As 2024 comes to a close, I wanted to share my experience managing a 3-flat in the Ravenswood neighborhood of Chicago during my first year as a landlord. It’s been a wild ride—full of challenges, lessons, and a few big wins that made it all worth it. For anyone starting out in real estate, I hope my story gives you a sense of what to expect (the good and the bad!) and maybe even some encouragement.

The Beginning: A Flooded Start and Big Adjustments

I started the year by purchasing the property with 5% down, thanks to new Fannie Mae guidance on conventional loans around December 2023. It has 3 units, an additional dwelling unit in the garden level, and 2 garage parking spaces (which I've come to realize are quite valuable where the property is).

It felt like a dream come true—until I moved in and discovered a flooded toilet in my unit that didn't come up in the inspection. That led to uncovering significant water damage throughout the first-floor unit's bathroom, forcing an immediate renovation. It wasn’t how I wanted to kick things off, but I worked with a contractor to get the bathroom fixed and functional.

Once that was behind me, I focused on improving the building and maximizing income:

I installed a shared washer and dryer for the tenants, a major upgrade that added convenience and increased the property’s value.
I rented out the two garage parking spaces, bringing in consistent revenue.
I also raised rents for the second- and third-floor tenants I inherited to be just below market-rate. The second-floor tenants stayed (they’ve been great tenants), but the third-floor tenants refused to pay the increase.

Spring: Turnovers and Learning Experiences

As spring rolled around, I turned my attention to getting the garden unit rent-ready. After some updates, I found new tenants and got the unit rented out. At the same time, the third-floor tenants overstayed their lease and brought in unauthorized occupants. I had to start the eviction process, but fortunately, they left a little over a month after their lease ended—just before it went to court.

These challenges reinforced the importance of tenant screening and clear leases, lessons I’d carry with me throughout the year.

Summer: Refinancing and Big Changes

Summer brought a mix of wins and challenges:

I began having issues with the garden unit tenants, which would escalate later in the year.
After learning from the screening mistakes I made with the garden unit, I updated the third-floor unit and rented it to great new tenants. It was a relief to have the unit back on track!
One of my biggest wins of the year came when I refinanced my mortgage. Rates dropped momentarily, and I seized the opportunity. Not only did I save over $500/month on my monthly payments, but the reappraisal came in over $140k above my purchase price, which was a huge confidence booster.

Fall: Challenges and Big Projects

Fall brought some of the toughest challenges of the year. The garden unit tenants stopped paying rent, and I had no choice but to start the eviction process, which is still ongoing. It's been a frustrating experience, but I knew it was necessary to protect the property and move forward.

Amid those challenges, I also started a kitchen renovation in my unit. I took on all the demo work myself, saving a lot of money in the process. Along the way, I discovered hardwood floors under the tile (unfortunately, not salvageable) and replaced them with new hardwood. I also upgraded the cabinets, countertops, and added a dishwasher hookup. The project was budget-conscious but impactful, ensuring the unit is ready for future renters.

Reflecting on 2024: Wins, Challenges, and Lessons Learned

Looking back, my first year as a landlord was a crash course in property management. I dealt with evictions, unexpected repairs, and the ups and downs of tenant relationships—but I also made huge strides in improving the property’s value and financial performance. Here are my key takeaways:

Tenant Screening Matters: The challenges I faced with the garden unit tenants reinforced how critical it is to have a thorough screening process and not stray from your requirements. I made adjustments, and it paid off when I found great tenants for the third-floor unit.
Improvements Add Up: From installing a shared washer and dryer to renovating my unit’s kitchen, every improvement added value to the property and increased its appeal.
Stay Financially Savvy: Refinancing my mortgage and renting out the garage spaces were big wins that helped offset costs and improve cash flow.
Expect the Unexpected: Maintenance surprises (like a flooded toilet or diagnosing strange sewer smells) are part of the journey. Being prepared to tackle these issues quickly is key.

Looking Ahead to 2025

As I head into 2025, I’m focused on building on this year’s progress. My goals include:

Eliminating PMI for this property (I'm about $12k short in equity from eliminating my PMI requirement).
Stabilizing the garden unit so that we start to benefit from the additional cash flow. Luckily, I did not include this unit in my underwriting when purchasing, so the survival of this property is not contingent on this situation.
Continuing to optimize for management of the building when I move out, like moving everyone to online rent payments or adding remote accessible security cameras.
Exploring opportunities to expand my portfolio—I've begun my hunt for my next 3 to 4-unit building to house hack, ideally in Lake View, North Center, or Ravenswood.

This year taught me that real estate investing isn’t easy, but it’s undoubtedly worth it. If you’re a fellow investor, I’d love to hear your thoughts! What lessons have you learned in 2024? How do you handle challenges like evictions and renovations? Let’s share and grow together.

Here’s to a stronger 2025 for all of us!

Chicago, Illinois

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