All Forum Posts by: Derek Luttrell

@Ham 

@Ham Merritt very cool that you started out in Chicago. I think my estimate of $500/bedroom is pretty safe, and my goal would be to move out in two or three years, at which point renting out the entire building would generate $4,000/month in revenue. 

At my current savings rate, I save $36-48,000 cash/year (while also contributing 10% into my 401k), so in two years I should have a solid pile of cash to move onto my next property with. While it is incredibly intimidating to start out with a $500k loan, there are enough bedrooms in this building to make a successful house-hack. What do you think? 

HI @Sam Shueh--I am a logistics consultant, and I make $120k/year with an 805 FICO score. I have just shy of $40k in cash saved up, and I easily save $3-4,000 every month while currently paying $1000/month in housing.

If 4 of the 7 bedrooms went vacant for a while and I had to cover the remaining $1400 payment myself, it would not stretch me too thin. What other advice/questions do you have? 

Hi Everyone, 

I am 25 and pre-approved with 5% down on a $499,900 two-unit multi-family unit in an increasingly popular neighborhood of Chicago--fifteen minute Uber to Wrigley Field, surrounded by tons of public transit, new restaurants popping up, etc. 

Upstairs is a 3-bed 1-bath that I would live in, and downstairs is a 5-bed 2-bath including a basement. The entire mortgage would be about $3200 all-in, and if I could average just $500 per bedroom, that would cover everything. The entire building was bought in July 2016 for $250k, completely renovated, and now listed for nearly $500k. 

My question is, is $500k just too daunting of a loan to get started on? In Chicago where housing is expensive, I don't have the option like a lot of other success stories on here to buy a house for under $100k, or a multi-family for under $200k, and then generate enough revenue to get other tenants to pay my mortgage. Has anyone else out there ever started out like this with a high-cost building in an expensive city? 

Thank you, 

- Derek 

@Harjeet Bhatti thank you for the input. Has my grace period of having multiple lenders check my credit officially begun? As far as I know, having multiple lenders check your credit in the same ~14 day period only dings you once. Is this a good time to check with more lenders?

My score is 800+, so I should be fine, but it's still good info for me to know. 

Hello, 

Upcoming first time buyer, here. Today I received my first official pre-approval letter from a potential lender. A house I saw last week (3 bed/3 bath; I would have a roommate in the 2nd bedroom, then airbnb the entire downstairs as it has a very large living room, a full bath, and a bedroom with private access from the rear of the building). 

My question is, at what point do I go gung-ho and shop around with lenders? My pre-approval letter obviously does not discuss interest rates and terms yet, so do I hold off on rate shopping until I put in an actual offer, or do I reach out to other lenders now? 

Thank you, 

- Derek 

Multi-family buildings in my area are expensive, and often need tons of TLC. For less than I am pre-approved for, I can buy a fully updated 3-bedroom house or condo, and rent out the other two rooms. With the help from my roommates, I would only be responsible for $400/month on the mortgage (I currently live downtown, and my housing expenses are $950/month).  

I know this isn't eliminating my living expenses, which is the ultimate goal of house-hacking, but it does significantly reduce them, all while hopefully building equity in an up and coming neighborhood just 3 miles outside the city. Also, if I move out in a few years, renting the entire condo would profit me at least $400/month (based on current rent prices, which increase pretty rapidly in Chicago).

Are there any tax implications to this? If in a few years if I decide to sell instead of rent all the rooms, am I subject to any capital gains tax, or not since I was still living there? Is house hacking a single family unit generally ill-advised? I am 25, and have no problem living with roommates for quite some time. For a much lower listing price than a MF, I can get a much nicer 3br space that will demand higher rent, without having to undergo any renovations. 

@Alex Deacon that is helpful. If it's a single 3br condo, will lenders care that I plan to generate $1600/month by renting the other two rooms? Perhaps I could have written letters of intent from roommates who agree to move in once I close on the condo? 

Hi @Nicholas Covington and @Alex Deacon, thank you for your reply. 

I guess I am also wondering if lenders take into consideration the fact that you will be renting out all unoccupied space, or if it is a universal policy to only consider my income and my income alone, no matter who else is living there.  I also haven't found any calculators online that consider your cash reserves, or even your credit score. 

With this, you're probably right in that it's best to have an actual lender plug in all of this information for me. The numbers all make sense for to significantly reduce my living expenses even on a 400k house with a $2500 all-in mortgage, but the goal is to make sure I could actually be approved for that.

Hello, 

This is my first post, and I'm here because I found the podcast off of Millennial Money Minutes. Before mapping out my actual plan, I need to know what I can actually be approved for, and I'm not sure which (if any) calculator online is most accurate. 

Here is my situation:

My goal is to buy either a 3-bedroom single family, or 5-br+ multi-family in a neighborhood just outside of downtown Chicago. My girlfriend and I will live in one bedroom/unit (the house will be in my name only, but she will pay her share in rent). I will then rent out the remaining bedrooms/units.

I can get a quality 3br home for $3-400k, and rent each room for around $800/month (girlfriend and I will share a room). Is anyone able to give me a glimpse of what I can be approved for? 

Gross pay: $8-11k/month (base of 60k, plus steady commission) 3yrs at current job

FICO: High 700s 

Cash: $40,000

Debt: Student loan minimum $100/month (no credit card debt)

Thank you!