Trading Convenience for Cash
Oh, 1148 W. Diversey, how we loved thee.
Our first condo in Chicago was one for the books. In fact, its memory still pulls at my heart strings when I read the listing we created for its sale:
Bright and spacious 2 bedroom, 2 bathroom condo, with views of the city, situated in the bustling Lincoln Park/ Lakeview community. The open floorplan, sun-drenched living space, and large outdoor patio will provide you with generous space to move about (without losing that cozy atmosphere when it’s time to cuddle up by the gas fireplace with a good book). Enjoy a gourmet kitchen with granite countertops, stainless steel appliances, and a breakfast bar. Sleep well in your large master bedroom boasting a spacious 11x5 Elfa organized master walk-in closet and en-suite master bathroom, which has dual vanities and a separate jetted tub and shower. This condo features crown molding throughout, in-ceiling speakers, a new water heater, freshly stained hardwood throughout, side-by-side washer and dryer, phone-operated Nest thermostat and dual Nest fire alarm and carbon monoxide detector. Additional storage closet in basement and 1 garage parking space included. You’ll be a 3 block walk to the Diversey L stop and just thirty minutes from the magnificent downtown Chicago.
Just married and with no kids, why in the world would we sell that dreamboat of a condo? It's not that we were living "paycheck to paycheck," but a lot of our income was tied up in our mortgage. And after reading Rich Dad Poor Dad and discovering the Bigger Pockets podcast, we were drawn to the idea of house hacking. We wanted to pay off our student loans, travel, and prepare for a family.
Finding a multifamily home in Chicago didn't come quick or easy, but with a ton of grit and the guidance of our talented realtor, Brie Schdmit, we made it happen.
Meet 4833 N. Ridgeway
This 3 unit property in Albany Park (Chicago), just off the last brown line stop, didn't hit the MLS as a slam dunk. In fact, we didn't think twice about purchasing it the first time we toured. We ran the numbers, and it just wasn't going to work. It was nice enough, but it wasn't in an area we were wild about, and it needed a lot more love than we thought we had time to give it in order for it to cash flow. So, we continued our search for properties that were bigger, in more desirable locations, and ready to rent. We saw promise ($$$) in those properties, but so did everyone else. We kept losing deal after deal to big time investors with a bunch of cash. The more discouraged we became, the more frequently we came back to 4833 N. Ridgeway, as it sat on the market for well over 100 days. What could we do to make it cash flow? What opportunities might be available to us that others weren't seeing?
After talking it over with Brie and doing research on our own, we decided to make a low offer, with the idea that we would make improvements ourselves. WE GOT IT! And by building a garage, fencing in the backyard, and adding a few more bedrooms, the property went from 80% finished to an investor's dream. There were a lot tears shed to get that baby ready to rent, (we were quite literally homeless for a month before closing and you better believe we walked through the entire place with sage to kill off all of the evil spirits before we moved in) but by golly we did it.
Living in Albany Park was a sacrifice to us for many reasons: our commutes were now well over an hour, we were no longer living next to friends or family, and we weren't walking distance to our favorite bars/restaurants. BUT, by living in the middle unit and renting out the upstairs and downstairs units, our mortgage was completely covered.
We trade convenience for cash, and we were hooked.
Chicago Triplex at 5% Down, by the numbers:
$500,000 3 unit property x .05 = $25,000 down payment
$3,200 monthly mortgage payment (Principal, Interest, Taxes, Insurance)
Unit G rent = $1650/ month
Unit 2 rent = $1550/ month
Unit 1 (our unit) = Live for free (SAVE MONEY FOR NEXT DEAL)
