New investor: Looking to house hack in Chicago with 15K

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New investor: Looking to house hack in Chicago with 15K

Hubert Deng
New to Real Estate · Chicago · Member since 2020 · 8 posts · 5 votes

I've been listening to the BP podcast for a few months, and now I'm looking to house hack in Chicago for my first investment. Just breaking even on PITI every month would be great to get my feet wet. I've got 15k in savings and about 750 credit score. I'm stuck on a few questions, if anyone could provide some insight, that'd be amazing!

  • I'm only two months into my W2 job, will that be an issue for getting loans?
  • If loans are possible, would a FHA or Illinois' Home Possible loan (which I've heard doesn't work as well as it used to) be best?
  • I heard mortgage brokers are a good first step, can anyone recommend one in Chicago that can walk a new investor through things?

Thanks in advance!

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John Warren
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
5y

@Hubert Deng you are taking all the right steps here and you already sound like you have educated yourself quite a bit! You should connect with @Joshua Jones. He has been my lender since I started investing six years ago, and has done eight loans for me personally. 

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  • Wallace Pendleton
    Chicagoland Area · Member since 2018 · 22 posts · 46 votes
    5y

    Hi Hubert,

    See below:

    1. Definitely contact a mortgage broker to confirm on what all they need to write a mortgage. They usually want to see some more information than that. But if you got and talk to a local bank face to face they may be able to work something out with you 

    2. I used FHA when buying my first property. There are some more hoops you have to go through but is great for house hacking due to the low down payment.

    3. I use wintrust mortgage. Gentleman by the name of Mike Nicestro my family has been using for 25+ years. Let me know if you need his contact information and I can email it to you. 

    1Reply
  • James Munoz
    Investor · Houston, TX · Member since 2020 · 29 posts · 6 votes
    5y

    @Hubert Deng @Hubert Deng Welcome and congratulations!! I am out in Houston, Tx! I do wholesaling at the moment to gain capital for the BRRRR method! I wanted to let you know about an opportunity that may not be for you, but it's based out of your area and it's pretty inexpensive!

    At the beginning of the year, a couple of business partners and myself bough a program called, “Make real estate real”. It was created by Jemal King. He and Eric Thomas are guys that I follow who are phenomenal inspirational figures. Jemal’s program walks you through real estate investment strategies and gives you access to his team that’s based in Chicago! I thought that might be able to help you out!

    Other than that, right now I am reading David Greene’s, “Buy, Rehab, Rent, Refinance, Repeat”. The book has helped me out a lot!! I bought the audiobook on audible (which wasn’t much) and got a physical copy as well to write on and take notes! Good luck and this group of individuals will help you find everything you need for little to zero costs!

    0Reply
  • John Warren
    Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    5y

    @Hubert Deng you are taking all the right steps here and you already sound like you have educated yourself quite a bit! You should connect with @Joshua Jones. He has been my lender since I started investing six years ago, and has done eight loans for me personally. 

    1Reply
  • Joshua JonesPro Member
    Member since 2020 · 70 posts · 32 votes
    5y

    Hubert Deng please feel free to reach out to me and I can answer any questions you have about mortgages, the rules we have to follow and how to work within the guidelines.

    There is a lot of information out there and sometimes tough to sort through. I can answer any questions you have.

    0Reply
  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    5y

    @Hubert Deng - First off.....good for you!

    Definitely connect with @Michael Facchini, @Michael Barbari, or @Zack Karp all of them are good lenders that put their clients first.

    Also connect with @Sarita Scherpereel or @Brie Schmidt if you are looking on the nw side of the city.  They are both Rockstars agents.

    And lastly, if you need some help with rehab or construction numbers let me know.

    [email protected]
    Quality Builders4.966 Reviews
    WebsiteView Page
    0Reply
  • Forrest Williams
    Real Estate Agent · Chicagoland · Member since 2018 · 314 posts · 199 votes
    5y

    Welcome Hubert! Your W2s may be an issue, but if you have previous experience in the field you are currently in, that can help. It also helps if you are salaried and your job doesn't depend on tips. FHA (if you can get it) is the way to go for a house hack in my opinion.

    Also if you are looking for more budget options, I would consider looking at the suburbs of Chicago as well. There are some great deals out here, and lower taxes than Cook county.

    0Reply
  • Michael Facchini
    Lender · Chicago, IL · Member since 2017 · 438 posts · 193 votes
    5y

    Hi @Hubert Deng, happy to help here.  So, IHDA is a decent down payment assistance program, but there are some catches to it that need to be considered - a few more hoops to jump through, and tad higher rates, for example.  Regarding the 2 months in your current gig, is it a salaried position or hourly?  Were you working prior to this, in the same line of work or different and for how long?  In school?  Any gap in time between your previous job/school and this current job, and how much?

    0Reply
  • Hubert Deng
    OP
    New to Real Estate · Chicago · Member since 2020 · 8 posts · 5 votes
    5y

    @Wallace Pendleton 
    Thank you for the input! I'll be shopping around for a broker, so it would be great to if you could forward me Mike Nicestro's contact info.

    0Reply
  • Hubert Deng
    OP
    New to Real Estate · Chicago · Member since 2020 · 8 posts · 5 votes
    5y

    @James Munoz 

    Thank you, and I’ll keep that opportunity in mind. I’ve heard of David Greene’s book, looking to jump into that and many more

    1Reply
  • Hubert Deng
    OP
    New to Real Estate · Chicago · Member since 2020 · 8 posts · 5 votes
    5y

    @John Warren Thank you for the feedback and the contact, I'll reach out!

    0Reply
  • Hubert Deng
    OP
    New to Real Estate · Chicago · Member since 2020 · 8 posts · 5 votes
    5y

    @Jonathan Klemm Awesome! Thank you for all the options, I will definitely reach out.

    0Reply
  • Hubert Deng
    OP
    New to Real Estate · Chicago · Member since 2020 · 8 posts · 5 votes
    5y

    @Forrest Williams Thank you! No previous experience actually, bummer, but I am at a set salary. I'll keep the suburbs in mind also, good tip.

    0Reply
  • Louis L.
    Investor · New York, NY · Member since 2017 · 36 posts · 6 votes
    5y

    Hi there Hubert. I did my first house hack in Jersey City, and had similar questions. I'd firstly ask your agent about the best lenders, since they typically have a bunch they can list from past transactions off the. top of their head. Then you can call them up individually and ask about specific requirements.I would think based on that credit score that you shouldn't have an issue getting an FHA loan with a w-2 job.

    I must say the FHA process was a breeze. I was one of those who had to make a few repairs for the inspector, but even with that things went well.

    Definitely shop around with lenders, too. just because you find one that seems great, you never know if there could be better terms available by calling a couple more. If you have any other questions with FHA stuff, I'd gladly help.

    0Reply
  • Joshua JonesPro Member
    Member since 2020 · 70 posts · 32 votes
    5y

    I am watching all the comments go back and forth on this thread about lenders. When certain people are posting to make sure "they have a ton of lenders" that is a loaded comment. TV and companies who do not rely on relationships but only internet leads, tries to reduce lending to rate and fees. Right? What's your rate and what's your fees? That's not real life. If one lender had a corner on the market, they would get 100% of the business. That's not true though. That doesn't exist. What you will find from lender to lender is program variation, knowledge, service and skill.

    Why do we as a country have attorneys who have a higher cost? Doctors? Contractors? or any field for that matter? People might make a little more or get paid a little more because they have become absolute experts in their fields. That's why we pay more. Why does someone pay $50 for a bottle of wine when you get any bottle of wine for $3? It's just an example of there are all variations in every market. When I see people say "you might find a better deal elsewhere" defines all people in a field are the same. I wouldn't generalize. Same with realtors. 

    I'm a lender that does 400 loans a year, does tons of investor loans and multi-unit loans and owns 9 rentals myself. Louis when you state that when you find a lender that is great (I read this and was like, ok awesome), then to reduce them to in essence "what's your rate and fees" is something that the market doesn't need. Same thing with fly by night contractors or you can relate that to any field.

    2005 was a bunch of investors and professionals undercutting others to try to save a buck at others expense. Right? Flipping homes and the "cover it up" idea because they weren't living there. We don't need the repeat of that. Hubert, if you find a great lender and you guys develop a great growth plan for now and the future, stick with them. 

    Lenders by law can not overcharge you and in this world you can always find someone to undercut someone else. Get a great team assembled and you will have amazing success Hubert. Come up with a plan of solid organic growth, trust your professionals and you will do really well. Work with people who are not in it for the deal but for the professional relationship and growth of you.

    0Reply
  • Hubert Deng
    OP
    New to Real Estate · Chicago · Member since 2020 · 8 posts · 5 votes
    5y

    @Michael Facchini Is IHDA looks interesting, especially the forgivable loan. I'll keep researching that. My W2 is salaried, and it's the only position I've worked in this line of work. Many gaps in employment since college unfortunately; worked in marketing 2 month after graduating in 2018, 3 month gap, gig work, 6 month gap, Peace Corps, 5 month gap, and now it's been 2 months in this position. 

    0Reply
  • Hubert Deng
    OP
    New to Real Estate · Chicago · Member since 2020 · 8 posts · 5 votes
    5y

    @Louis L. Hey, it's great to hear that the FHA process was easy for you! I wasn't sure between starting with an agent or a broker, seems if I find one then the other one can be recommended to me? I will definitely do a lot of shopping. I'll reach out if I have any FHA questions, hopefully soon! Thanks for the insight.

    1Reply
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