Successful FHA Chicago House Hack

[Michael Johnson]

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Chicago.

Purchase price: $750,000
Cash invested: $28,000

Contributors:
Michael Facchini, Jake Fugman

Successful 4-plex Chicago house hack. Below market rents, high CoC return, low money down and the best part is I get to live practically for free - something I wasn't sure was possible in an expensive market like Chicago. There are renovated units in the area that are getting DOUBLE the rent my building is getting. So i am very optimistic about this deal and couldn't be happier with my team

What made you interested in investing in this type of deal?

I wanted to lower my living expenses here in Chicago and what better way to do that than house hacking!? I was nervous at first given the crazy market and low interest rates, however, thanks to my team I was able to get an even better deal than I had anticipated.

How did you find this deal and how did you negotiate it?

MLS. This deal was listed at 775k, which maxes out the FHA loan limit. This may have contributed to less competition amongst bidders, which resulted in getting this 4-plex under contract for 25k UNDER asking price.

How did you finance this deal?

FHA

How did you add value to the deal?

Moving quick definitely helped. Not only that but the rents were under market, which left some untapped upside that ay not have been apparent just by looking at the MLS listing.

What was the outcome?

Closed this deal at 750k with 8k in seller credit, which only required me to bring 28k to the closing table. Once I get all the units on new leases I will likely realize $1000 more per month in rental/parking income.

Lessons learned? Challenges?

There were a lot of repair requests that I made during the attorney review period. I learned that focusing on the big picture is whats most important. There are always going to minor repairs/items that need fixing but its not worth holding up the deal for a few $100 dollars. Find your "happy" number, whether that is in items they actually repair and/or seller credit and once their offer is close, move on.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Realtor - Jake Fugman
Lender - Michael Facchini