Reflecting on my first year house hacking a 3-flat in Chicago

[Fed Finjap]

Hey everyone,

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:

1. 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.
2. 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.
3. Stay Financially Savvy: Refinancing my mortgage and renting out the garage spaces were big wins that helped offset costs and improve cash flow.
4. 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!

[John Clark]

You should have two main lessons learned from all this.

First: Tenant screening. Better to let a unit go vacant than to get marginal tenants. That encompasses realistically knowing what the market price of each unit is worth.

Second: Stay in great neighborhoods. Ravenswood is a great neighborhood. You got lucky,

[Quincy Mingo]

You did an excellent job summarizing your experience. I enjoyed reading about your first year of investing—it’s clear how much you’ve learned. Managing tenants yourself is no small task, but I’d say it’s often a blessing in disguise. The challenges in real estate teach you invaluable lessons that you might not gain otherwise.

I also invest in Chicago, so I have a few thoughts in response to the questions you raised. Regarding evictions, it depends on the time and resources you have available. I know a friend who is an attorney, although they don’t specialize in housing law. Even so, they were able to help at times when I had technical questions about the legal process. I’ve had two evictions in the past two years. Like most, I was evicting tenants that I incurred through property purchases. I have been fortunate enough to be successful in both my cases and just getting to the point right before going to a jury. Nonetheless, If you’re short on time, hiring a local attorney who focuses on evictions is definitely a good idea, as the process can be quite tedious. From what I’ve heard, it costs around $1,000 to initiate an eviction with an attorney. However, even issuing a five-day notice can be an important step before filing. Spending $1,000 to start the process can be worthwhile if you’re clear on the steps needed to reach that point.

As for renovations, the approach really depends on your goals and the scale of the work. I’ve learned through experience that if a renovation will take several weeks or months to complete, it’s usually better to hire contractors. Time is money, and delaying a renovation often means lost rental income. For this reason, I prefer to plan renovations when a long-term tenant moves out. For example, I have a tenant who has been smoking in their unit since before I took ownership of the property. When they eventually move out, I plan to do a full renovation to bring the unit up to high-quality standards and maximize its rental potential.

I’m happy to connect if you ever want to chat.

[Drew Sygit]

@Fed Finjap now you're better prepared if you continue to scale and eventually hire a PMC!

[Fed Finjap]

Quote from @John Clark:

You should have two main lessons learned from all this.

First: Tenant screening. Better to let a unit go vacant than to get marginal tenants. That encompasses realistically knowing what the market price of each unit is worth.

Second: Stay in great neighborhoods. Ravenswood is a great neighborhood. You got lucky,

 Completely agree

[Fed Finjap]

Quote from @Quincy Mingo:

You did an excellent job summarizing your experience. I enjoyed reading about your first year of investing—it’s clear how much you’ve learned. Managing tenants yourself is no small task, but I’d say it’s often a blessing in disguise. The challenges in real estate teach you invaluable lessons that you might not gain otherwise.

I also invest in Chicago, so I have a few thoughts in response to the questions you raised. Regarding evictions, it depends on the time and resources you have available. I know a friend who is an attorney, although they don’t specialize in housing law. Even so, they were able to help at times when I had technical questions about the legal process. I’ve had two evictions in the past two years. Like most, I was evicting tenants that I incurred through property purchases. I have been fortunate enough to be successful in both my cases and just getting to the point right before going to a jury. Nonetheless, If you’re short on time, hiring a local attorney who focuses on evictions is definitely a good idea, as the process can be quite tedious. From what I’ve heard, it costs around $1,000 to initiate an eviction with an attorney. However, even issuing a five-day notice can be an important step before filing. Spending $1,000 to start the process can be worthwhile if you’re clear on the steps needed to reach that point.

As for renovations, the approach really depends on your goals and the scale of the work. I’ve learned through experience that if a renovation will take several weeks or months to complete, it’s usually better to hire contractors. Time is money, and delaying a renovation often means lost rental income. For this reason, I prefer to plan renovations when a long-term tenant moves out. For example, I have a tenant who has been smoking in their unit since before I took ownership of the property. When they eventually move out, I plan to do a full renovation to bring the unit up to high-quality standards and maximize its rental potential.

I’m happy to connect if you ever want to chat.

Thanks for sharing your thoughts here @Quincy Mingo! Great point on when to hire contractors. I agree that for more significant renovations, hiring contractors that are experienced can help make timelines more predictable and avoid unnecessary delays. 

[Sebastian Nadal]

Nice job man. I'm doing a lil house-hack in Rogers Park for 2025. It's just a 2 bedroom/2 bathroom so not a multi-unit unfortunately. I'm trying to save up a down payment for my next place so I can house-hack for real. I'm also looking at Lake View :) Let's connect 

[Fed Finjap]

Quote from @Sebastian Nadal:

Nice job man. I'm doing a lil house-hack in Rogers Park for 2025. It's just a 2 bedroom/2 bathroom so not a multi-unit unfortunately. I'm trying to save up a down payment for my next place so I can house-hack for real. I'm also looking at Lake View :) Let's connect 

Thanks man. Just sent you a connection request, would love to hear more about your experience in Rogers Park so far

[Sebastian Nadal]

Quote from @Fed Finjap:

Quote from @Sebastian Nadal:

Nice job man. I'm doing a lil house-hack in Rogers Park for 2025. It's just a 2 bedroom/2 bathroom so not a multi-unit unfortunately. I'm trying to save up a down payment for my next place so I can house-hack for real. I'm also looking at Lake View :) Let's connect 

Thanks man. Just sent you a connection request, would love to hear more about your experience in Rogers Park so far

 So far I like Rogers Park. My street is pretty peaceful, lots of families. There are some good food spots around here. I've never felt unsafe, but I hear the danger is mostly around West Rogers Park, and I'm East Rogers Park. My main downside is that it's too quiet lol. I wish I was closer to downtown but not exactly downtown, that's why Lake View is my dream neighborhood haha. Rogers Park is more for older families I feel like, and for me being in my 20s, I'd like to be a bit closer to the action.

But overall, I'm happy with my place, and I like my neighborhood. It takes me 10~ minutes to get on Lake Shore drive, then it's pretty easy to navigate the city. 

[Jonathan Klemm]

Wow @Fed Finjap!  Amazing share!  Wonderful reflection my friend!  It is a sure thing that you will have success simply based on your introspection!

Tenant screening, especially here in Chicago, is one of the most important things you have to prioritize learning - learning it the hard way is the fastest, but not always the most cost-effective (I know from experience haha)

If you still need a solid eviction attorney, please let me know!  How I handle them is typically not well because I am not as swift as I should be - this is when having a PM is so valuable.

Whats your goals/vision for 2025 Fed?

[Fed Finjap]

Thank you @Jonathan Klemm! Appreciate the kind words.

Looking to 2025, my #1 goal is to expand my portfolio by purchasing and house hacking a second 3-4 flat. I'd like the building to be within 10 minutes walking distance from a Brown Line L stop, ideally in Lake View, North Center, or Ravenswood.

[Jonathan Klemm]

Love it @Fed Finjap!  No doubt you'll find that next property with your locked-in vision and crystal clear criteria!  

Do you already have your next down payment ready and lender ready?  I love those neighborhoods of Chicago.  

I had a similar mindset and started...in the sense I bought house hacks in areas whereI wanted to live and worried a little less about the dollars and sense and just made sure it worked for me!