First Condo Purchase in Chicago turned into 13% ROI after Refi!

[Natan Ostro]

Investment Info:

Condo buy & hold investment.

Purchase price: $324,500
Cash invested: $67,000

In November of 2018, I bought my first Condo in Chicago. There wasn't much on the market, but I found a 2BR 2 BA condo that was sitting empty and went after it! With a few bumps in the road, I finally closed and moved in. At first, I was renting out the second bedroom to friends, and after about a year I decided I wanted to fully capitalize and move to another area of the city.

I refinanced my mortgage and collect a steady $725+ each month after my 67k investment!

What made you interested in investing in this type of deal?

It was my first condo, so partially to live in and partially to own instead of pay rent.

How did you find this deal and how did you negotiate it?

I found the deal on HotPads at the time, and used my Realtor as well as my Attorney to finalize negotiations and get an additional 15k off the purchase price!

How did you finance this deal?

I financed through JP Morgan and shopped around quite a bit for the best 30 year fixed rate I could find.

How did you add value to the deal?

I lived in the unit, updated the appliances and found great renters. Also, I found the right time to refinance - in March 2020 I reduced my rate by 1.5% (250$ monthly payment decrease) and appraised it at 370,000 (Up from my 324,500 purchase price)!

This gave me a higher cash yield as well as a higher Loan to Value (Realized Equity) amount on my investment!

What was the outcome?

Approximately $700 of Net Operating Positive Cash-Flow per month.

Lessons learned? Challenges?

Wish I would have taken cash out in the Refinance, used that money to purchase another property. Instead, I have to think about liquidating assets or taking out a Home Equity Line of Credit to get that cash. Still learning!!

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Prero Law P.C. were attentive, professional and did an overall great job where my Realtor and Lender were lacking.