All Forum Posts by: Michael Facchini

Derek, I wouldn't necessarily say that's a bad thing.  Depends on your income, debt-load elsewhere (auto loans, student loans, credit cards, etc.), how fiscally responsible you are....and most importantly, we're talking about a multi-unit here.  Some credit needs to be given to the fact that you're buying a good investment that will reduce your monthly outlay.  The first property I ever bought was a 2unit in Lakeview (Belmont and Ashland), $675k, and I was 23 years old.  It kicked out a bunch of rental income and put me in a great financial position each month....and over time, to this day.  15 years later I still own it and it's one of the best investments I've made.

Many of my clients are your age and buying properties in this price range (including condos or townhomes), or even higher if a multi-unit.  I don't think it's as simple to say whether it's a good or bad idea to be 25 and taking on a loan this size....there are many other factors at play which help determine if the decision is responsible.  Hope that helps!

I like them, and many of my clients have had favorable investment experiences with them.  True it's another roof to repair, but you typically realize higher rents/returns....as has been mentioned.  They are also in shorter supply, and as a result can be more desired by the investment/rental community.

Yes, we do a lot of FHA 203k rehab as well as conventional Fannie rehab. Happy to answer any questions!

What about a debt offering where you take a loan from friends or family with promise of repayment? Perhaps less attractive for the friends/family, but a fixed income investment for them.

Keep in mind that buying residential 2-4's as an LLC, or any corp for that matter, will reduce your financing options significantly. Residential lenders want a person, not a corp.

Line of credit is a variable rate. You have the ability to pull the money/principal out again after you've paid it down. So if the intention is to pull money in and out over time, kind of like a credit card, and you're ok with rate fluctuation, the HELOC is the choice.

However, if you are thinking more long-term, want a fixed rate, and you can take specific dollar amounts and put them in play in the near future, a cash-out refinance on one or several homes is the way to go. Make sense?

What type of property are you looking to buy, and approx price range? Where is your 2flat now?

I agree with a lot of things said above. It does depend on the kind of debt and interest rates. In terms of your long-term plan though, buying now at these mortgage rates will save you money over time. So, there's likely a healthy balance here. What about starting with a 0 down VA loan on a primary while also paying off debts, then worry about the investment property?

At least 5% earnest money, but 20% is going to be preferred.  If you're coming up against other interested buyers, you'll need to bid above them of course.  203k won't be something the seller is excited about, nor closing in 45 days...again, if there are competing bids.  Being able to close sooner, larger earnest, and maybe looking at other rehab options is what I suggest...again, if you're competing against other buyers on a given property.  And of course, getting to that property first and being quick to act...

I am very familiar with 3-4 units and the neighborhoods mentioned.  Right now it's hyper-competitive in most neighborhoods of Chicago for this property type.  Often you'll land above asking price and you'll need a strong preapproval to compete against cash-buyers.  You might even need to look at closing in 15 days, so as to act like a cash-buyer.  Larger earnest deposits can help as well. It really comes down to getting in front of the right properties quickly, coming in with a strong offer (in various respects), and having a solid preapproval.  Are you working with an agent right now, and are they tapped into the multi-family market of these neighborhoods?

It starts with the first deal, and going in on a primary residence, multi-unit  is often a great way to get that ball rolling! Congrats and any questions on the lending side, hit me up!