Hi- I'm a 22-year-old college grad. My first full-time job out of school is remote with a startup that gives me flexibility to explore other interests like real estate. I have $30,000 already set aside for a down payment, thanks to savings from various jobs and internships while in school. Now that I am full-time, my projected savings rate means I will have $50,000 to put toward a down payment by the start of 2024. Note that this is not my whole net worth- I also invest in a Roth IRA and standard ETF portfolio, but I plan on keeping that money separate as I want my portfolio to be at most 50% real estate.
I plan to house-hack a multi-family property using an FHA loan. Based on some preliminary conversations with loan officers and my math, I'm comfortable purchasing a property worth up to $950,000. I'd ideally like to buy something between $450k and $700k. I have five finalist cities: Chicago, Houston, Minneapolis/St. Paul, San Antonio, and Jacksonville/Central Florida Coast. Chicago is my first choice because it's convenient for my work, a city where I have family, and somewhere where I feel I could cultivate a meaningful social life. I understand I stand to lose appreciation potential compared to a city like Houston or San Antonio and tax savings compared to a place like Jacksonville. However, given that I'm choosing a home for the next 12-18 months rather than a pure investment property makes me lean toward Chicago for the aforementioned reasons.
Additionally, because Chicago is such a large, diverse market, I feel confident that with the right team in place, I could close on a property with 3+ units in an appreciating neighborhood like Logan Square, East Garfield Park, South Shore, Pilsen, Portage Park, or somewhere similar. My two non-negotiable criteria are that the area has a stellar rental history, and the property produces break-even margins while I occupy a unit and a 10% cash-on-cash return after that. My approach is that I don't need to hit a home run here. Just stepping into the batters' box and getting to a stable first base feels like an accomplishment at age 22.
I am open to buying as early as January 2024 and as late as May 2024. The expert consensus seems to be that things will get worse before they get better, and I know that every month I don't buy is another month that I put more money away for a down payment or safety net. Based on this, I feel it makes sense to wait a few months and continue to learn/ refine my criterion before entering the market.
With this context in mind, I'd be incredibly appreciative of your insight on any of the following questions:
-Do you recommend any loan officers or real estate agents in the Chicago area who have experience creating successful outcomes for people with goals similar to mine?
-Considering the five finalist cities I named in my second paragraph and the context provided, am I mistakenly choosing Chicago? I know the other cities have pros, and I'd love to buy property in them someday too. I'd be more interested in why Chicago is the wrong place for a buyer with a strategy like mine.
-Do you have experience in the Chicago market or a situation like mine? If so, I'd love to hear your perspective on what I shared, your venture, and anything you think I may need to consider.
-What is your opinion of my outlook on the real estate market in general?
PS- My only motivation behind sharing detailed numbers/information is the hope of receiving specific, actionable advice from the BP community. I hope my tone reads as such!
