All Forum Posts by: Victor So

@Sheila Campbell

Hello!

If I were you, I would save up a little money first and then consider using a FHA loan and pay only 3.5% to get into your first property. Then, you can have roommates to help you pay down your mortgage. If you find a pretty run down place, then you can use a FHA 203k loan to include the rehab costs into the purchase of the property.

I feel like this is low risk, relatively high reward in getting started.

Hope this helps!

Victor

@Eric Sipe

Hey!

I think there are different approaches to this as one method may not be suitable or appealing to everyone. But, one way, would be -

(1) Use a FHA loan to buy a property to house hack with only 3.5 percent down, put tenants in one unit and you live in the other unit for a year (this is one of the rules you have to abide by).

(2) Then, after a year, refinance out of the FHA loan into a conventional loan.

(3) Then, buy another multifamily property with a FHA loan where you can househack.

(4) Move into new property, put tenants in your previous unit, and repeat.

Hope this helps!

Victor

@Anthony Fecarotta

Hey! I think there are different ways to do this. I’ve posted a similar question before. It seems the consensus is,

(1) Get to know a realtor (unless you’re a realtor yourself)

(2) Have your realtor get you comps on the property as well as rental rates in the area. Then, run the numbers between your monthly costs (PITI + expenses) and rental income and see if you'll cash flow when you rent the unit(s) out. You can also do a quick check on Rentometer.com for rental rates in the area.

I recently bought a duplex. I made sure I purchased the property for under market value by looking at comps. And then, I looked at rents around the area to see how much cash flow I would make.

Long story short, I’m going to live in one unit, rent out one unit, and airbnb my finished basement and other rooms that I don’t use. I think I can break even or cash flow ~100-200 bucks.

Hope this helps!

@Andrew Angerer

Not sure about other people. But I almost gave up... because I had to deal with a very difficult municipality and village when pulling permits. It took me 6 months just to pull permits and get renovations started on a property I purchased with a FHA 203k loan. Luckily, I persevered through the grueling wait.. and once renovations started, everything was history. I am more than hooked than ever.

So I think some people may want to quit... when hurdles come around, not knowing that once you get through the hurdle, you will never look back again.

@Matt Loewenstein

I’m from Chicago and I started renting out my rooms on airbnb to see how it would do. Luckily, for me, I lived in a hot location, close to Michelin starred restaurants and nice bars, with easy access to transportation and downtown Chicago.

So yes, first thing would be (as some mentioned above) location, location, location. Is the town (or block) your place is in a very desired, touristy location? Or, is it sought after for other reasons (college campuses are nearby, close to airport, etc)?

Second, I would make sure to know your local laws and ordinances. A lot of cities are cracking down on airbnb and some won’t allow short-term rentals unless you live in the unit yourself.

Third, I would make sure your numbers are on point. Make sure to include cleaning expenses, taxes, percentage cut to airbnb, etc in all of your calculations.

Hope this helps!

Victor

This is crazy!

Hi Rebecca, I don’t mean to be negative here since I’m sure there are many who do well with condo investments. Personally, though, I’ve had one bad experience with a condo that I just sold and that’s all it took for me to make a decision to stay away from condos from now on. Here are some reasons why I don’t like condos: 1) Unpredictability - the HOA can raise fees and slap on special assessments as they see fit. The intentions may be good (in order to make improvements to property, make repairs, etc). However, this can hurt your ROI in the long run and the surprise aspect of it sort of stinks. 2) Renovation limits - the HOA can tell you not to make certain renovations. For example, you may want to tear down a wall in order to open up the kitchen. However, if the HOA says no (like mine did) then you can’t. 3) Regulations on when you can start renting out your property - many condos do NOT allow short-term rentals like airbnb, vrbo, etc or any other endeavors that promotes business use of your home. Also, many do not allow you to rent out your condo. If they do, there may be a wait list or a waiting period. For my condo, I had to wait 2 years before I could even think about renting. 4) Other HOA rules - if you’ve bought a condo before, then you’ll be familiar with the 100 page condo document with all of the rules/regulations of the HOA. I was simply tired of following all of it. For example, my condo would not allow me to hang certain types of curtains and my doors had to be painted a particular type of color. Now, I’m sure there are other condo associations with less stringent rules, more flexibility in renting provisions, etc. but I would suggest you vet thoroughly the HOA you’re dealing with before you buy a condo.

Kimberly H. Do you know move out fees are typical in Chicago?

Ann Folan do you charge a move out fee?

John Warren do you also charge a move out fee when they leave? Is that even a thing in Chicago? (This is sort of a separate topic but I’m curious because my condo is charging me a move out fee)