanks for all the work you have put into the podcast

my number one piece of advice for every new investor in chicago would be go check out “straight up chicago investor” podcast. the last episode is a deep dive into the struggles David Greene has had with his portfolio in the last couple years and Mark and Toms podcast is the first place i’ve heard this story. Reminds you as an investor how close you really are to the bottom! 

[Jonathan Klemm]

Hey @Connor O'Brien - Completely agree on Straight up Chicago investor podcast - so many gold nuggets.

I am not sure I quite understand your last sentence about being close to the bottom....can you explain?  Bottom of what?