Hold it, rent it or sell it ? transition from condo to muti unit

[Ornuma Panmunee]

Hello. My name is Orn.

I'm having some difficulty making the decision and want to see what other options I have that I might miss.

Part 1 - the background story

I own a 2 bed 1 bath condo in Chicago since July 2016. ($147,500 with 20% down at 3.87500% interest. $336 HOA -- as of today the loan remaining is $106,050.53)

I love this condo. it great sunlight, the perfect size for my family.

YET, I'm not satisfied.

My goal is to become a landlord and start to invest more in properties by 30.
I was a stayed-home mom for 2 years and just back to work for 11 months.
The very main reason I'm back to work was that I want to make my goal happen.
(already 30 and still haven't made my goal come true. Eventho I have 740 credit score, still had some difficulty because I wasn't working long enough)

I got  2 pre-approvals

1. conventional loan for $299,900 with 5% down (only if I sell this condo or have a rental least. -- I might misunderstand in this one whether I have to sell my condo or not)

2. FHA loan 3.5% down. Max loan limit on a 2 flat is $ 461,000 on a 3 flat is $569,000

Part 2 - What I want

My goal is to own a multi-unit preferably north side of Chicago or Northwest of Chicago but open for any safe area for 3 years old boy and me who always gets home from work after 1 am.
(lived in Division blue line, Logan Square, Avondale, Old Irving Park, and now Lincoln square)

- Want a property that can stay rent-free or pay nearly nothing.

- Have tons of renovation ideas and would love to learn to do everything by helping, observing contactor (if they let me)
  I only know basic like paint, grout, change faucets, apply silicone, cut drywall, etc
  My end in mind is to be able to gain more skills and knowledge.

Part 3 - My limitations

1. I only have around $28,000 in saving

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I put my condo for sell at $165,000. 2 weeks later got an offer at $158,000.
I was so ready to make a move to my next goal, so I accepted it.

Had the buyer came in for inspection. No critical repair but 16 listed of all cosmetic repair.
I agreed to fix some but not all. Now just waiting for the buyer to respond.

This is when I became to realize, I'm losing money in this deal. (sale commission is at $9,955 - 6% plus $475 for photos)
It's ok. it's happened. 

Questions :

- Is there a chance the buyer will deny and won't buy my condo? if that's a case, what will I lose besides having to start over?   

- What if I want to break the contact (not selling to that buyer), how much it cost? and what're other consequences?

- let's say I'm not selling this condo anymore and decided to put it for rent (between $1,400 - $1,500) Can I take out this condo home equity line of credit for next property down payment with the loans I got pre-approval? is that a thing?

- Do you suggest me to refinance?

- Ok, if the buyer agrees to buy, the closing date is on January 15th. I been searching for deals but haven't put any offer because my realtor told me it's no point to do it now, I should wait until the buyer is finalized. I don't want to hurry to choose just because I don't have a place to stay after the 15th. (I start packing and ready to move my stuff to self-storage unit I rented.)

- Is there other loans option I should look into?

[Sarah Brown]

It sounds like you need to sit down and figure out some strategies for your goals.  It is great that you want to get into investing, but how are you going to do that and what is the best avenue to get there? Just jumping on an offer because you are ready to move doesn't sound like you have thought this through very well.  

I am going to estimate that your mortgage payment is in the $800 range, plus the association dues would put your total payment at $1136 (ish).  If you rent for $1500/mo that would net you $364/mo.  Keeping the condo would have given you 2 doors of rentals vs just one if you sold and bought a duplex.  You are in a position to be able to own two properties if you play your cards right.  The conventional loan option you mentioned above allows you to close on a second property if you have a signed lease on the condo.  It is 100% possible to have a tenant lined up to move in as soon as you move out. 

I would talk to your realtor about what would happen if you chose not to sell the condo. There are consequence to breaking a real estate contract, and your areas specific PSA (purchase and sale agreement) should spell that out.  Generally you can't just break the contract.  You could be sued for non-performance.  This might be an instance where you have to chalk it up to a learning experience.