$115,000 in paid off condo, should I leverage or bad time?
Looking for guidance, thank you in advance. These are turnkey rentals.
Condo #1: $115,000 equity, bought @ 106k last year. Rent: $1400, HOA: $300, Insurance/Tax: $144, Net Monthly: $956, Net Yearly: $11,472, ROI: $11,472 / $106,000 = 10.8%
Potential Condo #2: $115,000 purchase price, Rent: 1400, HOA: $260, Insurance/Tax: $150
DSCR Cash Out Refi on Condo #1: LTV 75%, $86,000 Loan Amount, 30 yr fixed, 7.5% rate, Monthly Payment: Around $650, Closing Costs: Around 8-10k, Total Cash Left: $76,000
Condo #1 After Refi: Money Left In: $28,750, Monthly Net w/ Payment: $306, ROI: $3600 / $28,750 = 12.5%
Cash In Hand: $76,000
DSCR Loan on Condo #2: $115,000 purchase price, 25% down: $28,750, after fees estimating $35,000 All In, $1400 Rent, $260 HOA, $150 Insurance/Tax, $650 Monthly Payment, Net Monthly: $330, Net Yearly $3960, ROI: $3960 / $35,000 = 11.3%
RESULT: Total Monthly Costs: $2160, Total Monthly Net: $630 ish, Yearly Net: $7,560, Total Cash Invested $65,000, Yearly ROI: 11.6% CASH LEFT OVER: $41,000
Could put the cash into a third condo or put into the S&P 500.
Looking for some guidance on whether or not I should pull the trigger for some context:
19 years old college student studying engineering (heavy courseload)
Living in Chicago, Condos are in Ohio (I have family and friends out there)
I work part time at a high end hibachi restaurant averaging $25-$30 an hour.
My rent + utilities with roommates is $750 with room mates.
The numbers work out, my main concern is whether or not Ill deal with large vacancy within the next 5 years, or a recession, and I have to cover the monthly costs on my own ($2,160) which is a lot and not sure if I would be able to keep that up for a long time if I am not working full time in the industry. I would have the safety net of $40,000+ sitting in an investment account, and Ill try to save as much as possible per month to counter any large vacancies in possible recession. The other option is to get DSCR loans with a LTV of 40-50%, monthly payment will be less but then I wont have much $ left over to put in stocks. I want to invest in stocks and also leverage debt. SO, what does everybody think, based on my age, scenario, the current economy / real estate market, what should I do? My father says I should just leave the condo alone and just try to build up a stock portfolio slowly. I currently have around $5000 in an investment account.
