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All Forum Posts by: Jacob Nevarez

Jacob Nevarez has started 2 posts and replied 21 times.

Post: First House Hack

Jacob NevarezPosted
  • New to Real Estate
  • Chicago, IL
  • Posts 21
  • Votes 16

@Quentin Ambrose Intresting! I would have not thought about it that way. Are you currently house-hacking yourself?

Post: First House Hack

Jacob NevarezPosted
  • New to Real Estate
  • Chicago, IL
  • Posts 21
  • Votes 16
Quote from @Jake Andronico:

@Jacob Nevarez

Congrats man!! Here is my experience house hacking at 22, and what I ultimately regret: 

https://www.biggerpockets.com/forums/922/topics/1133476-hous...

Wow, that's a fantastic post, @Jake Andronico! Way to find a way to house hack rather than let funds stop you! Are you currently using house hacking as a method of investing, or are you using different methods? 

Post: First House Hack

Jacob NevarezPosted
  • New to Real Estate
  • Chicago, IL
  • Posts 21
  • Votes 16
Quote from @Mose Gebremeskel:

That's awesome! Couple of things I looked out for:

- Area, make sure it's somewhere that will have stable demand

- I stayed away from homes that had a lot of renovations that were needed

- During the tour see if you can spot basic issues like if wiring is old or how new is the HVAC system, etc. 

- If you decide to keep the tenants that are already there see how well they keep the place

 @Mose Gebremeskel These are great tips! I have yet to hear these, especially about staying away from homes with many renovations. Typically, you hear people flock towards those properties. What were your thoughts that kept you away from those properties? 

Post: First House Hack

Jacob NevarezPosted
  • New to Real Estate
  • Chicago, IL
  • Posts 21
  • Votes 16
Quote from @Jake Fugman:

@Jacob Nevarez Congrats on getting the process started!  A few quick items:

Red flags / tips:

- Seller not willing / able to produce a written lease. Dont trust a verbal "month to month" with nothing in writing. Inheriting a bad tenant can ruin your experience. 

- Evidence of water damage in the basement.  Typically issues repeat themselves.  

- Always do a sewer scope during inspection.  90% of the "major" expenses Ive seen that surprise new buyers are sewer related.   

 Thanks for the insights @Jake Fugman! I just listened to a BP podcast about doing the sewer scope inspection. I'm glad to hear this tip being doubled down. 

Post: First House Hack

Jacob NevarezPosted
  • New to Real Estate
  • Chicago, IL
  • Posts 21
  • Votes 16
Quote from @Quentin Ambrose:

Great question Jacob,

1. Listings that don't allow you to view the entire property until after an accepted offer could be a red flag. 

2. Look for properties with tenants on MTM leases and extend them if you like. 

3. Make sure the property is going to have positive Net cash flow when you move out.

 Thank you for your insight, @Quentin Ambrose! I totally agree that the property must have a positive cash flow when moving out. My realtor has been great at providing numbers that show projected cash before and after living on the property. As for the leases, would you recommend keeping the tenants, potentially raising rent, and extending the lease to a long-term rental, or would you recommend finding a new tenant? 

Post: First House Hack

Jacob NevarezPosted
  • New to Real Estate
  • Chicago, IL
  • Posts 21
  • Votes 16
Quote from @Pat Aboukhaled:

Hey Jacob,

It’s great that you’re diving into house hacking in the Chicago area! Here’s a breakdown to help you navigate your first deal, incorporating advanced strategies, including 1031 exchanges, to attract a broader range of investors.

  1. Neighborhood Recommendations: Chicago offers a diverse range of neighborhoods for different investment goals:
    • Wicker Park & West Town: These areas are known for their strong rental demand among young professionals and offer good potential for cash flow.
    • Lake View: Ideal for attracting tenants who want to be close to downtown while enjoying local amenities.
    • The Loop: A prime location for high-income renters, making it an attractive option if you’re planning to house hack and generate a steady stream of rental income.
  2. Property Types: Opt for properties that align with your investment goals. Multi-family units (duplexes, triplexes) allow you to maximize rental income while maintaining some personal space. If you’re targting properties in historic areas like Lincoln Park, be sure to budget for unexpected maintenance expenses, as older buildings often require more upkeep.

Incorporating 1031 Exchange Strategies

If you’re looking to scale your investment or defer capital gains from a previous property sale, consider utilizing a 1031 exchange. Here’s how you can leverage it:

  1. Upgrade Your Property While Deferring Taxes: By using a 1031 exchange, you can sell a current property and reinvest the proceeds into a larger or better-located multi-family unit. This can be a game-changer, especially in neighborhoods like the South Loop or near revitalizing areas like Pilsen, where property values are expected to rise.
  2. Improvement Exchanges: Recent IRS rulings allow you to use exchange proceeds to make improvements on a replacement property while still qualifying for 1031 deferral benefits. This is particularly useful if you find a lower-cost property that needs some updates to attract high-quality tenants.
  3. Reverse Exchanges and Parking Arrangements: If you spot a great investment opportunity before selling your current property, consider using a reverse exchange. This strategy involves having a third-party entity hold the replacement property while you complete the sale of your relinquished property. This could be a useful strategy if you need more time to negotiate a good price for your current property.
  4. Exploring Financing Options: Given the higher interest rates in 2024, securing financing for your replacement property can be a challenge. Consider exploring alternative financing methods such as bridge loans, seller financing, or specialized 1031 exchange loans, which are tailored to streamline the exchange process while ensuring IRS compliance.

I remember when I first got started with house hacking, I made the mistake of not looking into all the nuances of 1031 exchanges. A friend of mine ended up in a tough spot because he didn’t realize that improvements could be included in the exchange value under certain conditions. It wasn’t until he consulted with a tax advisor specializing in Section 1031 exchanges that he was able to properly navigate the process and save thousands. So, if you’re considering using a 1031 exchange for your Chicago house hack, make sure to consult with an expert early on. A solid understanding of the rules can open up opportunities you didn’t even know existed.

House hacking can be a powerful strategy to build wealth while covering your living expenses, and incorporating advanced strategies like 1031 exchanges can help you scale faster. Start with neighborhoods that have stable rental demand and long-term appreciation potential. Focus on maintaining flexibility in your financing and deal structure to adapt as the market evolves.

Let me kno if you need more specifc recommendations on property types or want to dig deeper into 1031 strategies! I’m also happy to make an introduction to the chicago realtor I use for my investments there, Ali Bakir, I almost have $10K in free cashflow on my triplex there now.

Pat
Turning investment visions into reality in Phoenix, AZ - Ranked #1 for residential real estate growth and opportunity by PwC


Thank you for your insight on neighborhoods and the 1031 strategy! Currently exploring the suburbs as opposed to the Chicago neighborhoods. 

What are your thoughts on Chicago neighborhoods vs Chicago suburbs? 

Post: First House Hack

Jacob NevarezPosted
  • New to Real Estate
  • Chicago, IL
  • Posts 21
  • Votes 16

Hello,

I recently got pre approved and now looking at properties to house hack in the Chicago land area (suburbs). As I'm going through the MLS I'm coming up with my questions for the realtor.

My questions for you all:
Is there red flags that you look when searching for a house hack deal?

And 

What is something you wish you had know before going into your first deal? 


Post: New to Bigger Pockets - Looking to Make 1st investment

Jacob NevarezPosted
  • New to Real Estate
  • Chicago, IL
  • Posts 21
  • Votes 16

@John Mason

I just joined the group! Thanks for sharing. 

Post: New to Bigger Pockets - Looking to Make 1st investment

Jacob NevarezPosted
  • New to Real Estate
  • Chicago, IL
  • Posts 21
  • Votes 16

@John Mason

I started to look at local meetings, and I see that some coming up this weekend. I haven't thought to look at Facebook groups, but I will look into those. Would you recommend joining one that is a niche market (SFH, MFH, BRRRR etc.), or one that covers REI as a whole?

Thank you of course for reaching out!

Post: New to Bigger Pockets - Looking to Make 1st investment

Jacob NevarezPosted
  • New to Real Estate
  • Chicago, IL
  • Posts 21
  • Votes 16

@River Sava

Hey River, 

Thank you for reaching out! I'm currently trying to build a team and find the right lender first. But in the meantime, I will be happy to connect with you!