All Forum Posts by: Paul De Luca
Paul De Luca has started 18 posts and replied 1807 times.
Post: Entry into Real Estate
- Real Estate Agent
- Chicago, IL
- Posts 1,857
- Votes 1,504
Credit to you for getting started early and planning ahead! To qualify for a typical conforming loan (Fannie Mae/Freddie Mac), you'll need to show a stable income to get pre approved. But if you could get a co-signer, you may be able to get your first property sooner or without a full-time income. I'm sure @Zack Karp can give you advice on this front.
There are many different careers within real estate, so I suggest investigating the jobs/careers that seem interesting to you. You're already doing that within property management, which I think is a great career path particularly if you want to be a real estate investor because it gives you broad exposure to all the other professionals & careers within real estate (landlords, contractors, agents, etc). You're acting as the owner's agent, so it's good on-the-job training and experience for when you become a landlord yourself.
Post: New to House Hacking Chicago!
- Real Estate Agent
- Chicago, IL
- Posts 1,857
- Votes 1,504
Can you turn the home in Milwaukee into a rental? Is that the plan?
How long of a commute would it be to and from the office for those 8 days? To your point, you acknowledge you will probably get tired of the long drive pretty quickly. If the commute is that bad, I think you should probably consider moving to the local area to be close to your job. A long commute can be a grind and not only will you be forced to spend that time driving, but it will overall negatively impact your health.
There are a decent amount of 2-4 unit properties in Berwyn and Cicero in particular but less so in Oak Park, Naperville, and Downers Grove. In my experience, it's difficult to get the numbers to make sense when house hacking in Berwyn these days. Also, I frequently see buyers get deterred from 2-4 units in Berwyn and Cicero due to the village compliance inspection reports, which oftentimes the seller will pass off to the buyer to handle. The violation lists are usually fairly long.
House hacking in Oak Park can be tough too due to the properties being more expensive and high property taxes. But at least you get strong rents there to compensate a bit.
To know if there's potential with the numbers, I recommend connecting with a lender to understand your budget & financing terms and then analyze deals from there.
Post: How do I deal with the mental weight of debt?
- Real Estate Agent
- Chicago, IL
- Posts 1,857
- Votes 1,504
Debt is simply a tool which should be used with careful thought and consideration. It's not something to be feared, but to be understood. Too much debt and not enough liquidity has no doubt ruined many people due to a combination of circumstances or bad decisions. As @Chris Seveney and @Theresa Harris said, there is "good debt" and "bad debt". Basically, good debt is debt that through calculated use can be used for growth in assets and income (real estate, business) which should lead to a net positive outcome for you. Bad debt will most likely lead to a net negative outcome for you and an overall drain on you (credit card debt, loans for luxury items or depreciating assets).
There's a lot of great writing on this topic in personal finance and investing books. I know Robert Kiyosaki in particular talks about the pros and cons of using debt.
I think some real estate investors can take the concept of "good debt" a little too far in a way it becomes an obsession and almost like a cult. The cult of debt and constant pursuit of endless growth, which can lead to over-leveraging.
Be conservative, have liquidity (a rainy day fund), have a reliable income source, and you should be okay.
Post: Looking to get into Real Estate investing, Help
- Real Estate Agent
- Chicago, IL
- Posts 1,857
- Votes 1,504
I agree with @Aaron Zimmerman that you should strongly consider house hacking. For your situation, it makes sense to take advantage of the low-down payment financing options available to owner occupants/house hackers.
Hypothetically, if you saved up $60k for a down payment and you did not live in the property you're looking at 20-25% down. Assuming you purchase a property for $300k, at 20% down that's $60k right there not including closing costs (2-3%) and other fees (home inspection, appraisal, rehab, etc). It's generally not recommended to spend all your cash on one property and leave yourself with little to no reserves.
If you're looking for 2-4 unit properties, a budget of $300k isn't going to get you much unless you're looking at rougher area. $300k or less for a single family home you'll have more options but likely still be limited to more C/D class neighborhoods.
Maybe you say, well I'll look at cheaper properties. Even assuming a $200k purchase price and 20% down, that's $40k for the down payment and again not including any other fees or expenses that there will be.
I get your desire to stay home for the next few years to save up money more quickly, it's a great move and something to take advantage of. But, you will be limiting your budget and options available to you. You just have to be honest about what tradeoffs you're willing to make.
Post: Looking to meet new people
- Real Estate Agent
- Chicago, IL
- Posts 1,857
- Votes 1,504
What markets are you currently invested in?
Post: Lawmakers in Chicago introduce Just Cause Eviction Law - 5x market rent $ as penalty
- Real Estate Agent
- Chicago, IL
- Posts 1,857
- Votes 1,504
Quote from @Henry Lazerow:
Hopefully this does not pass. @Brie Schmidt has been super helpful in fighting for landlord rights. Lets keep everyone informed when the next call to action is!
Seems everyday now more radical policies are being announced. The way I recommend my clients avoid problems is to only buy nice building in areas with high quality tenants, I cannot stress this enough for new investors in Chicago. A good golden rule is only buy a rental property if you would be willing to live there yourself. For example, my 4-unit in Rogers Park has never had a late payment notice needed in 8 years of ownership and of course never an eviction. I raise the rents to market every year and if someone leaves there is enough demand for multiple qualified applicants who are happy to live in a nice rental. On the flip side, there are other neighborhoods in Chicago where numbers look like great cashflow on paper but they have high eviction rates, even sometimes double digit eviction rates where you are heavily involved in Chicago eviction/tenant politics. In areas where the tenants can't afford the rent raise, you get stuck with either high vacancy/turnover or below-market rents. It's very important you NEVER let your rents get more than 10% below market rate with upcoming potential laws like this. It is not passed yet so if anyone has below market units I recomend you raise them immediately at the next lease renewal. Below are some excerpts from the new law.....
City Council lawmakers are hoping to once again bring to fruition the advancement of such protections for tenants this 2025 legislative session. Introduced by Alderman Desmon Yancy (5th Ward), the city’s proposed just cause eviction ordinance (“Record No. O2025-0017516”) would strengthen tenants’ rights in a concerted way, including by (1) requiring that landlords have just cause, such as nonpayment of rent or violation of the rental agreement, to evict a tenant or refuse to renew a tenant’s lease; (2) requiring that landlords provide tenants with relocation assistance if the tenancy is terminated through no fault of the tenant, or if the rent is increased by more than 10%; and (3) requiring property owners to register their rental units in a citywide registry in order to increase transparency in the private rental market.
Tenants who are terminated from their tenancy due to one of the causes listed are entitled to receive relocation assistance in the amount equal to five times the median monthly rent in the city for a unit with the same number of bedrooms.
#1 makes sense to me. #2 is absurd I think mostly due to the amount, and #3 would just be creating more ridiculous bureaucracy which imposes more costs on landlords and gives government more power (obviously bad). I'm sure this additional "transparency" and forced data collection would be used for good things only...
The advancement of tenant's rights usually seems to come at the expense of the owner's property rights.
Post: Real Estate Investing in Illinois - Greater Chicago Area/Chicagoland
- Real Estate Agent
- Chicago, IL
- Posts 1,857
- Votes 1,504
Quote from @Sungyeol Park:
Hello! looking for input on different areas around Chicago that are great for flipping (within 1 hour of Chicago). I have a few in mind however want to know other's opinions. Looking for entry points at or below 300k.
Thanks!
Post: New investor seeking mentor or like-minded individuals
- Real Estate Agent
- Chicago, IL
- Posts 1,857
- Votes 1,504
What's your strategy for buying your first investment property? What's your buy box?
If you need referrals to help build your real estate team (lender, attorney, inspector, etc), feel free to PM me.
Post: Inspection before renting
- Real Estate Agent
- Chicago, IL
- Posts 1,857
- Votes 1,504
Quote from @Mary Witt:
I've lived in my condo for four years and want to rent it out as an investment property. Last year, there was a leak from upstairs, and the maintenance guy opened a hole in my drywall to investigate. He removed wet insulation and a concrete-like chunk that felt sandy at the edge, possibly mortar. He said that chunk was already loose so he took it out. I am not sure if the concrete/mortar piece could indicate any structure issue or I am completely over thinking.... To have peace of mind before renting it out, is there a third-party inspection service that can check the unit's structural safety and other aspects to protect myself and future tenants?"
I recommend reconnecting with the contractor who performed the work to ask him questions. Otherwise your HOA/property manager should have more information on the work that was performed. If there have been no issues since the leak, it may be reasonable to assume the problem was fixed.
Post: New To REI
- Real Estate Agent
- Chicago, IL
- Posts 1,857
- Votes 1,504
House hacking is a great strategy for getting started with building your real estate portfolio!
Besides learning the fundamentals of house hacking from books/podcasts/blog posts, the next steps would be to build your real estate team (agent, lender, inspectors, contractors, attorney, etc). Starting with your lender and agent make the most sense. The lender so you can understand your budget and financing options. Then you can define your buy box and start searching with an experienced investor-friendly agent. From there, start scheduling showings and making offers!