{ "media_type": "text", "post_content": "Friend wants to go halfsies on investment property in Chicago to rent out. Is this a good idea? \n\nAbout me: \n-26M, $130K salary +$80k in late-stage startup equity, no debt, ~$200K Net worth (investments, cash, etc) \n- job: strategy at software unicorn startup\n- current rent: $850 (live with girlfriend in a steal of an apartment)\n\nAbout friend: \n26M, $90K salary, prob $50-100k net worth.\n- Job: sales at Rockwell automation \n- lives with a roommate, $1400 / month", "post_id": "60ff2eb3b5d7ed0022bc18c7", "reply_count": 47, "vote_count": 3, "bowl_id": "59064a3cb12379001006592c", "bowl_name": "Personal Investment Chatter" }

Friend wants to go halfsies on investment property in Chicago to rent out. Is this a good idea? About me: -26M, $130K salary +$80k in late-stage startup equity, no debt, ~$200K Net worth (investments, cash, etc) - job: strategy at software unicorn startup - current rent: $850 (live with girlfriend in a steal of an apartment) About friend: 26M, $90K salary, prob $50-100k net worth. - Job: sales at Rockwell automation - lives with a roommate, $1400 / month

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I’d recommend doing it yourself. Reach out to an agent who specializes in investor properties and they can point you to a good lender to pre approve you. I just did this earlier this year in Chicago and was in a less strong financial position than you are. I also recommend checking out the Chicago Bigger Pockets forum, and the straight up Chicago investor podcast - both were awesome resources for me. Both are also great ways to get connected to good agents and start building your team. Only thing I’ll say upfront is if you want to cash flow in Chicago you’re going to be looking at Irving park, Avondale, Albany park, humbolt park, or further out. It is very difficult to cash flow in the more class A neighborhoods without a huge down payment

I think it’s fine to go into business with a friend if you have the same goals and plans. Make sure you discuss this in detail before committing to it. Think through potential exits, who will do what on the project. If you have to come up with more money how do you handle that. I’ve done many deals with friends over the years. Some work out, some don’t. Some are still friends, some aren’t. I’ve done deals with people that I didn’t know well that became friends. You need to think of this as forming a side business and selecting work colleagues. Look first for qualities that will serve the work, trust, integrity, risk tolerance etc and second for friendship. And yes, be willing to walk away if needed.

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Don’t go into business with friends and family

likesmarthelpful

I do work in consulting ‘buddy’, and I don’t think you have an understanding of what bad sample data is… This isn’t a family operated business - very different situation to go into a passive investment with a friend that’s in a slightly inferior financial position (as described anyway)

No. Just do it yourself.

likesmart

My dad always said "don't go into business with anyone you're not prepared to sue"

likesmart

Nice

Chicago is baaaaaad to own. Taxes are unreal

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Chicago has low appreciation because taxes continue to go up. Just compare condo price appreciation in DC with Chicago

Don’t do it! Tried it recently, friend who’s I trusted tried to screw me, no longer friends. If you can afford it anyway, just go solo.

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Not sure in Chicago but in Canada you can buy your first property at 5% down. I'd advise to buy first one yourself then the subsequent ones after with others

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Check out roofstock if you want helping managing and buying a house

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I don’t

smart

I would absolutely NOT do it with a friend - it’s not worth the headache. Like the others have said, look into the taxes, maintenance, hoa etc. to determine true cost of ownership and then you can make a decision if it makes sense financially to do it on your own.

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Find a duplex to buy and live in one side and rent the other. Good way to dip your toe in property management

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I have investment properties, and I wouldn't go in together with a friend. You can easily do it on your own, partnering to do this same thing with a friend just makes it so much more difficult. Hard pass

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Why not ? Go to a lawyer and draft a JV with your friend. Put on paper all the what if’s scenarios. Happens all the time in real estate.

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1. Make sure to look at taxes/HOA and sunk costs 2. What could that money do if you invested it in the market or somewhere else? I live in Chicago, and I’ve never considered it worth it to own (for me) because most of the yearly taxes alone on places are more than what I’ve paid to rent (albeit cheap rent)

Also if I was going to go halfsies with someone, ideally I’d want them to be more experienced in real estate, life (older age than me), or at least be making as much as me

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I am in very similar situation and did it with friend. Dm if you wnat

Well, if you have to ask…no

Late to the party - but there is a lot of work and hassle in owning a rental property, whether you do it yourself or you co-own. Make sure you and your friend are crystal clear on who is scheduling maintenance, going over to the house at 10 pm to handle an emergency water leak, who is calling the contractor to fix the leak, who is doing the paperwork and taxes, etc. Each individual thing might seem fairly “easy” but it adds up in the time investment. I wouldn’t own a rental property at all, let alone share with a friend. Just put the money in the market.

For Chicago, lived there 5 years myself, owned my first home there, it is a condo. For over 10 years, did not even appreciate $90K. I bought it in 2009 after financial crisis, so definitely the low point. Chicago just does not appreciate in the city, the suburb seems to do ok. But when the property tax is high, the city is pro tenant, and people are not moving into Chicago, it is not a good market.

Own in Chicago, only because I found all in cost lower than rents for the neighborhood where I wanted to live. I agree with everyone here, I’ve known friends who have been owning since over 10 years and there’s 0 appreciation. So don’t buy for appreciation. BUT, if you can get over the mortgage pretty quickly, you will have forever rent income. And it’s super easy to rent in Chicago and will always be. Said that, it is a headache to own so if you don’t absolutely trust your partner it just makes sense to do it on your own whenever you are confident enough or maybe find an advisor.

Everyone who doesn’t own an investment property or hasn’t done a partnership, please dismiss yourself from this thread 😂

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