New Investor Seeking Advice

Buying & Selling Real Estate
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New Investor Seeking Advice

Darci Aita
Chicago, IL · Member since 2018 · 3 posts · 1 vote

I purchased my condo 7 years ago and it has nearly tripled in value. While I'm excited about this, I really like the location and layout of my place - it's in a nice, quiet neighborhood close enough to the city but far enough so families are comfortable (Oak Park, IL) I'm right by the metra and 'L' (subway) which is fantastic for my commute to work. 

I'm graduating from my masters program without any student loans and I don't have any debt aside from my current mortgage, which I owe about $25k on. 

Should I sell and use the profits to invest in a new place? My concern is the market seems to be a sellers market now, and I'd hate to invest and end up underwater. I was thinking of buying a 1-2 bdrm in Wrigleyville and renting it out with AirBnB. With 81 Cubs games/year, I could bring in at least $225 a night. It's a pretty big tourist location. I'm concerned about regulations though, and wouldn't want to be stuck with a high mortgage and no ability to rent or airbnb my unit. 

I could also invest my profits and rent until I find a great real estate deal - but that means spending $600 more a month on rent (My mortgage is crazy low). 

Here's the breakdown: 

Home sold for $50k, worth $130k

Rent nearby is around $1300/Month (The HOA Prevents me from renting my unit out unfortunately)

Options: 

1-Stay, save up and continue to have a low mortgage 

2-Sell, buy a new place and invest my earnings in non-real estate investments

3-Sell, buy a place in Wrigleyville and airbnb it out while renting elsewhere 

4-Stay, get a home equity loan and do #3 (minus the sell part)

What do you think? Am I missing any options, and what's the best option? 

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Zack KarpPro Member
Lender · Schaumburg, IL · Member since 2015 · 833 posts · 774 votes
8y

@Darci Aita

5.  Stay and refinance your mortgage and pull cash out to use as a down payment(s) to buy rental properties.

As an investor, ideally you want your primary housing to be inexpensive.  Sounds like you hit a home run on your condo, great job on that.

The home equity loan would be at either a much higher rate and/or adjustable, versus a low fixed rate on doing a refi to your mortgage.  You could refi with a loan up to 80% of the appraisal and get locked into a low fixed rate, which IMO is the smart move in a rising rate environment.

Now you have 50K or so to play with, and still a manageable mortgage payment.  Lots of options from there.

Best of luck!

847-387-5513
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  • Rome Wells
    Stamford, CT · Member since 2018 · 91 posts · 34 votes
    8y
    I suggest to sell and start hunting in areas where it makes sense that cash flow well and have appreciation factor. Forget Airbnb and shoot high not low. Get yourself a building multi family building... syndicate it yourself and get other investors to invest with you, become a networker, Money raiser, wholesaler, all in 1... (I call it hybrid syndicator) When you ready to sell your condo sell it and buy multi family building with other investors. Plan it out... don’t just do it... randomly. You must time it properly or take risk being sinked under water. If interested to see what I think about real estate after almost 4 months of attempting to learn it... then simply check out my site StudyGuide.net/real-estate Note I am not an attorney neither cpa, but rather someone who thinks that the final answer truly depends on you and your persistence. I can’t decide for you, but if you want to see how I am similarly torn apart across multiple options and similarly going through the same newbie torture then feel free to check out the link I showed you to see what I learned... Note most of the things I teach I simply teach out of joy. Hope my advice will help.
    0Reply
  • Zack KarpPro Member
    Lender · Schaumburg, IL · Member since 2015 · 833 posts · 774 votes
    8y

    @Darci Aita

    5.  Stay and refinance your mortgage and pull cash out to use as a down payment(s) to buy rental properties.

    As an investor, ideally you want your primary housing to be inexpensive.  Sounds like you hit a home run on your condo, great job on that.

    The home equity loan would be at either a much higher rate and/or adjustable, versus a low fixed rate on doing a refi to your mortgage.  You could refi with a loan up to 80% of the appraisal and get locked into a low fixed rate, which IMO is the smart move in a rising rate environment.

    Now you have 50K or so to play with, and still a manageable mortgage payment.  Lots of options from there.

    Best of luck!

    847-387-5513
    1Reply
  • Michael Guzik
    Real Estate Agent · San Antonio, TX · Member since 2017 · 523 posts · 362 votes
    8y

    @Darci Aita Wow it sounds like you have a really good problem lol! You seem very knowledgeable so good job on really thinking through all your options. If you are ever going to sell it now would be a great time because we are at the tip top of the market. I would even see about 1031ing into a larger property maybe a plex? That could be very stressful though and that due date can lead to some impulse decisions.... I personally think you should either do a HELOC or sell and use that money as a down payment for another property. That Airbnb idea sounds great but keep in mind that is a job and is much harder than most people make it seem. I would look into smaller apartment buildings too because you could use that money you get as a down payment or maybe passively invest in some deals? There are so many options that I would just stop and focus. What part of real estate do you want to focus on? Once you know that I believe that will help guide you in this situation. Good luck!

    1Reply
  • Fradel Schaechter
    lakewood, NJ · Member since 2017 · 282 posts · 156 votes
    8y

    @Darci Aita- hope you have luck choosing the best path for you.

    I can't offer much advise as a newbie except for: KEEP ON ASKING! Staying active in the forums, I believe, can help you get ahead and make less mistakes.

    Best of luck!

    0Reply
  • Tom Ott
    Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ votes
    8y
    Originally posted by @Darci Aita:

    I purchased my condo 7 years ago and it has nearly tripled in value. While I'm excited about this, I really like the location and layout of my place - it's in a nice, quiet neighborhood close enough to the city but far enough so families are comfortable (Oak Park, IL) I'm right by the metra and 'L' (subway) which is fantastic for my commute to work. 

    I'm graduating from my masters program without any student loans and I don't have any debt aside from my current mortgage, which I owe about $25k on. 

    Should I sell and use the profits to invest in a new place? My concern is the market seems to be a sellers market now, and I'd hate to invest and end up underwater. I was thinking of buying a 1-2 bdrm in Wrigleyville and renting it out with AirBnB. With 81 Cubs games/year, I could bring in at least $225 a night. It's a pretty big tourist location. I'm concerned about regulations though, and wouldn't want to be stuck with a high mortgage and no ability to rent or airbnb my unit. 

    I could also invest my profits and rent until I find a great real estate deal - but that means spending $600 more a month on rent (My mortgage is crazy low). 

    Here's the breakdown: 

    Home sold for $50k, worth $130k

    Rent nearby is around $1300/Month (The HOA Prevents me from renting my unit out unfortunately)

    Options: 

    1-Stay, save up and continue to have a low mortgage 

    2-Sell, buy a new place and invest my earnings in non-real estate investments

    3-Sell, buy a place in Wrigleyville and airbnb it out while renting elsewhere 

    4-Stay, get a home equity loan and do #3 (minus the sell part)

    What do you think? Am I missing any options, and what's the best option? 

     Hello and welcome! Best of luck to you!

    0Reply
  • Yukiko Nakayama
    Real Estate Professional · Ashburn, VA · Member since 2014 · 29 posts · 15 votes
    8y

    I recommend that you do more research such as aribnb regulation etc and talk to local investors who are investing in the area that you are interested in.  Eventually you will find an answer you are looking for. 

    1Reply
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