All Forum Posts by: Mike Scaccia

I love it man! I'd say take the ARM- plenty of time to watch the market, and we already seeing rates trending down. Revisions to the most recent jobs data shows us that they were off by almost 1,000,000 new jobs being created which tells me the job market isn't as strong as we are led to believe which means were closer to a recession, lower inflation and subsequent rate cuts from the FED. If rates fall off a cliff in the next six months you refi into a 30yr fixed and there is your fixed rate!

Dillian,

First off congrats on your journey into real estate, and no better way to get started than a house hack. Little back story on me, i am a local lender in Chicago, been the biz almost a decade. Investor and house hacker myself.

The deal you're being offered from what i can tell seems like a steal.. 0% down no PMI? Who is this through and what market are you in if you don't mind me asking!? Is this not a conventional loan? What is the type of financing and is there any points of fee's associated with the rate being offered? From my perspective, if you can get a 5/1 ARM at a lower rate, by all means take it. Most expect rates to come down over the next 24 months, and since a 5/1 ARM is fixed for the first 5 years, you'll have plenty of time to get out of that ARM prior to it adjusting.

Right now, i'd say leverage is your friend, rates expected to come down, which will only drive demand therefore increasing home prices.. CASH IS KING. Hang onto your money if the payment makes sense without a large chunk down, or any for that matter. So long as you plan to hold the asset for the next 5-7 years, the historical appreciation/principal paydown should be enough to cover costs of sale, should you need to exit. Putting less money into the property upfront would give you a greater return on your money because you're into for basically nothing out of pocket upfront! 

If you have any other questions feel free to shoot me a PM/DM!

Thanks,

Hey Jake!

First off, congrats on the successful house hack back in 22! Sounds like you got a winner of a deal there, and all things considered a great interest rate before they shot up in 2022!

I'm a local lender based out of Bucktown and work with a ton of investors, and help host meetups in our office. It sounds like you have a good idea of what you are doing and are looking to speed things up for future purchases. 

1. I'd agree with John- anything with blue line access seems to see quite a good amount of price growth year over year. There is some other up and coming areas where we are seeing a ton of activity with house hacker (unsure its somewhere you'd want to live TODAY though).

2. The biggest change in terms of lending programs id say is fannie's changes to allow for 5% down for 2-4 units. That said, like John mentioned above me, if you're looking for more of a value add type deal, than 203k and homestyle offer great assistance! 

answer to #4: Speeding things up to do more deals every year, i'd say begin looking into partnering on deals with friends or family who perhaps have yet to purchase a property so they can use an fha 3.5% down or 5% down conventional loan, you gift them a portion of the downpayment for a % of equity in the property. Other options would include tapping into the equity of the current property through a heloc or cash out refi to fund the next purchase, or be able to put 20% down for a straight investment property or using private money. Depending on your liquidity/vesting in these retirement accounts - utilizing these accounts can be a great way to purchase more property, you'll just want to be sure you're covering all the bases to keep you on track for retirement, emergency fund etc.

If you have any more specific questions as it relates to financing i'd be happy to chat more in the DM's!

Best,

I'd agree with Anthony's response!

I assist clients in figuring out methods to finance real estate, and house hacking is my bread and butter.

Something i've done personally and continue to help new inspiring investors do every day. Feel free to shoot me a PM and i'd be happy to connect further to share experiences or insights!

Hey Chad! 

Welcome to the forums my friend! Sounds like you guys have found a potential gold mine, in someone looking to offload these properties. 

I am a lender, not a realtor but based on the homes sold in the area i would agree with Caroline in that i find it way overpriced. I think presenting them with the facts of recent comps in the area should help them see the light.. 

Although, you may pay a premium for it, if it were to go to market due to heavy demand for turn key multi family. I'd love to connect further to see if i could be of some assistance to you! Feel free to shoot me a PM/DM to connect further!

Thanks!

@Ethan Tramel Welcome to the forums man! Congrats on the finishing up of your education and journey into real estate investing. As many of these othre great moderators have pointed out, house hacking is an incredible tool to leverage when starting out in real estate.

House hacking a condo, with a buddy is always a solid option. If the mortgage on the condo costs you $2750 and you can get half that from a roommate, you guys have the ability to stay somewhere you actually desire, and you're only footing half the bill but getting all the benefits. Principal paydown, equity, appreciation etc. I think there is greater value in more doors though, so findings something like a 2-4 unit property, where you will live in one unit and rent out the remaining units likely would allow you to live cheaper as their is more opportunity to increase cash flow. As someone above had mentioned you have to be weary of the HOA in any given building and what the implications are for you renting out that condo or short term (Air Bnb) when you decide to move out, pending you didn't want to sell!

I am a local lender and investor myself here in Chicago. Myself and my team work with tons of investors and first time buyer/hackers to get them on the right path and ensure you're properly educated on all the FACTS to make certain you will be a successful homeowner! I shot you a message to connect. Feel free to PM/DM me if you wanted to connect further! Thanks!

Love this take!!

Hey Tim!

Congrats on beginning your journey into real estate! House Hacking is an incredible tool to get started. 

FHA is definitely one route you can go, in the current market with elevated home prices, and interest rates its alot more difficult to utilize and fha loan because with any 3-4 unit property you will need to pass what is called "self sufficiency test" essentially fha has a rule for any 3-4 unit property that requires 75% of the projected rental income to cover the total mortgage payment in order to qualify for financing. In most markets the rents from the other units aren't enough to meet that criteria. That said, it is possible! FHA will not allow you to close a loan within an entity it will need to be under the individuals name.

As it pertains to the conventional 5% down with fannie mae or freddie mac you can do the same house hacking with only 1.5% more down. With this type of financing you won't need to worry about self sufficiency or any income restrictions. Same as FHA though where you will not be able to close the loan within your LLC or other entity. It may be possible however to VEST TITLE within the LLC. The mortgage conveys who owns the debt while title conveys ownership rights in the property!

please feel free to shoot me a private message if you wanted to connect further! 

Hey Chris!

Congrats on beginning your journey to investing in multi family here in Chicago! 

From a finance and lending standpoint 150k of investable capital i'd say is a good chunk of change. Even if you were to purchase the property as an investment property (assuming 20-25% down) you're looking at a 500k purchase price. In those area's it'll be tougher to find something that is turn key and producing a good amount of cash flow. 

About 1/3 of the real estate in Chicago is multi family so i am confident there is something out there for you! If you're interested i think connecting to dive deeper would definitely help!

Feel free to shoot me a PM!

Hey Tim! 

Congrats on the completion of the two projects! That's stellar sir!

Can definitely help you run some scenarios on a cash out refi to 75% loan to value. Rate/fees will all depend on how you want to complete things. If we are looking to qualify soley on the projected rental income you'll be looking at a Debt Service Coverage Ratio loan or DSCR. These are great for investors because we wouldn't need to look at any of your personal income. No paystubs, W2's or Tax Returns. Also with this type of loan you can CLOSE and VEST title within an entity like an LLC. These loans typically have higher rates because they're much riskier from an investor standpoint..

On the flip side, utilizing a conventional loan would certainly yield you the BEST terms in regards to interest rate on a cash out refi of a project such as this! Please see free to shoot me a message if you'd like to connect further! 

Thank you!