All Forum Posts by: Henry Lazerow

@john warren did you say there was a way you got the home possible to work in another post? Or meant the FHA 5 down?

We should talk to some large mortgage banks and try to come up with a new program. It's a unique situation in that the average Chicago house hacker has great credit and strong income but likes to put as little as possible down. Maybe people should just start putting more money down, doing 20% down conventional gets you awesome rates right now. 

Ways to do it now low down....

I have gotten the last two pre-approvals OK'd for 4 units by making them FHA 203K this allows appraiser to expect top of market rents. We were only going to do like $10-20k of "rehab" basically just to get a pass on self sufficiency test. 3.5% down.

Legal 2 units + an illegal 3rd. This always will enable FHA to work and buy 3.5% down.

I have a lender in California who will do 10% down at around 5% interest rate. Closed a Logan Square 4 unit with him and it all went smooth. It's on an ARM but not a balloon so overall a really great product. He only does higher credit/income clients though.

A bunch of local mortgage brokers could do 10% I have no idea what the program was but rates higher. As long as still cashflows or you plan to refinance after rehabbing who cares about rate. I just look at deals as Cash on Cash % so don't really care about interest and most people are going to refinance these things at some point anyways.

Local west suburbs bank - They can do 15% with rehab costs wrapped in loan. Higher rate and one point but an awesome program if buying our 2-4 units non owner occupant.

Welcome! REIA events are great. There are also good Meetups at Dino's Pizza out west and Sully's House in Old Town.

For cash flow in Chicago you got to make it. Find deals with under market rents you can raise, do some updates, etc. You can also force a lot of equity increase once you raise rents with our properties. 

Shop around lots of mortgage brokers can set you up on a 10% down. Rates bit higher but still good option. There are also a few tricks to get a second FHA. For HELOC feel free to message me I know a good company that can probably still do it and at a high LTV.

I refer my investor clients to Landon Hoon and used him for my personal house hack. He is great. PM me for his email.

A 1br or studio will be extremely easy to rent out in any of those locations (as long as priced to market) those are all prime areas. Also check out East Lincoln Park there are several older condo buildings largely owned by investors that are all 1br's and studios. I actually almost bought a studio in one a while back. 

Overall with condos be careful of the association rules. I always recommend buying a multi unit if you can afford it instead. 

1) The underwriter is going to make you say you will live in a legal unit and a legal unit needs to have their lease ending or be on a month to month. When you get initial loan or do a refinance you will sign a sheet saying will live in a legal unit for 12 months after those 12 months you can live in whichever unit or move. 

2) They typically just want stove removed. I've only had to cap it for a deal once. Never had to remove a kitchen.

….and then you need a new roof or a furnace and it wipes out years of cashflow. You need a manager a good one charges $100 a unit minimum. These deals end up being zero cashflow unless you self manage and fix it all yourself. They look good on paper and occasionally a sucker from San Francisco buys one lol 

It really depends what you consider cashflow. Theres lots on BP who consider mortgage/taxes minus gross rents their cashflow. This way of analysis makes high crime junk markets look profitable but ignores the high cap/ex/vacancy/management/etc. Interesting topic none the less. 

Stefan, welcome also be sure to check out the Chicago specific sub group on biggerpockets. Logan and Humboldt are awesome markets seeing a ton of growth. 3 and 4 units will have better returns then 2 units. For house hacking you can find deals that work it may take a bit of searching but they are out there often times it's with you raising old mom and pop landlord rents up to market and also doing some updates. Avondale is good too and been doing a lot in Albany Park lately.