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Updated about 7 years ago on . Most recent reply

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10
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8
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Luke Shaw
  • Chicago, IL
8
Votes |
10
Posts

BRRR - Does it work with single Chicago condo units?

Luke Shaw
  • Chicago, IL
Posted

Hi BP,

I'm a young professional ready to buy my first piece of property in Chicago. I don't have the funds to buy an entire 2 flat or 3 flat (yet), but I COULD buy just one condo unit if I found the right one.

My question: is buying a single condo unit in Chicago a financially sound decision that fits into the BRRR mentality, or should I continue saving and renting until I can buy an entire building? As someone who would always prefer to DIY first, the idea of answering to an HOAdoes not sound fun. I'm also afraid it would sap my cash flow. However, I would love to start building equity and pay rent towards a mortgage rather than burn it on rent, and a condo seems like a good beginner property.

Thanks! 

Most Popular Reply

User Stats

96
Posts
69
Votes
Ted Kuhlmann
  • Real Estate Broker
  • Chicago, IL
69
Votes |
96
Posts
Ted Kuhlmann
  • Real Estate Broker
  • Chicago, IL
Replied

@Luke Shaw great question!! As a vet in the industry of 13 years now, i get this a lot from first time buyers and always have the same response to them: "what makes you think you can only afford a condo and not a multi-unit?" If you have conversed with a mortgage broker to get pre-approved, then you definitely have taken the correct steps to homeownership for sure, but if not, that's gotta be your first move here. No question!

These days, you can use an FHA loan to buy a multi-unit and use the rents existing in the building(if there are any) to bump up your max purchase price!! In essence, it might be more expensive to buy a building over a condo, but if you offset the current leases in there, it might be more than viable.

That's the simple answer but of course there are a million potholes along the way so find someone to guide you through the transaction from contract to close. Your first bet is definitely finding someone that knows mortgages though because for all you know, you might be ready to buy that multi-unit now and not be "cash poor" after purchase! I bought a condo as my first purchase in 2006 and realllllllly wish i house hacked that first deal. I learned a lot from buying a condo and seeing the downturn, so learned a lot, but always regret that first move personally.

DM me if you ever have any Chicago based RE questions. Definitely here to assist. Best of luck...

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