First Homebuyer - Multi-unit House hacking in Chicago - Little to no money down

[JT Stanford]

I am a first time homebuyer looking to house hack in Chicago and I have an almost 800 credit score, but I don't really have much saved up beyond my emergency fund for a down payment. I have a stable job that pays fairly well for my age I guess, but I am not yet a $100,000 earner. 

I also have been referencing contacts I know that invest in real estate for advice, and I have been recommended programs like NACA, Loan Depot, etc. However, I have also been getting conflicting information about a commercial loan servicer not being the best route, and would prefer not to have to stay in the multi-unit for multiple years via programs like NACA if possible. Considering moving to Charlotte within the next couple years..

I honestly don't truly know where to start. I just know some of the neighborhoods I have been interested in buying in (Woodlawn, Greater Grandcrossing area, plus some others). I want to make the best ROI using my FHA loan, and want the multi-unit to be move-in ready.

Any tips? Should I be looking at duplex or triplex? What is realistic and what is possible?

I appreciate any guidance anyone could provide!

Thank you.

JT

[Paul De Luca]

Quote from @JT Stanford:

I am a first time homebuyer looking to house hack in Chicago and I have an almost 800 credit score, but I don't really have much saved up beyond my emergency fund for a down payment. I have a stable job that pays fairly well for my age I guess, but I am not yet a $100,000 earner. 

I also have been referencing contacts I know that invest in real estate for advice, and I have been recommended programs like NACA, Loan Depot, etc. However, I have also been getting conflicting information about a commercial loan servicer not being the best route, and would prefer not to have to stay in the multi-unit for multiple years via programs like NACA if possible. Considering moving to Charlotte within the next couple years..

I honestly don't truly know where to start. I just know some of the neighborhoods I have been interested in buying in (Woodlawn, Greater Grandcrossing area, plus some others). I want to make the best ROI using my FHA loan, and want the multi-unit to be move-in ready.

Any tips? Should I be looking at duplex or triplex? What is realistic and what is possible?

I appreciate any guidance anyone could provide!

Thank you.

JT

 Welcome to the forums! House hacking is a great way to get started. To determine what financing is ideal for you, I recommend connecting with an investor-friendly lender. If you need some lender recommendations, feel free to PM me. 

There will be pros & cons with low-down payment programs (FHA, 5% down conventional, NACA) so you just want to pick the best fit for you. Now that the 5% down conventional loan program is widely available (since November last year) I generally recommend using that as opposed to FHA because FHA comes with minimum property condition standards, the self-sufficiency test, and it's less attractive to sellers. Ideally I think you should target a 3-4 unit property to make the numbers more attractive for you. It's tougher to get cash flow upon move out these days but if you're patient, willing to do some work, or live in lower cost/fringe areas you can make it happen or at minimum put a serious dent in your housing expense which is still a win in my opinion compared to renting or buying just a primary home.

Also if you're a bit short on cash, make getting a seller credit part of your financing strategy.