All Forum Posts by: Nicholas R Foster

i'm in the chicagoland area as well debating our first purchase. i personally am shying away from any unit that has an HOA attached to it due to the restrictions. restrictions can also change over time, etc... so i'm aiming towards a MF or SFH...

i'll give you a shout to connect as well so we can brainstorm!

I am very familiar with the NACA program. We've helped quite a few owner-occupant investor purchase properties through the program. My point of view on the program- It's next to impossible to beat the interest rates provided to participants in the program. One of our best friends and clients purchased a multifamily in Bronzeville through the program for $600K. At the time market interest rates were between 2.5 & 3%. Her rate with NACA was 2%. She bought the rate down to 1%. Our other clients that have used NACA were not really concerned with the nothing-down part. It was the fact that their interest rates were way below market rates.

With all of that said- the challenge with NACA is the lack of a sense of urgency, poor follow-up, unavailability, and a bad reputation with some listing agents When you complete the training provided by NACA you then have to go out in the real world to get a deal done.

Sense of Urgency and unavailability example: Good agents will call to verify a pre-approval. NACA has a tendency not to return calls in a timely manner. The next thing you know someone else's offer is accepted because NACA did not return a call or was unavailable. We've developed a workaround in anticipation of this.

Unavailability example: Residential Real Estate is a 7-day-a-week business for the most part. We had a situation with NACA where the deadline for acceptance of an offer was over the weekend and we needed something from NACA to secure the contract for our client. No one from NACA was available. We've also had this happen during the week. After this happened a few times we developed workarounds so our clients would not lose deals.

Bad reputation with some agents- We've had a number of agents recommend to their clients to reject a NACA offer. Reasons include too long to close and terrible experiences with NACA inspectors. We once had a NACA client fall in love with a renovated home. The seller did everything that NACA asked for after the inspection. Then NACA asked for one more thing which essentially required her to rip out everything she had done as part of the renovation in the basement. Naturally, she refused and the deal was dead. She called me one month later after selling the home to someone with an FHA Bank of America loan that did not involve NACA. When NACA was not involved the loan closed. With NACA it did not close. There are a number of agents that have had that experience with NACA.

I know I make it sound like there are more cons than pros. But the pro of interest rates below market and nothing down if you need it, make the program worthwhile. You just have to be patient.

I actually attended a webinar about the NACA program earlier this week because a client of mine had the same idea. Here are the important factors to consider for a house hacker of a 2-4 unit property when using the program:

NACA's eligibility requirements consist of the following:

1. No member of the household can have an ownership interest in any other property at the time of closing,
2. Occupy the home over the life of the NACA mortgage
3. Participate in five actions and activities a year and at least one prior to NACA Qualification and one prior to closing in achieving NACA's overall mission of economic justice; and
4. Be willing to abide by NACA's terms of membership, participation, and eligibility.

Occupancy requirement:

At the time of closing, the house purchased with the NACA mortgage must be the Member's only home. After closing, the property must be the Member's primary residence that he/she occupies. NACA takes out a lien on the home to ensure this requirement. This does not prevent any Member from selling their house, refinancing, or purchasing additional property after closing as long as they meet the occupancy requirement.

NACA puts a $25,000 soft-second lien on the property to ensure that the Member lives in the property for as long as they have the NACA Mortgage. In addition, it ensures any required repayment of any assistance provided by NACA for the mortgage payment.

My client's plan was to live in the property for a year and then refinance, however I explained that you'll only be able to refinance to another loan type if you have enough equity (20-25%). That's unrealistic after a year unless you're doing a certain level of rehab, which it does sound like NACA pays for renovations although I'm unsure how much.

All this information I took directly from their website - https://www.naca.com/faq/gener...

@Nicholas R Foster congrats on being here and thanks for listening to the podcast.  I will send you a DM on local meetups and I am right in St Charles where maybe we can connect someday for coffee.  Enterprise is a great organization to learn Leadership so that is a good move to make for now.  

Hey @Nicholas R Foster - Welcome to the Chicago BP forums and congrats for jumping right in!  Out of curiosity what is your current job?

Love your passion for real estate it's an awesome industry that we really aren't taught about in school.....which is sad.   We love helping out and working with newer investors.  I know how hard it was for me to get my first deal under my belt.  

If you are listening to Straight Up Chicago Investors and you haven't already visited their website you should.  It has a done of great local Chicago meetups.

Most importantly we are having a Christmas party on December 2nd, you won't want to miss it.  https://www.biggerpockets.com/...

Happy for you getting going and started.  I always tell someone new to really focus on getting experience on 2 big things in their first few years:  1. Walk as many properties as possible.  Do this by going to open houses with some friends on the weekends, and target flipped properties in areas you like or want to invest in.  Also, if there are investor open houses in your area, where wholesalers are trying to sell vacant properties, go see fixer uppers…again if possible bring a friend.  I know this seems elementary but, in a normal year / normal life we maybe go to a dozen houses or less if you think about it, family, friends - we don’t just show up at a ton of properties…but in Real Estate, you need to begin to notice what makes one type of property different or similar to another so you can “Comp” properties.  

2.  In addition to this, put yourself in any environment possible to be around a higher volume of RE transactions.  You can do this by working at a mortgage company, title company, wholesaler company, real estate brokerage, OR if those things don’t seem practical you can do it vicariously by making friends with investors buying and selling multiple times a month, getting to know them, and eventually they might take you to the closing table, and to walk property when they buy.  

The point is, right now it seems like a lot, like RE is so crazy complicated…but after awhile, you see it the same as a check out line at the store.  There is a simple process of exchanging goods & services for revenue…

I wish you well and keep going and keep learning.  Best wishes to your success.  

Welcome to the BiggerPockets forums!

Go to NETWORK at the top of your screen and you can search for other investors and investment groups in your area. You can also check meetup.com or search facebook for real estate investment groups, clubs, or meetings in your area.

1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by Brandon Turner or The Unofficial Guide to Real Estate Investing by Spencer Strauss.

2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control of your personal finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by Scott Trench , or The Total Money Makeover by Dave Ramsey.

3. As you read these books, watch the BiggerPockets podcasts. This will clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.

4. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. There is a handy search bar in the upper right that makes it easy to find previous discussions, blogs, podcasts, and other resources. BiggerPockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, it will be much easier to recognize a good deal when it shows up. Find Brandon's videos on YouTube for the "four square" method of analyzing homes and practice. It doesn't take long to learn how to spot a good deal.

5. Study the market. You can learn to do this on your own or get a rockstar REALTOR to lead the way. I highly recommend a well-qualified REALTOR that works with investors and knows how to best help you.

6. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. The truth is, you could read 100 books and still not know enough because certain things need to be learned through trial-and-error. You don't need to know everything to get started; you just need a foundation to build on and the rest will come through experience and then refining your education.

You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a pretty forgiving world and the average person can still make money even with some pretty big mistakes.