Looking to House Hack in Chicago for the first time

Chicago, Illinois
House Hacking
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Looking to House Hack in Chicago for the first time

Sebastian Nadal
Member since 2024 · 12 posts · 11 votes

So, earlier this year I bought a 2 bedroom / 2 bathroom condo in Chicago. This was my first time ever buying property. The condo is in Rogers Park. I'll admit, I might've bitten a little more than I could chew, but I got anxious and I just wanted to have my first property in the city that was up north. 

I've been able to afford my payments so far without much issue. My principal/interest, escrow, and insurance is 1570, and my HOA is 306 and it includes water. I cannot fully rent out my place as it has not been 2 years since I started, but I can rent out a room.

After looking around rent prices, I have reached at $900. I think that is a fair price and that will help me with my breathing room and hopefully help pay off my place faster, or at least so I can reach 20% equity so I can stop paying $110 a month in PMI haha.

I'm obviously going to be checking credit score, making sure tenant has a stable income, no criminal background, etc. But since I'm young (24) and really new to this, I want to make sure I'm not missing anything glaring. Anyone have any suggestion for me? Thank you.

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Victor SoBusiness Member
Real Estate Agent · Chicago, IL · Member since 2017 · 324 posts · 192 votes
1y

Hey @Sebastian Nadal ! You’ve got the right idea! For now, it Looks like your roommate/tenant can cover half of your mortgage (plus hoa fees). Definitely screen properly and don’t cut corners! Are you planning to rent the entire unit at the 2nd year mark? My only concern would be whether or not, you’d be able to cash flow. If you’re not able to, then it may be better to sell the condo, take the profit (if you have some equity in the condo) and put it into a multi-unit to househack again. Note - if you live in your property for 2 years out of the last 5, then you don’t pay taxes on the profit. 

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  • Victor SoBusiness Member
    Real Estate Agent · Chicago, IL · Member since 2017 · 324 posts · 192 votes
    1y

    Hey @Sebastian Nadal ! You’ve got the right idea! For now, it Looks like your roommate/tenant can cover half of your mortgage (plus hoa fees). Definitely screen properly and don’t cut corners! Are you planning to rent the entire unit at the 2nd year mark? My only concern would be whether or not, you’d be able to cash flow. If you’re not able to, then it may be better to sell the condo, take the profit (if you have some equity in the condo) and put it into a multi-unit to househack again. Note - if you live in your property for 2 years out of the last 5, then you don’t pay taxes on the profit. 

    Victor So Real Estate LLC517 Reviews
    WebsiteView Page
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  • Sebastian Nadal
    OP
    Member since 2024 · 12 posts · 11 votes
    1y
    Quote from @Victor So:

    Hey @Sebastian Nadal ! You’ve got the right idea! For now, it Looks like your roommate/tenant can cover half of your mortgage (plus hoa fees). Definitely screen properly and don’t cut corners! Are you planning to rent the entire unit at the 2nd year mark? My only concern would be whether or not, you’d be able to cash flow. If you’re not able to, then it may be better to sell the condo, take the profit (if you have some equity in the condo) and put it into a multi-unit to househack again. Note - if you live in your property for 2 years out of the last 5, then you don’t pay taxes on the profit. 

     I do plan to rent the entire unit at the 2nd year mark. I probably plan to go back home with my mom so I can save faster. Ideally I wanted to live in Lake View as that's my dream neighborhood, but I just didn't have the funds/income. I also wasn't aware of househacking really, not sure if I can do it in that neighborhood, but I'll do my research.

    As for making a cash flow, looks like it'll be a slim profit? 1876 for the mortgage and HOA, and it looks like rent in that neighborhood is around 2-2.2k. I know that's not a huge cash flow, and any repairs could make me break even. But that's not too bad for me. I like my place and I feel rent will go up in this area as this is considered one of the few affordable neighborhoods up north. Plus Loyola with all its new construction. Once I reach 20% equity I'll request to remove PMI so that would free up $110 a month.

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  • Jennie Berger
    Lender · Chicago IL · Member since 2020 · 357 posts · 227 votes
    1y

    @Sebastian Nadal Congratulations on your first purchase and how exciting that you want to start house hacking!

    As someone who did something very similar to this for the last 2 years - rented out my 2nd private bedroom and bathroom in my apartment (rental) furnished to traveling professionals and medical students - I think it's a great idea! 

    I'm in South Loop near the Loop, lake, Grant Park, CTA, and a variety of hospitals / schools, so renting out the room on a mid-term basis (32+ days) for a premium was the best strategy for me. Since you're so close to Loyola and not too far from Northwestern, I imagine you might have a pool of people who need temporary furnished housing while they study, do a medical rotation, or travel in the medical industry. Have you considered this option as well? 

    The investment is a little bit more upfront since you'll have to furnish the room and bathroom fully, but you may be able to command a higher rent each month since you're covering all utilities, WIFI, and providing all the furnishings.

    Either way, renting out the room is a great idea and I'm sure it will be helpful so you can rest a little bit easier while you save to move to Lakeview, eventually :)

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  • Account Closed
    Member since 2021 · 22 posts · 3 votes
    1y

    Why do you have to wait 2 years to rent your property? The mortgage companies usually only require one year. The 2 year mark would save you on taxes, if you have a gain within 5 years, but it seems like you're in this for the long haul.

    Some advice for screening tenants. Zillow has an easy application for them to fill out. it come back with a credit score and background info. It can also create a lease for y'all to use. I would also verify income with a current paystub. 

    Best of luck to you! 

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  • Michael K GallagherBusiness Member
    Real Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
    1y

    Renting out a room is a great way to get started, and I wouldn't get too settled into the "going rate" use that almost as a floor.  if you are going to do things like include utilities, or have an off street parking spot, other amenities etc, there's no reason in my mind you couldn't "charge a premium" for a premium unit/service.  You also don't need to do a traditional long term strategy, is there a draw the  area that playing host to a traveling nurse or other professional/student would be interested?  Perhaps you could get $1250 for a room if the unit was furnished...just an idea.  

    Do you like to cook?  I'm sure people would pay extra for some kind of "meal prep/private chef" type package in their living situation.

    You've got the right idea thought, but don't be afraid to reach...nothing wrong with dropping your price after a couple weeks if you don't get any interest.  

    [email protected]614-362-2231
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  • DuBois Othero Toy
    Chicago · Member since 2019 · 38 posts · 14 votes
    1y

    I'm a house hacker too, message me if you want to connect 

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