The Right Place At The Right Time- What RE Investing Can Offer

[Abhijit Joshi]

Dear Potential Investor,

I would like to preface this story by saying that the events in this story fell in place by chance for this to happen. I am fortunate that I was in the right place at the right time. It could have been you instead of me. Just thought of sharing this story to show you that real estate can bring monetary wealth into your life.

As I come from the world of sports, we were always taught to respect the game because no one was ever bigger than the game. A parallel concept can be applied to the ‘sport’ of real estate. What happened to me here is greatly credited to the Chicago real estate market and I’d like to re-iterate that I am grateful to have been in my place playing this game.

I bought a 1-bedroom condominium in North Chicago at the beginning of 2017 and with the help of my broker and his team, I was able to find tenants within two weeks of closing on the condo. I profited roughly half a grand a month on this property and was able to use that extra cash in other investment avenues. A few weeks after closing, I got a letter in the mail about a potential de-conversion. I didn’t know what this meant so I took this letter to my lawyer to understand what this was about.

Before the housing market crashed in 2008, the buying market in Chicago was red hot and there were more incentives to purchase property than to rent. This was because banks were more lenient in giving loans to buyers. Many of the financial institutions did not thoroughly verify buyer’s income which made it even easier to purchase property. Private investors and investment companies saw this trend as an opportunity and looked to convert* rented buildings into buildings that residential buyers could purchase. So, apartment buildings were converted into condominiums which allowed an increase in supply for potential buyers to purchase. The investors would purchase the building in order to convert the apartments into condominiums and then sell the individual units in the building to interested buyers. This was a way that investors increased chances of selling property and since it catered to the market’s needs, it was a win-win situation for all parties involved.

About two years ago, the Chicago market started to shift towards a renter’s market. People saw it financially beneficial to rent rather than buying. Investors saw this trend as an opportunity and decided to buy condominium buildings and de-convert* them into apartment buildings. Hence, the supply of rental properties in Chicago increased which, again, was a win-win situation for both the investors and the renters.

Soon after the closing of my condominium, I realized that my condo building was approached by a real estate brokerage firm with an offer to purchase the building and de-convert it into an apartment. Offers were placed by multiple investors and investing companies and finally the condominium association decided to accept an offer after months of negotiations. The investor who’s offer got accepted made bids for each condo unit that was quite hard to refuse. Just to give you an idea, my condo unit appreciated 77% with the offer that was made. This type of appreciation is unheard of and is rare even in a span of 20 years of organic market growth! The condo association conducted a poll where more than majority of the unit owners needed to agree to this sale in order for the building to be de-converted into an apartment. The entire process was extensive and took over ten months. As a unit owner, I found myself, often, in late night meetings with either the condo board or my own real estate team where I would ask questions and try to learn every bit I could. Eventually, this deal was finalized and the investor bought the entire building. He bought out each owner’s mortgage which allowed me to pay off my 30-year fixed mortgage in less than twelve months. Again, a rare occurrence to say the least.

After all the closing costs and other fees associated with this deal, I walked away with roughly $80,000.

Again, this could have been you who bought this property back in January of 2017. I do not take credit for this fortunate event but my intention of writing this story is to share the opportunities that the real estate game can offer. This is one of hundreds of examples of how you can build wealth through real estate. This wouldn’t have been possible without me taking the leap to purchase this property. After all, I was new to the game and had no prior experience. Paying more than $25,000 for the down payment of this condo was frightening to me. It put a huge dent in my bank account and with the volatility of the real estate market and being a novice in the game, I had a lot of doubts. However, I had the courage to go through with my first purchase and I was fortunate enough to reap this huge profit. Call it beginner’s luck, but for all of you who are considering investing in real estate, this exact phenomenon most likely won’t happen but there are numerous other ways of building wealth through real estate. I highly encourage you to go out there and buy your first property. If you think you do not have enough capital to purchase property, read this book by Brandon Turner:

The Book on Investing In Real Estate with No (and Low) Money Down: Real Life Strategies for Investing in Real Estate Using Other People's Money

This book offers many options on how to purchase real estate with no or low-down payment and provides real life stories and insight to do so.

I wish you the best in your journey and do hope you jump into real estate investing to secure your financial future. Whether your goal may be to provide you and your family a financial safety net or to be financially independent by forty, real estate can help you meet your financial goals. Along with this, it offers you a thrill of learning new concepts and brings financial discipline into your life.

Have a remarkable year and may you make 2018 the best year of your life yet.

All The Best.

---

Conversion- Where an apartment building is turned into a condominium building. Each unit in the building is sold individually and has its own address.

De-conversion- Where a condominium building is turned into an apartment building. Each unit in the building is generally owned by one entity or landlord and the entire building has one address.