Lived in to Rented out

[Michael Florczak]

Investment Info:

Condo buy & hold investment.

Purchase price: $240,000
Cash invested: $50,000

I purchased this condo in 2006 with the intention to keep as a rental property after my needs changed. In 2011 I moved to the Chicago suburb of Downers Grove and kept the condo as a rental property. Long term goal was to use the cash-flow eventually when paid off to help me pay for kids' college.

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

It was my intention to own rental properties and this seemed like the easiest way to get started.

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

This was an apartment to condo conversion at the time and there was no negotiating, I had to pay market price.

How did you finance this deal?

With a traditional lender. I refinanced twice since into a 15 year mortgage set to be paid off in 2031.

What was the outcome?

The cash flow is not great, however I still get tax advantages, still get principal paydown, and it has not lost value, yet has barely gained value either.

Lessons learned? Challenges?

I have had longer-term tenants, keeping turnover to a minimum has kept some of my costs low. Association takes care of maintenance of premises which makes this easy to manage. 2 special assessments along the way which eat into cashflow.
This property has barely appreciated which has been frustrating when so many other areas of Chicago have. Perhaps this unit is too small??