House Hacking in Chicago

Bells, doors, and boxes...Oh My!

Alright, a bit tacky, but think about it. Every doorbell, every mailbox, and every door represents someone living somewhere. Every person that lives somewhere pays something, either a rent, a mortgage, and even if paid in full, you still pay taxes! Yes---you never truly can live "free"! Kind of a downer in theory, but this is just how our system is, like it or not.

Maybe you were on one of those investment sites. Maybe you went to one of your friends that are doing this. Or maybe you thought to yourself, "Gosh darn...I would make a terrific landlord (and tell my boss to F off at the same time). In any case, you may have heard the term "house hacking" and thought "what the heck is that?"

Yes, even agents when they get into real estate wonder that term is and agents that have been doing real estate for decades are always blown away when I explain to them that I work with many clients that house hack.

So, what is house hacking? Simply stated, you buy a place, have some renters and/or other forms of income from your property, and you pay off a sizable amount of your mortgage. That's it (basically) but is actually quite complex. We won't go into everything here because this could be made into a college curriculum. And yes, I am serious about that. Think finances, ethics, legal, taxes, general relationship of tenants, marketing, property management, and more. However, everything is one step at a time and should not jump steps. It can easily become overbearing.

"I get it, Dan...it's complicated"

Okay, great! So you do realize that is more than just buying a place and making money. All too often, individuals come to me and say they heard of this thing and want to do it. I have had clients on the search ask why everyone doesn't do it. If I told you all the reasons why people don't, you probably wouldn't anymore. With my support, you will have a huge step up! Let's go through some of the high level items and I will save the more detailed aspects for another day or more focused deep dive.

Why Do You Want To Do This?

That's the first question and it's a doozy. If it is simply to make money, there's nothing wrong with that but also shouldn't be the only primary goal. Making money is important but it's like opening a restaurant. You want to make money but you have a product and reputation to maintain. If it begins to go to crap you can find yourself in a lot of sa*ce (you know I meant "sh*t" but talking restaurants). I always sit down with my clients and dive into their why. It can be money, yes, but I want to know what you're willing to do. For many, they want to create good homes simultaneously expanding their investment portfolio. They want their money to work for them and to serve the communities they live in.

How To Start

After we review your why we will do an exploratory review. This means we will go over some numbers, the search criteria, and what you can handle both form the perspective of work that requires to be done as well as financial review via my exclusive pro-forma. This will ensure you know what you can afford, where you can add value, what your goals are, and where this is all heading. Some want to scale while others want one and done and make a little money or have family members live with them.

The Search and The Process

The Search will look different for everyone. Additionally, it looks different than buying a condo or a home as well. It's a little bit of both when buying a multi-unit. You want to be happy where you live (unless you have cash and buying a place to not live in which is a totally different thing). Also, if I just ruined your dream of owning investment places without living in them but still requiring a mortgage, then we really need to review! Taking residency for at least a year within 60 days of closing is required (in most to all cases). The overall process will be interesting because we need to be smart about how much money you reserve, what the terms look like, who the current tenants are or lack there of, and more. This plays into everything.

Next Steps

This blog barely scratched the surface of house hacking. If you want to understand how this will play into your life if you want to keep going, let's connect. House hacking is not for everyone. Think tenant issues, late payments and more. However, it can be great if you establish yourself, are transparent, and willing to keep learning, you will probably grow to love it (and become addicted like some). Remember, this ain't your old school slumlord anymore...this is your friendly neighbor that takes care of the property kind of mindset!

Want to learn more? Let's connect! Click the connect button!