Guidance Needed - Want to Purchase 1st House Hack Mid Next Year!

Chicago, Illinois
House Hacking
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Guidance Needed - Want to Purchase 1st House Hack Mid Next Year!

Jared B.
Member since 2020 · 6 posts · 3 votes

Hello everyone!

As a recent college graduate, my goal is to purchase my first rental property, a duplex, before I get married. I am looking to house hack with an FHA loan 3.5% down and am looking to buy mid next year.

I need advice on educating myself thoroughly (I have a few books, found BP podcast, YouTube videos, etc.), what methods/how to analyze properties for the numbers/profitability, what people to connect with (realtor, contractor, etc.), getting set with finances, even though I’d get married late next year, the timelines for everything, and the whole process overall. 

I am very much in the process of saving (with goal of $18k-$20k), and will buy in the southeastern Wisconsin area. 

I will probably house hack 2-3 times before living in our own home, and keep purchasing multi-families every year to build toward financial freedom.

I’d appreciate any advice and guidance, as this is how I want to start my real estate investing journey!! Thanks! 

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Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
1y

In a perfect scenario you'd buy using FHA for the 3.5% down.

Also, look at the FHA 203(k) which allows rehab funds to be included in the mortgage:)

After you've renovated the property and added value, you'd want to refinance out of the FHA into a standard FNMA loan, so you can re-use the FHA loan for the next property.

The challenge is both FHA & FNMA require you to live in the property for the first 12 months of the LOAN before renting out the property. So, this will extend the amount of time you need to live in the property.
FYI - DSCR loans can be used on the refinance to pay off the FHA loan, but they have higher interest rates, fees and prepayment penalties.

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  • Aaron ZimmermanBusiness Member
    Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
    1y

    Welcome Jared! You're on the right path with house hacking. Although I don't know of any meetups, I'd recommend getting connected with local investors and getting to build out your team. By assembling your team in advance, you'll be a lot more prepared for this property and future properties. The Midwest is a great place to invest with room for cash flow and appreciation!

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  • Jakob Mikhitarian
    Member since 2025 · 86 posts · 25 votes
    1y

    @Jared B. You're thinking the right things. Getting into a property after college--you'll have time on your side for the property to appreciate. I would definitely try and work with an investor focused agent in your area to gain the knowledge of investing. Using 3.5% fha is good. In terms of education, the best thing to do is to get into rooms with people who have done this before. Search any local real estate meetups in your area and attend!! Can't stress this enough! Keep listening to BP--there's a plethora amount of info there. This is an overall great plan and definitely the first step to financial freedom. 

    0Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    1y

    House hacking is a no-brainer financially. You can invest with very little money, learn the basics from working with contractors to landlording. The downside is that you have to live with neighbors, so it's really a great strategy before you have a family. Milwaukee has 66,000 duplxes, almost all of them in the City of Milwaukee. The issue is that they don't get sold very often - people tend to hang on to them. You can find more information about Milwaukee on YouTube. And much better to aim for 5% down conventional; sellers don't love the FHA inspections.

    0Reply
  • Kerlous TadresBusiness Member
    Realtor · Columbus, OH · Member since 2023 · 1k+ posts · 1k+ votes
    1y

    Hey @Jared B. I'd suggest continuing to dive into BiggerPockets, books, and YouTube, and check out local REI meetups for real-world advice. When analyzing properties, focus on cash flow and the numbers aim for positive cash flow per unit and use GRM, cap rate, and cash-on-cash return to analyze deals. Find a realtor who works with investors and contractors familiar with multi-family properties. They'll help you assess rehab costs and potential. FHA loans are great for house hacking with a minimal down payment, so get pre-approved early to streamline your buying process. As for long-term strategy, house hacking 2-3 times is a great plan. Keep the properties as rentals to build your portfolio for financial freedom.

    [email protected]614-490-1163
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  • Jack Matthias
    Lender · Chicago · Member since 2023 · 176 posts · 70 votes
    1y

    Hi Jared! Welcome to BP and wanting to get going with a househack. If looking at buying a 2 unit building with FHA you will be fine. But if you're wanting a 3-4 unit building your going to need to use Fannie Mae's 5% down product. As 3-4 units have to pass the FHA self sustainability test. Given where rates and prices currently are at no 3-4 units are passing this test therefore you have to go the conventional route. I'm local to Chicago and would be happy to talk financials whenever your ready.

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  • Terrence TerrellBusiness Member
    Lender · Chicago, IL · Member since 2015 · 35 posts · 8 votes
    1y

    Welcome, Jared!

    Buying owner occupied is definitely the highest and best use of your cash! Especially if you're able to move a few times while acquiring those properties. With the FHA loan, your minimum is 3.5% down for your first property. If purchasing in the SE Wisconsin area, you can find many properties that can pass the 3-4 unit self-sufficiency test for FHA financing. I have helped several clients in the Milwaukee area do just that! After the first, you can then purchase another multi with 5% down with conventional financing.

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  • Rebecca KnoxBusiness Member
    Specialist · Milwaukee, WI · Member since 2014 · 1k+ posts · 1k+ votes
    1y

    I am in southeast Wisconsin as well and I use Redfin and Zillow as soft guidelines for value.  If I were going to hire a buyer's agent, I'd make sure they were an active and successful investor themselves. Premier Point Realty and Homestead Realty are both owned by investors and most of their agents are investors. Also, many property management companies are either brokers/agents. I know Welcome Home Milwaukee and MKE Leasing does so in that case, you sort of really kill two birds with one stone since they not only are familiar with investment property but can give opinions on market rent, neighborhoods for your price point, repair estimates and value adds and even manage your other unit(s) if you want to remain discreet as far as being the owner. If you do buy with existing tenants, you might want to consider making sure they have been paying on time, have a formal WI Legal Blank lease and/or estoppel certificate completed so you know what type of tenant that you are inheriting. Good luck in your real estate investing journey. I talk to many investors in our area and I would say that the majority have paved financial freedom by house hacking. 

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  • Charles ClarkBusiness Member
    Real Estate Broker · Milwaukee, WI · Member since 2020 · 306 posts · 209 votes
    1y

    @Jared B.

    Congrats on setting such a clear goal! You're already on the right track with education and saving. I'd suggest networking with a local investor-friendly realtor, lender, and property manager early, and start running numbers on potential deals now using tools like BiggerPockets calculators. This will help you get comfortable analyzing cash flow and returns. Also, connect with local REI meetups in southeastern Wisconsin — those relationships can be game-changers. You've got a solid plan, just keep learning, saving, and networking, and you'll be ready when the right duplex comes along!

    [email protected]414-719-6090
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  • Karmine Cramer
    Real Estate Agent · WI · Member since 2024 · 25 posts · 14 votes
    1y

    Congrats Jared! 

    The first step is always starting. I'm based out of Racine Wisconsin (The best investment market in South Eastern Wisconsin for a budget concious investor IMO) 

    I'm a licsensed agent and fellow investor with a pretty similar goal of acquriing 3-4 multi-family properties before a single fmaily home and continuing a simple 1 purchase a year strategy. Not looking to get rich quick. But get rich for sure!

    I would love to connect and network. I can even share some details on local events and soon as August 23rd! 

    look forward to speaking,

    Karmine

    0Reply
  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    1y

    In a perfect scenario you'd buy using FHA for the 3.5% down.

    Also, look at the FHA 203(k) which allows rehab funds to be included in the mortgage:)

    After you've renovated the property and added value, you'd want to refinance out of the FHA into a standard FNMA loan, so you can re-use the FHA loan for the next property.

    The challenge is both FHA & FNMA require you to live in the property for the first 12 months of the LOAN before renting out the property. So, this will extend the amount of time you need to live in the property.
    FYI - DSCR loans can be used on the refinance to pay off the FHA loan, but they have higher interest rates, fees and prepayment penalties.

    Logical Property Management4.9454 Reviews
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    1Reply
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