All Forum Posts by: Jacob Lopez

I've said this a number of times before, house-hacking sounds good on paper but rarely pans out as people expect. Namely high prices compared to returns in multifamily and also high interest rates. The biggest thing that few people talk about is the ideal investment property and the ideal place to live rarely overlap. You will almost always sacrifice one for another. I would bet you could make house-hacking numbers work in an the absolute worst neighborhood in your city, but chances are you're not willing to live there. 

There are potential tax benefits associated with house hacking. Expenses related to managing and maintaining the property may be tax-deductible. 

House hacking provides flexibility in terms of lifestyle. It allows individuals to live in a desirable location, potentially in a larger or more expensive property than they could afford if not for the rental income.

Hey there @Jacob Lopez - Generally speaking, I think every real estate deal is a great deal, IF the numbers make sense for your situation.

Naturally, ALL real estate like the stock market goes up over TIME but different from stocks you don't only make money from appreciation but also cash flow, debt paydown, and tax benefits!

I think like @Paul De Luca pointed out...it's hard for us to speak to your specific deals if we don't know all of your numbers, your criteria, and your exact situation.

My opinion would be to go for it!  Because the key to getting ahead is getting started and there is nothing that will replace experience.  Just make sure you have the right Chicago team around.

You can't answer the question "is this a good investment?" without assessing the condition of the property and quantifying the projected return. Bellwood is a C class area, is close to 290, has a metra stop, and isn't far outside of Chicago. But the specific neighborhood also needs to be considered. 

What kind of return are you aiming for? What kind of tenants are you interested in having? How much cash do you have for a down payment, closing costs, and potential repairs? Does the property have city violations? These are all things to consider to decide if it's the right investment for you.

The property is priced on the lower end of the spectrum for a multi-unit.

@Jacob Lopez The price point sounds reasonable if in solid condition. Outside of Chicago city limits you need to watch out for the property taxes - which even in suburban Cook county can be 40-80% higher VS Chicago addresses. Make sure the current assessed value is w/in about 25% of actual market value or you will have to underwrite in a decent property tax bump w/in 1-3 yrs. Your agent should be able to help you run some current VS pro forma cashflow #s to make sure it meets your ROI expectations. The gross income is the largest "lever" you can pull so make sure its realistic/accurate.

Hey Jacob,

I am so glad to hear that you are looking to invest in real estate. House hacking is certainly the best way to get started with this. When looking at this deal, here are my initial thoughts and questions. 

When considering a house hack deal, you need good estimates and knowledge of what your are looking for your monthly payment to be, what that payment will be before deductions (gross rents), what your monthly deductions will be, and what your net rents will be. Unfortunately, in the year 2024, the once common 'live for free' model does not really exist. This is why its important to manage expectations and really know what your end goal is.

in the right area, appreciation can offset a monthly loss and some with enough time. This brings up again the factor of rehab, and elongated rehab over many years. If you put enough work into a property and have spent 5-10 years there to gain some appreciation, you may be in a position where you could refinance and gain equity on your refinance. You can then keep this property with the equity you have now gained, or could sell the property with the gained equity, and buy something with the gained income. 

There are many strategies that can all be effective. Make sure your goals are clear and concise and you have a plan in place! Please let me know if you'd like to further discuss.