All Forum Posts by: Donald Hruska

I'm looking at potentially submitting an offer on a multifamily home in Chicago. It is a two story building - I do not have exact square footage. It has what appears to be asbestos siding - I am not under contract, and this has not been definitively tested. There appears to be a bit of cracking going on, as well as some deterioration where the siding meets the eaves and the roof. I'm assuming it would need some attention in the next few years. What are my options here? After some research it seems that the consensus is to not remove asbestos siding, but to spot touch up and paint or completely cover with new siding, because removal is very costly. Does anyone know what ballpark prices I'd be looking at for either of these options? As an aside - some reconfiguration of windows would be beneficial for reworking the layout of the interior of the units. I'm figuring that the proper time to do this would be when making these changes to the siding. Do you think it'd be possible to cut new window openings in asbestos siding without completely removing all the siding? A lot of questions in here - thanks for reading!

I've been valuing multi family property based on cash-on-cash return (yearly income after mortgage payments, property taxes, maintenance, vacancy, insurance over upfront cash i.e. down payment and closing costs) and cap rate. Something I'm realizing is that this doesn't take into account income taxes. Is calculating cash on cash return like this inaccurate?

@Samson Kay How has this been going the last few months?

Originally posted by @Mark F.:

@Donald Hruska Hi Donald, yes, you're right, you don't need 20% down to buy a property that you plan on living in. FHA will finance you with as little as 3.5% down. Keep in mind that you'll pay mortgage insurance - which can be steep - if you put down less than 20%.

I understand I can put less than 20% down with an FHA loan, but I am trying to shy away from FHA because of the recent PMI requirements that would make PMI last for the life of the loan. Do you know much about conventional loan requirements when putting less than 20% down, such as length of time living in required, or anything else?

I am planning to purchase a multifamily property in the coming year, and I bill probably not be able to afford more than a 5% or maybe 10% down payment based on the area I am looking. I had been under the impression that for a conventional loan the maximum allowed LTV was 80%, but I am now hearing that that isn't true. If it is indeed possible to purchase a home with a conventional loan and 5% or 10% down payment, what other requirements are there? I was planning to live in the property for a year.

@Brie Schmidt and @Crystal Smith - thanks for the replies! Looks like I have plenty more research to do. I'm not necessarily tied to FHA, but I think it may be necessary based on the neighborhoods I'm looking at and the fact that I don't have a ton of capital at this point.

Hi all,

After a good amount of reading I've begun saving for a downpayment for my first rental property. My plan is to purchase a multi-unit property and live in one unit, potentially utilizing a FHA loan. I'm in the process of looking at properties and checking Redfin daily as I try to get a feel for the market and decide on what neighborhood would be best to look in.

I think I would potentially like to buy a slightly (cosmetically) run-down property that I can work on fixing up as I live in it, both to minimize initial costs and to potentially increase home value. I'm a young professional and currently live very close to the Loop with roommates, so if they moved with me it would probably need to be relatively close to the Loop. Ideally, Old Town, Lincoln Park and Lakeview would all be great neighborhoods, but I feel that costs of homes there are too high for my current position, especially if I want to utilize a FHA loan. Wicker Park or West Town could optionally be good, if I could find something affordable and near the blue line.

So, my questions for anyone familiar with neighborhoods here in Chicago:

1. Are these assumptions about neighborhoods and prices correct or am I off base, and do you have any other neighborhood suggestions given my criteria?

2. Are there other ways I can be searching for properties and getting a feel for the market as I build up my funds? I've heard Redfin is a useful online resources because of the MLS access, but is there another way I could be looking at properties not "officially" on the market? Would networking with wholesalers here on BP be beneficial to me or do properties sold by wholesalers tend to be priced high?

Thank you all!

So let's say you're valuing a 3 unit property using the GRM of the area, and you don't factor in the illegal unit - that results in a pretty large difference in value from the asking price. Is that basically no longer a useful way to value the property?

Hey Dan, small world, yes we should!

Hi all, I'm doing research for my first purchase which I'm hoping to make sometime in the next 12-18 months. I plan to purchase a 2-4 unit property in Chicago and live in one of the units. Very frequently I see in listings "illegal" garden units. What are people's opinions of these? Do you factor in theoretical income from one of these units?