All Forum Posts by: Derek Luttrell

@Naeem Boucher nice work on your first property. I'm 25 and closed on my first about 5 months ago, and also rent to roommates. They cover all but $250 of my monthly PITI, and it's a 3/2 condo so maintenance is very minimal. I'm not matching up to numbers like yours, but it has definitely helped me ramp up my savings for the next one (I came from being a renter paying $1,000/month).

I have a conventional loan, but like me, aren't you allowed to move out of this property after living there for 12 months, rent out your unit, and go get another owner-occupied loan? Let's say your next place is $200k, assuming your DTI can spare it you can get a 5% down conventional loan ($10k down). Other than that, you'll have to put either 20% down on a SFR or 25% down on a MFR if you're not going to live in it yourself.

@PJ Kolnik it's definitely helped me get ahead. I went from renting for $1000/month to now paying $250/month by owning and having roommates. I'm a few weeks away from closing on my first true investment property. It's a 2/1 condo up in Albany Park I bought for $122,000 that will rent for $1400 with a detached garage. I know many on BP think the devil himself invented condos, but it's low maintenance, the building has $30k in reserves for 12 units, and aside from 500k+ MFHs, they're what people in Chicago live in. I see it as a good option for my first go at things.

@PJ Kolnik much appreciated! Keep us posted with before/after pics, and whether you're able to stick to your $20k reno budget. How much were you paying for housing before this move? Will this help you save much faster each month than before?  

I would posit that your budget for "Other Expenses" on a triplex should probably total more than 5% of gross rent, but either way huge congrats for jumping into the MFH space in a city that I consider very difficult to do so in. 

@PJ Kolnik congrats on the closing. Any chance you're willing to share the actual numbers of your deal, and neighborhood you found your multi-family in? I'm closing on my first rental condo next month, as I wanted to stay close to home and couldn't come to grips with the current asking prices vs. rent rates for MFHs around the city. 

I would love for my next move to be an owner-occupied Multi, though.   

@Matt K. so you're saying if you have a good sized personal credit line that could cover any major incident, your preference is to put actual cash to better use instead having it wait for a rainy day? I can see the appeal of that, but I also like the comfort of having one property's reserves established so I can focus on the next one.

Hi All, 

I close on my first investment property in three weeks, and I'm wondering if it's common to inject a certain amount of reserves in the property's bank account right off the bat. Purchase price is $122,000 and rent will be $1450, and I was anticipating keeping 6 months of PITI as a starter cushion, and then build on that as rent checks start coming in.

For all future properties, I'd like to consider 6 months of PITI as being part of my initial investment/cash needed at closing. Please let me know what your common practice is! In the same vein, is there a point where you stop building a property's reserves and start allocating those monthly funds elsewhere?

I'm doing this currently in my 3 bed/2 bath. I did not know either roommate beforehand. I'm 25 years old, and all I have ever known since age 18 is having roommates. I listed the rooms on all the online platforms, and then I would meet interested candidates in the city for a drink after work (assuming they passed my initial screening of all their social media). I had them show me their past two pay stubs, and I pulled credit reports. I drafted my lease on Legal Zoom, but no actual lawyer was involved. One pays me with Chase Quickpay, and the other with Venmo because they use a different bank. They're paying nearly 90% of my housing, so I highly recommend doing this is you screen thoroughly and are a people person. My plan is to do this and save for 2 years, then replace myself and hold this property as a rental.

I was a golf caddy from 8th grade through high school graduation, and I achieved a full ride because of it (called the Chick Evans Scholarship, paid for by the Western Golf Association if anyone out there has heard of it.) In college I worked in a sorority kitchen in between classes for free meals and an hourly wage. In the summers, I had corporate intrernships and still caddied on the weekends--it was always difficult to turn down $100+ cash for a four-hour day. I don't have any kids, but I definitely hope they get into caddying some day.

@Alex Fraher that's awesome. We're actually in the same neighborhood--I currently own a 3 bedroom condo near California & Division and rent out the spare rooms. Their rent covers almost 90% of all monthly expenses for the condo, so once I replace myself with a 3rd tenant I should be in a similar position as you.

Would you mind sharing your purchase price on the 4-unit, and you lending type? Did you take advantage of a 5% owner-occupied down payment? What should your $1100 unit rent for once you move out and put in a tenant? Is the building move-in ready, or do you have to fix up each unit? 

Thank you for sharing! I love hearing about other Chicagoan's REI journeys.

@Alex Fraher thanks! Same to you--very exciting to be house-hacking a 4-unit. 

If you don't mind sharing the numbers and neighborhood of your 4-unit, I'd love to know. How long have you lived in your current condo, and will you be renting it once you move out?