All Forum Posts by: Tim Duffey

 Sounds good. And Thomas just to clarify, would you expect it to cashflow right when I move out? Or would you wait a year or two to cash flow positive after I move out. Because some properties I have been seeing will cash flow positively in 5 years after purchase. So just want to make sure I have the right mindset of when to make it cashflow positively. 

Hi guys, 

I am searching for a house hack in my area. When I run the numbers to see if it cash flows, should I run it while I am living there or if I should run it like if I wasn't moving there, (like when I move out eventually). Because I have ran numbers on properties without me living on the property and none are good cash flowing properties initially.

Also, for my 1st rental property and house hack, do you guys focus a lot on cash flow by the way? I've been told for a house hack and me living there for a few years, it is more of a long term growth. Which my CoC would be positive in 5-10 years. But would start off in the negatives pretty well. Curious if I should have a different mindset when house hacking on my CoC, ROI, and cashflow. I like to live in a good neighborhood where crime is low which where I live my cashflow will suffer. Seeking any advice an have with their previous house hack and how it worked out for them with there cashflow, ROI, and CoC. Thank you.

Warning long post:

Hey guys, I am looking into my first rental property in Chicago. I want to start the Stack method and house hack on my first property living in it for a year to get a FHA loan. So I found a real estate agent on biggerpockets which who I liked initially as he has been doing REI in Chicago for 20+ years.

Anyways, was looking at this one property in a nice neighborhood right by a park. It’s a two flat with a mother in law suite as the basement. I found out roofing was replaced last year, heater is 9 years old, and AC is 2-3 years old. Listed at 450k but my RE agent told me we can probably get it at 435k.

So I ran the numbers and most likely will spend $4500 a month with:

Mortgage around $2500

Capex $330 (10% rent)

Vacancy $165 (5% rent)

Heat and water $400

Repairs $200

Property tax $547

Insurance $200-300

And I haven’t even considered electricity, wifi, etc.

My income would be estimate $1400 top unit, $1900 main unit, and $1100 for basement. But I be living in the basement for the first year or two. But it be $4400 estimate for my rent if all units are rented out. So I know my cashflow wouldn’t be the best, and I would start off negative with me living in it.

But after I told this to my agent, he wasn’t concerned about the numbers, and told me I was over analyzing it, and that I made the same mistakes he made 10 years ago. But I told him others say not to bank on appreciation as it is never guaranteed and should be “icing on the cake”. But he is more gunhole on appreciation more than cashflow for this property. I personally do think it will appreciate as well as it is in such a good neighborhood right by other really cool areas of Chicago. So wanted to get opinions of others that are more expertised on this area so I know I’m making the right move. I have a stable job with a good income as well, but paying $4500 a month for me is really expensive though. Just another thought. TIA to anyone taking the time to help me out here. I really do appreciate it.

Awesome, yes I was thinking if I buy this property that I am looking at, I would not focus so much on CoC for the year I am living there. After I would generate close to 5% CoC, but hopefully increase rent as time goes on to increase CoC later on. The property is in a very nice area and I did my research where the properties on this area of Chicago will most likely appreciate as well. So just making sure from others that it is ok to have a low CoC for now and hopefully it will increase overtime plus appreciation.

 Hi Henry, I just sent you a PM I believe. I'm new to BP forum so just let me know if you didn't receive anything. I definitely want to connect and talk about the properties on the Northside for sure. I appreciate your help!

 Interesting point. Do you know which areas of Chicago typically have good cashflow and appreciation? Preferably I want to avoid the South side where the crime is high. But anywhere else I am open to as long as it's a safe and booming area

Hi guys,

Was looking into getting started in REI in Chicago where I live. I have looked at some properties and ran some numbers in areas such as Logan Square, Bucktown, etc. My initial strategy is to do a multifamily house hack where I live in one unit and rent out the rest for a year, using the FHA loan. Then I would rent out my unit after the year is up and invest in a new property afterwards using the Stack method. Question is for areas such Bucktown, West Ridge, Logan Square, etc, is it ok to have a low CoC return if appreciation is most likely for the property in 10-15 years? Some properties I see almost hit the 1% rule now and maybe after some rehab doing the BRRR method I can increase my rent to increase my cashflow and CoC. Just curious in these areas if it's a good bet to start investing now based on my observations and maybe other observations you know of that I do not know of yet. I appreciate any input on this. TIA.

So I've been on the edge of getting into REI now due to insane high prices of homes in a seller market. Me looking at many properties it is hard to find a good deal to follow the 2% rule let alone even 1%. So I'm curious if it's smart to wait it out on my first rental property until the housing market adjusts to find more deals.