Newbie in need of some advice!

[John Hall]

Hey BP

Need some advice for a newbie who's just getting started. I recently closed, this friday!, and will be house hacking a 2 unit building in Chicago in a B/A+ area. The purchase price is right around a fair market value for the area. The loan product is 100% LTV so I'm fully leveraged on the deal.

It is cashing flowing day 1 with room to increase gross rents by about 200-400 a month. Going into the deal I knew it had some capex expenses off the bat and it will be about 30-40k in capex total. Capex needed is a new roof which is near the end of its life, some exterior maintenance, and some other issues.

One reason why the capex is so expensive rather than in previous years is obliviously inflation and labor shortages. According to the contractors it would be about 5k cheaper if before the pandemic.

My question is that with the recession incoming, if we aren't already in one, and the softening of the housing market and maybe a 5-10% dip in housing prices nation wide would you spend the money on the capex now or wait it out?

I plan to be a Long term buy and hold investor. So would you pay the high inflation cost now to fix what needs to be fixed and not have to worry about it for 20-30 years OR wait till after the recession/inflation maybe the capex prices drop a little in price and do the projects then? Would you hold off on investing that much money into the building with little to no equity into the deal but still cash flowing off the start just in case the house prices take a deeper dive that what many think?

My fear is spending all this upfront capex expenses now and then being under water on the deal, but then again since I want to hold the building the life of the loan and need a place to live that even if I'm underwater if the market takes a deeper dive than expected I'm still cashing flowing strong and can wait for the equity to eventually come 5,10,15,20 years from now.

Thanks BP community!