All Forum Posts by: Paul De Luca
Paul De Luca has started 18 posts and replied 1807 times.
Post: Where does house hacking still work in Chicago?
- Real Estate Agent
- Chicago, IL
- Posts 1,857
- Votes 1,504
Quote from @V.G Jason:
Quote from @Paul De Luca:
Quote from @V.G Jason:
The risks of self managing and disrupting family/independence just isn't worth the material risk for anyone over 25, maybe 28 years old.
House hacking is the low hanging fruit to get in. But people never explain those aforementioned risks.
Think most of us want to find properties that exhibit intrinsic valuation or aren't terribly deep OTM and show vast extrinsic applied to it. That's really showing something if you can get that. This is just kind of expected and can be done anywhere, pay the least down, get the most rooms then rent each room.
Still likely overpaying for the property once you consider it's at market, and if you had to use a DSCR or a normal conventional way you would not qualify.
What are the risks of self-managing? If you're saying house hacking as a family with children can limit your privacy or be less desirable than owning a detached single family home, I don't disagree. However, many families rent or owner-occupy apartments in 2-4 unit buildings, condos, or townhomes. House hacking is essentially the same situation with the exception of the owner/landlord aspect to it. For me, I would rank house hacking as a more desirable situation than any of the above I laid out. What are these material risks you're alluding to?
Setting the age limit for self-managing or house hacking at 25-28 seems pretty arbitrary as well. Many people are now delaying buying homes or starting families until later in life (30s or even 40s+).
What risks are there for self managing? The grandest of them all... liability. This is why most RE agents shouldn't be giving advice, they never see the blind spots.
Do you have any specific examples of greater liability when self-managing?
Post: Where does house hacking still work in Chicago?
- Real Estate Agent
- Chicago, IL
- Posts 1,857
- Votes 1,504
Quote from @Drew Sygit:
Quote from @Paul De Luca:
Can't just arbitraly inflate the price for seller contributions and such
Still needs to appraise out for the mortgage.
It can be a concern at times and is a conversation to be had with the buyer and listing agent that under-appraising is a possibility. I lean on the comps for supporting evidence and that helps me advise what's a realistic appraised value.
Post: Where does house hacking still work in Chicago?
- Real Estate Agent
- Chicago, IL
- Posts 1,857
- Votes 1,504
Quote from @V.G Jason:
The risks of self managing and disrupting family/independence just isn't worth the material risk for anyone over 25, maybe 28 years old.
House hacking is the low hanging fruit to get in. But people never explain those aforementioned risks.
Think most of us want to find properties that exhibit intrinsic valuation or aren't terribly deep OTM and show vast extrinsic applied to it. That's really showing something if you can get that. This is just kind of expected and can be done anywhere, pay the least down, get the most rooms then rent each room.
Still likely overpaying for the property once you consider it's at market, and if you had to use a DSCR or a normal conventional way you would not qualify.
What are the risks of self-managing? If you're saying house hacking as a family with children can limit your privacy or be less desirable than owning a detached single family home, I don't disagree. However, many families rent or owner-occupy apartments in 2-4 unit buildings, condos, or townhomes. House hacking is essentially the same situation with the exception of the owner/landlord aspect to it. For me, I would rank house hacking as a more desirable situation than any of the above I laid out. What are these material risks you're alluding to?
Setting the age limit for self-managing or house hacking at 25-28 seems pretty arbitrary as well. Many people are now delaying buying homes or starting families until later in life (30s or even 40s+).
Post: use free and clear house to buy another rental property
- Real Estate Agent
- Chicago, IL
- Posts 1,857
- Votes 1,504
@Denise Supplee laid out your options here. I recommend connecting with @Zack Karp about the possibility of doing a cash-out refinance or HELOC. Good luck!
Post: Where does house hacking still work in Chicago?
- Real Estate Agent
- Chicago, IL
- Posts 1,857
- Votes 1,504
Post: Where does house hacking still work in Chicago?
- Real Estate Agent
- Chicago, IL
- Posts 1,857
- Votes 1,504
Thanks @Jonathan Klemm!
Key challenges in these deals included strategizing how to win a multiple offer situation (#3) and negotiating concessions (#3) which we did in that case thanks to your team's estimate.
Post: Where does house hacking still work in Chicago?
- Real Estate Agent
- Chicago, IL
- Posts 1,857
- Votes 1,504
Hi everyone,
I thought it might be helpful to share a few house hack case studies from the past few months where my clients have closed.
Property #1 - 2-flat with 4 beds/2 baths in Unit 1 (duplex down) and 2 beds/1 bath in Unit 2. Pro forma rent $3000 for Unit 1 and $1600 for Unit 2
Location: North Austin, just a few blocks from Cicero and North Ave
Purchase Price $429,900
Seller credit $12,600
Earnest money: $4,200
FHA financing 3.5% down payment
Cash due at closing $3623.75
Projected cash flow once fully rented (even with property management) $450/mo
Notes: $12,600 seller credit was built into the offer upfront. Overall turnkey but my client will likely boost rents by installing in-unit laundry.
Property #2 - Legal 2-flat with non-conforming basement unit. Unit 1 has 3 beds/1 bath, Unit 2 has 4 beds/1 bath, and basement has 2 beds/1 bath. Pro forma rents - Unit 1: $1890; Unit 2: $1750; Basement: $1000.
Location: Brighton Park, right by Pershing and California
Purchase Price $475,000
Seller credit $14,000
Earnest money $4,700
FHA financing 3.5% down payment
Cash due at closing $12,639.89
Projected cash flow once fully rented $109/mo
Notes: $11,500 seller credit built into the offer upfront but buyer received an additional $2500 to address catch basin repairs.
Property #3 - Legal 3-flat. Unit 1 has 2 beds/1 bath, Unit 2 has 1 bed/1 bath, Unit 3 has 3 beds/1 bath. Pro forma rents - Unit 1: $1300; Unit 2: $1100; Unit 3: $1600
Location: Marshall Square, right by 23rd and Sacramento
Purchase Price $355,800
Seller credit $10,674
Earnest money $3,600
Conventional financing 5% down payment
Cash due at closing $15,824.69
Projected cash flow once fully rented $216/mo
Notes: $15k concession from seller between purchase reduction plus seller credit for buyer to repair the garage, which will cost about $25k. This was a multiple offer situation and it sold for $30k over the asking price.
Post: Possible Property Inspector
- Real Estate Agent
- Chicago, IL
- Posts 1,857
- Votes 1,504
If you don't see yourself having a career as a home inspector, it's probably not worth the time and effort to get your license.
Post: real estate agent for rental
- Real Estate Agent
- Chicago, IL
- Posts 1,857
- Votes 1,504
If you want to meet the potential tenants, maybe you shouldn't hire an agent. The point of hiring an agent is to have a professional handle that for you.
I self-manage and understand the importance of meeting people in person to get a feel for them. There are obviously qualitative factors that go into assessing a potential tenant like overall demeanor, punctuality, communication style, personality, and what they say at the showing. If that's all important to you, maybe you should self-manage.
I agree with the other replies here and think @Denise Supplee suggestion is the best balance. Only meet with the serious, qualified applicants
Post: Real Estate Investor for 20 years, but buying first Multi in Chicago
- Real Estate Agent
- Chicago, IL
- Posts 1,857
- Votes 1,504
Your budget gives you plenty of options within A to C class neighborhoods. Besides your budget, what's your buy box?