Zenoviy Kovtun
Contributor
User Power
Value/Post Ratio
66%
- Jan 29, 2017
- 47
- 31
Hey guys,
Came across a potential house hack opportunity and wanted to get some feedback. I am determined to live rent free! What are your thoughts? Maybe some input from @JScott and @G_Alexander @Envision would be great:
4 flat - Asking ~363K in Chicago
Rents:
3bd ($1200+$120 garage) [Vacant]
3bd ($1250) [Vacant]
(2) 1bd ($700 & $675)
Gross $3,945/m - $47,340 annually
•Needs about 50K in rehab
Taxes: ~7K annually
PITI, underwritten @ a conservative 5.2% interest rate is roughly $1,955.
Remember, I must live in the property so I would occupy one of the 3bd's while also rehabbing the units using an FHA 203K loan. The income would be less once occupied.
Technically, I would be short a few hundred dollars on the mortgage before I find a tenant for the other 3bd.
•Fyi, the seller is motivated and I know there is room for negotiation. He is ill + owns the property free & clear. Was contemplating putting in an offer of 275K, which would decrease the PITI after the 50K rehab even lower to around $1,753.
Expenses underwritten@ 40% of gross income show some losses, but they are variable and with the rehab should be minimized. Perhaps to 30%
Tenants pay electric/ gas - I would pay water
A mentor of mine mentioned he didn't hate it and that it can work. Although, he suggested to save up more capital and to hold out for a better location/take on a bigger mortgage in one of those better locations. Even if that meant still paying minimal rent instead of what I pay now.
The area is currently working class, safer than before ( I felt completely fine while there) and seems to be improving. I can see growth ultimately happening here.
I've had trouble finding good income producing properties in the over-priced Chicago market lately, at least in this asset class below 5 units.
Truly appreciate the feedback. Hope to some day in the near future share my process with fellow fastlaners. Just like they did with me.
Thoughts?
Came across a potential house hack opportunity and wanted to get some feedback. I am determined to live rent free! What are your thoughts? Maybe some input from @JScott and @G_Alexander @Envision would be great:
4 flat - Asking ~363K in Chicago
Rents:
3bd ($1200+$120 garage) [Vacant]
3bd ($1250) [Vacant]
(2) 1bd ($700 & $675)
Gross $3,945/m - $47,340 annually
•Needs about 50K in rehab
Taxes: ~7K annually
PITI, underwritten @ a conservative 5.2% interest rate is roughly $1,955.
Remember, I must live in the property so I would occupy one of the 3bd's while also rehabbing the units using an FHA 203K loan. The income would be less once occupied.
Technically, I would be short a few hundred dollars on the mortgage before I find a tenant for the other 3bd.
•Fyi, the seller is motivated and I know there is room for negotiation. He is ill + owns the property free & clear. Was contemplating putting in an offer of 275K, which would decrease the PITI after the 50K rehab even lower to around $1,753.
Expenses underwritten@ 40% of gross income show some losses, but they are variable and with the rehab should be minimized. Perhaps to 30%
Tenants pay electric/ gas - I would pay water
A mentor of mine mentioned he didn't hate it and that it can work. Although, he suggested to save up more capital and to hold out for a better location/take on a bigger mortgage in one of those better locations. Even if that meant still paying minimal rent instead of what I pay now.
The area is currently working class, safer than before ( I felt completely fine while there) and seems to be improving. I can see growth ultimately happening here.
I've had trouble finding good income producing properties in the over-priced Chicago market lately, at least in this asset class below 5 units.
Truly appreciate the feedback. Hope to some day in the near future share my process with fellow fastlaners. Just like they did with me.
Thoughts?
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