Vendor Portal
Author: Mark Ainely | Partner GC Realty & Development & Co-Host Straight Up Chicago Investor Podcast
You’ve house hacked, maybe even two or three times, and now you’re ready for the next step: buying a true investment property where you won’t live in one of the units.
This week on the Straight Up Chicago Investor Podcast, Mark Ainley and Tom Shallcross sit down with Chris Puleo from Neighborhood Loans to break down exactly what changes when you go from owner-occupied financing to non-owner-occupied investing.
If you’ve ever wondered how much cash you’ll need, which loans are available, and how to qualify as a full-time investor, this episode answers it all.
Episode Summary
Once you move beyond living in your investment property, the financing rules change. The lower down-payment options disappear, but other tools open up, like conventional 25%-down loans and DSCR loans that qualify based on rental income, not personal income.
Chris explains:
- Down-payment requirements for 2-unit vs. 3- and 4-unit investments
- The basics of Debt Service Coverage Ratio (DSCR) loans
- How investors can tap 401(k) loans, HELOCs, or partnerships for funding
- Rate differences between owner-occupied and investor loans
- Why condos are harder to finance than small multi-units
- How appraisers use market rents, not actual leases, to qualify your deal
This discussion gives new investors a clear roadmap for scaling from their first house hack to their first true income property.
Show Notes
00:00 – Cold open: Mark and Tom introduce lender Chris Puleo and set up the scenario of investors moving beyond house hacking.
00:37 – The challenge: investors ready to buy a 4-unit but not live in it; what financing options exist.
01:04 – Conventional loans: Fannie/Freddie guidelines, 25% down for 3- and 4-units, and why two-flats can require less.
02:59 – Using 401(k) loans to fund down payments without tax penalties, reallocating your portfolio, not cashing out.
03:32 – DSCR loans explained: qualification based on rent coverage ratios and why they’re ideal for self-employed borrowers.
04:48 – Creative funding: HELOCs, partnerships, and diversifying equity across multiple properties instead of one.
05:33 – Long-term wealth mindset: multiple leveraged properties build more rent and equity than one paid-off home.
06:55 – Rate comparison: investor loans typically 0.5% higher than primary residence rates, with small additional fees.
08:02 – Why lenders prefer single-family and small multi-unit properties over condos in the current market.
08:32 – Market rents vs. current rents: appraisers use comparable area rents when qualifying investment loans.
Key Takeaways for Chicago Investors
1. Expect Larger Down Payments
Once you’re no longer living in the property, 3- and 4-unit buildings require 25% down. Two-flats may qualify with slightly less, but investors should plan around that minimum.
2. Explore DSCR Loans
These loans rely on rental income rather than your W-2 or tax returns. If the projected rents cover 120–125% of the mortgage payment, you can qualify, even if you’re self-employed.
3. Leverage What You Already Have
Use equity from your primary home, a 401(k) loan, or a strategic partnership to fund the next purchase. You’re not losing money, you’re diversifying your portfolio.
4. Condos Carry More Risk
Fannie Mae and Freddie Mac treat condos as higher-risk, which means higher down payments and tighter underwriting. Stick to single-family homes or small multis when scaling.
5. Rates Are Manageable
Investor loan rates are typically only 0.5% higher than primary rates. A slightly larger down payment (30%+) can nearly erase that difference.
6. Market Rent Determines Value
Lenders qualify investment properties using market rent estimates from the appraisal, not the current below-market leases. Undermarket rents often signal a buying opportunity.
Guest Info
Guest Name: Chris Puleo
Guest Company: The Puleo Group – Neighborhood Loans
Guest Link: https://neighborhoodloans.com
Because finding good tenants and property management shouldn’t feel like online dating.
Dear Investor,
If you are an investor in either the city or suburbs of Chicago, I would love to speak with you about how we can help you on your real estate journey. At GC Realty & Development LLC, we help hundreds of Chicagoland real estate owners and brokers each year manage their assets with both full service property management and tenant placement services.
We understand that every investor’s goals are unique, and we love learning about each client’s individual needs. If there is an opportunity to help you buy back your time by managing your rental property or finding quality tenants, please check us out.
Best Investing,
Founder, Partner, Podcast Co-Host, and Investor
