All Forum Posts by: Brandon Gates

@Brandon Gates great to see your name pop up again! Why not try to jump to commercial properties? You can put down as little as 20% and they focus a lot more on the income of the property and the relationship with the principle. 

I don't know of any tricky way to get around being 1099 other than being in the business for 2 years. If you want to do house hacks, it is normally better to have that W2. 

@Brandon Gates - The whole W2 /1099 thing is something almost every agent goes through that also wants to be a real estate investor.

I wouldn't let the 2-year capital gain tax slow you down, if you can take advantage of it great, but find the next deal regardless.

Find a deal at the top of the funnel (aka off-market) and everything else will fall into place.  You don't need a W2 for hard money loans, however, they will want some experience - that's when you just find a partner.  

50% of something is better than 0% of nothing.

@Brandon Gates - Commercial funding has gotten much better in terms of rates in the last year so you do have options there. However as @Henry Lazerow mentioned, you'll be at 25% down. 

You can find a co-signer or look to partner. There are plenty of people on BP reading this thread who can qualify for a Fannie/Freddie loan that are looking for a deal.  

Also, if you want to own condos, it's part of the long-term plan, and you can find deals, by all means go for it. However, don't buy a condo simply because it's the only thing you can afford at this present moment in time.  

I had to wait 2 years to get a property. There are options but they have awful rates/terms and needed 20-25% down. If have parents to co-sign that can work! Condos can be a good option and pretty easy to find that cashflow in Chicago, look for low rise buildings with lower assesments and no rental restrictions. 

Great post. I'm personally in a similar phase where I'm ramping up to my first deal, and was trying to decide whether or not a house hack must be the first deal I make since I am BRRRR-focused and so will need to continue to make multiple purchases and need to preserve capital for that. I have found properties where the numbers work to accomplish "living for free", though I'd have to move to the more outer-lying areas of the northside to accomplish this. If I want to live where I prefer (which includes many of the areas you specifically mentioned), the numbers change quite a bit to the point where my goal would be to just match the current rent I'm paying (which is under $1400/month in a building I don't own).

So the goal from that perspective would be to just improve my situation where at least after a house hack that $1400 would be paying down my own mortgage instead of someone else's with a chance of some appreciation thrown in and tax benefits over time.  Though I am wary to buy at this exact moment as there is a glut of inventory expected to flood the market once covid is "over" which will put downward pressure on prices.  Depending on who you listen to there may also be a wave of foreclosures on the horizon, so I'm being wary of that too (on the opportunities side) 

@Brandon Gates

The first house hack is mostly about lowering your housing expense and gaining momentum for your next deal. Don't expect a great return while you're living in the property, especially for a duplex. Sometimes new investors go in with lofty expectations hoping for a home run but you just need a base hit to get in the game. Nobody really gets rich off of just one deal.

@Brandon Gates - Sounds like you are on the right path.  You have a market area identified, you are actively looking at properties and running the numbers....are you actively putting in offers as well?

My main focus when I was looking for my first house hack was just getting started.  Because you have the loan limits and self-sufficiency test for 3 & 4 unit buildings it makes it nearly impossible to find a house hack where everything works, especially if you are on the northside.....So I put a little more emphasis on looking at 2 unit buildings.  I figured as long as my rent was cheaper and it was in a great area that it would end up being a win.  

Just know your first deal isn't going to be perfect and the quicker you can get something under contract the closer you are to the next deal.

@Brandon Gates it sounds like you have some solid areas in your sites. The big thing to keep in mind if you jump to the suburbs is the higher tax rates in the suburbs versus the city. Keep an eye on assessed values on https://www.cookcountyproperty... They have a tax calculator on there. The tax rate in Berwyn is something like 14% most years, so if you are looking at a Chicago property with 6.8% you can be taken off guard. A lot of agents don't mention this because it is easier to sell these suburban deals if people don't think about how the expenses will adjust year 2. 

As far as appreciation, I think all of the areas you are looking in will have a similar long term outlook. All areas of Chicago are extremely competitive, especially if the deal makes sense which @Tom Shallcross referenced. When a deal makes sense,  you normally have about a 1/2 a day to react and get a showing set up so be ready to move fast.