Beginner looking for advice

[Ryan Cotter]

Hello BP community!

I'm hoping to get some advice on something I've been mulling over but can't decide what makes the most sense financially. I own a 2BR/2BA condo in Chicago which I've owned for 15 months. I absolutely love real estate and want to continue investing, so I'm considering my next steps as I get closer to the 2 year threshold of needing to owner occupy to avoid cap gains. The particulars of my current property are below and the different options I'm mulling over are:

1. Sell my place and buy a new one. Basically a non-starter cause I'm certain I can't sell it at the 2-year mark and make money on it factoring closing costs.

2. Keep my place, rent it out and buy a new place. Issue here is I'll only have approx. $75K in cash for a down pmt on a new place, and would be looking to buy a place in the $500K range. The additional rental income would offset the PMI on my new home, but I'd have to use quite a bit of my monthly allocated savings to accelerate principle payments to get above the threshold where PMI is no longer required.

Thanks in advance for any advice & input!

Orig. Purchase Price = $400K

Down PMT = $100K

Remaining Mgtg. Balance = $287K

Cost of Improvements = $15K

Est. Sale Price = $430K-$440K

Break Even Sale Price = $450K

Monthly Mgtg. PMT = $2K

Est. Rental Rate = $2.5-$3K/mo.