Beginning investor in Chicago

Hey Everyone, I just wanted to throw out there if anyone was ever in the situation I am in, what would you do. I have a Condo in Harwood Heights Il which is on the NW side of Chicago. I purchased back in 03 for 210K, put down 130k, and financed the other 85k with a standard 30yr loan. The Units in my buliding (160 in all) are selling today for around 280 - 285 range. The area is very very hot still and I want to start Investing in real estate. What would you do if you were in my shoes.
Any of your insight would be apprecated

I would sell today, get my equity out, and NEVER invest $130K of hard cash in a condo EVER again!

You have at leats $200K to play with – use mostly OPM and you can buy a ‘butt-ton’ of properties!

My 2 cents…


Hi Mario! My name is Aaron and I am a rei that invests primarily on the southside of chicago. There are many opportunities on the southside that simply dont exist on the northside because of the high property values.

May sure that you have stayed in the house for 2 years so when you sell you don’t have to pay capital gain tax. I would definitely sell and get the money out. Use the banks or private lenders to finance some uppers and have fun.

Goodluck :slight_smile:

Ok two things… what does OPM mean and how do i buy my next place that i can live in and still buy a “butt-ton” of properties on my income. Sorry for asking but i dont get it :slight_smile:

OPM = Other People’s Money…i.e., don’t dump a bunch of YOUR money into an investment property…use OPM. You will also hear this referred to as “leverage”. You want to leverage as much as possible.

I agree with not having 200K in cash in a condo (appartment). But leveraging to the hilt is just as irresponsible too!

I am not advocating putting any money in any condo. I am talking about leveraging rental properties and still maintaining a positive cashflow.


I didn’t say you were keith. It is just that I am starting to see too many people over leveraging themselves on cash losers. That is not a sound investment strategy, in my opinion. I believe those people are going to get hurt the most. As long as the economy is OK, the rental market is OK, cash flow is positve and you can afford to keep the place in case of a vacancy, you should be fine.

I hope this helps and this KISS (Keep it Simple Stupid) example. It sounds like your condo went up in value about 10% per year.

When you sell the condo you will have about $200K in the bank. Use 100K to buy 5 income producing properties at $200k apiece with 10% down on each one. Put the other $100K in a savings account. Now you control about $1 million in properties for that $100K with leverage. If all of these properties go up 10% in value you will have increased your assets by $100K. That is providing that each of the properties is producing some cash flow. That net worth would be a 100% (ROI) return on your investment over the coarse of a year.

By owning one Condo worth $250K your assetts will increase about $25k per year. By leveraging your money you can earn more in appreciation.

Now let’s use the other $100k that you may have put into savings at 3% for the year you would have earned $3K. This a an ROI of 3% quite a bit of difference when you use other peoples money and leverage. Now when you compare the ROI of $100k on each of the two investments which is better the $100k on R/E that returns $100k on paper or the $100k in the bank that returns $3k cash? Another issue to recognize is that the 100K in equity is not cash. You have to balance the options.

Please keep in that having Cash on Hand will help in your real Estate business. Banks like it and you can use it when bargaining power.

Good Luck!

NDI :wink: