how to move forward with portfolio

Question

I have a fully paid off condo that I bought in cash last year because I am studying and I do not have a W-2, heard about DSCR loans but didnt really look into it at the time. Got the condo for $106k, key turn rental, and has been renting for $1400. I now want to do a DSCR cash out refinance so I can use that money to expand my portfolio. Now my question is whats the best way to move forward with this estimated $75k? Obviously some sort of BRRR would be ideal, where I dont need to do an insane full gut rehab, but smaller renos to be able to have the least amount of money left in a property, but im finding that such properties are hard to come by, and dealing with contractors seems like a headache. I could just get a similar condo the one I have currently with a 25% down payment and a DSCR loan, ratio would be 1:1 at minimum, but probably around 1:1.2 . And I could do this for 2 condos easily, but my concern is HOA fee increases and lack of appreciation for condos. Would it make more sense to put this $75k into a sfh even if the cash flow is less? I feel like condos are nice because its less of a headache, easier to find good cash flowing deals, and just overall cheaper. If I want to do a house hack, or any other method anybody have any advice on getting started with these? Additionally, whats the risk in having multiple mortgages? If I am able to just pay my mortgage continuously even through a recession I should be ok right? any advice greatly appreciated.

Daniel Baker · Answer

Fannie Mae's 5% down program on up to a 4 unit is what I would use if I were you.  You will have to live in the building, but if you’re serious this is the best way to utilize leverage.  If you find any issues in the inspection, ask for a credit at closing, maybe 10 to $20K to cut your cash to close. Another option is to tell the seller you will pay 10K more but you want a 10K credit. So rough math, let’s say $800K 4 flat north side of Chicago. Price $800K, closing cost $23,000. Down payment $40,000+ $23,000.

Hard part will be finding a deal.  I see a few a year on the MLS that work.  There was a 4 unit in Albany Park a few weeks ago that was perfect for this kind of financing.

So normal cash to close with the 5% down program: $63,000

$63,000-$20,000= $43,000 cash to close depending on tax prorations assuming you live in the building.

Message me if you want to talk more about it.

Wale Lawal · Answer

@Burhan Senih

You're in a strong position with a paid-off condo and solid rental income, and tapping into that equity via a DSCR cash-out refinance is a smart move to scale. If ease and cash flow are your top priorities, sticking with condos could work—but your concern about HOA unpredictability and limited appreciation is valid. If you're playing a longer-term game, you might consider diversifying into a single-family home (SFH) in a growth market, even if the cash flow is tighter upfront, since SFHs typically offer better appreciation and more control. House hacking a SFH could also help you offset expenses and build faster equity. As for multiple mortgages, they’re manageable as long as your properties cash flow, reserves are in place, and you don’t overleverage—steady payments through downturns is key.

Good luck!

Jonathan Klemm · Answer

Hey hey @Burhan Senih - Congrats on having a paid-in-full condo!  That's an amazing position to be in.

Maybe consider a Home Equity Line of Credit - if you can claim it as your primary residence, you can get up to 90% of the value and use that to invest.

If you can pull off a house hack and buy a 2-4 unit multi-family, that is always the best way to go, but honestly, there are NOT many people buying and renting condos here in Chicago.  Less competition can mean more opportunity - the key with buying condo's is understanding the HOA by laws inside and out.

Some HOAs will have a rental cap and some of capital calls because they are low on reserves...if you plan your cards right, you can find some great deals!

Most importantly - stick to ONE STRATEGY because that's how people are able to grow and scale, they build a system around a repeatable business model...

Riley Poppell · Answer

Hey Burhan, I think that it would make more sense to put it into a single family since you won't have an HOA (which lowers your equity and can be a headache). I personally have a couple referrals for the HELOC (cash out) and then the next purchase could be a DSCR.

Shea Murray · Answer

@Burhan Senih Hey Burhan, I think you have quite a few options here. If you're looking to invest in the Chicago area - happy to make some connections for you / chat about what makes sense. I will shoot you a DM now.

Eric Gerakos · Answer

Condos can have great appreciation if they are in desirable vs affordable locations.

Chris Seveney · Answer

First, I would not take money or refinance just to refinance, you will be paying close to 7% interest on that money to do nothing. Investing in another condo is not a bad idea but as you mention just got to watch condo fees. Investing in SFH also could be good or there are lots of other real estate investment options and strategies (could be passive investor in a fund).

What I would do is get someone to underwrite the DSCR for you to confirm what that would look like and at same time be looking for properties. Having a property not cash flow is not an absolute no, you just want to make sure it is in an area that appreciates and you have the money to be able to carry it.

how to move forward with portfolio

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