Need Opinions Here on Possible 1st Rental

[Tim Duffey]

Warning long post:

Hey guys, I am looking into my first rental property in Chicago. I want to start the Stack method and house hack on my first property living in it for a year to get a FHA loan. So I found a real estate agent on biggerpockets which who I liked initially as he has been doing REI in Chicago for 20+ years.

Anyways, was looking at this one property in a nice neighborhood right by a park. It’s a two flat with a mother in law suite as the basement. I found out roofing was replaced last year, heater is 9 years old, and AC is 2-3 years old. Listed at 450k but my RE agent told me we can probably get it at 435k.

So I ran the numbers and most likely will spend $4500 a month with:

Mortgage around $2500

Capex $330 (10% rent)

Vacancy $165 (5% rent)

Heat and water $400

Repairs $200

Property tax $547

Insurance $200-300

And I haven’t even considered electricity, wifi, etc.

My income would be estimate $1400 top unit, $1900 main unit, and $1100 for basement. But I be living in the basement for the first year or two. But it be $4400 estimate for my rent if all units are rented out. So I know my cashflow wouldn’t be the best, and I would start off negative with me living in it.

But after I told this to my agent, he wasn’t concerned about the numbers, and told me I was over analyzing it, and that I made the same mistakes he made 10 years ago. But I told him others say not to bank on appreciation as it is never guaranteed and should be “icing on the cake”. But he is more gunhole on appreciation more than cashflow for this property. I personally do think it will appreciate as well as it is in such a good neighborhood right by other really cool areas of Chicago. So wanted to get opinions of others that are more expertised on this area so I know I’m making the right move. I have a stable job with a good income as well, but paying $4500 a month for me is really expensive though. Just another thought. TIA to anyone taking the time to help me out here. I really do appreciate it.