The Power of the Two-Flat
June 29th, 2009 categories: Chicago Real Estate News
The traditional Chicago two-flat – multiple-story homes common on the city’s North Side – has always been a great home for first-time buyers. That’s because these buyers could live on one floor and then rent out the other. This rental income helps the first-time buyers pay their mortgage.
The plan, then, is to wait as the two-flat appreciates. When it’s time to sell, you’ll make a nice profit that you can use toward your next home.
Does this plan still work? Yes. In fact, according to a story in the Chicago Tribune, the two-flat is attracting a growing number of first-time buyers today.
Two-flats in neighborhoods such as Lincoln Park, Lakeview, Lincoln Square, Ravenswood and other top Chicago communities are more affordable than they’ve been in years. According to the Tribune story, these homes were some of the first lost to foreclosure during the housing slump.
That leaves the prices on today’s two-flats in a range that’s affordable to many first-time buyers. Experts quoted in the Tribune story say that many two-flats today are selling for the same amount that they were moving for in 2000 and 2001.
The story also explains that financing a two-flat is relatively simple for owners who plan to live in the building. These owners can acquire an FHA loan that allows owner-occupants to put less than 5 percent down. The loan also allows owner-occupants to apply potential rental income to their own incomes. This way, owners may quality for a higher loan than they would if they were buying a traditional single-family home or condominium.
Of course, there are some downsides to living in a two-flat. The main one: You may not like being a landlord. It’s not always easy to live with renters. When something in your renter’s unit breaks, you’ll have to get it fixed. You’ll also have to do the background work to make sure you’re renting to occupants who have a history of paying their bills on time.
If you are willing to do this work, though, buying a Chicago two-flat may be the right choice for you. It might serve as your entry into the Chicago housing market.
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