How I Bought My Second Property 🚪
Crazy times led to a timely purchase.
After two and a half years, I decided to dive into another property. It was earlier than expected, but the market was in my favor. My first home is in a quiet suburban neighborhood, the perfect starter home for a growing family. I was initially renting half of it out and living in the other part. My tenant is fantastic, but the end of the lease was quickly approaching. I intended to remain in the same situation for a few more years until my tenant told me she was interested in taking over the entire home. I started to calculate the numbers and realized that it was my benefit to move out and rent this home completely. I began to look at the market and the current situation of people’s lives. More people were leaving the city of Chicago and were buying homes in the suburbs to have more space while they worked from home. They wanted private yards and more space for their growing children. The next thing that changed was the effect of George Floyd and the BLM riots in the city. People were fleeing the city during the summer because they felt scared as looting and destruction continued. The riots diminished as the weather turned cold, but I knew the combination of all these factors plus the low-interest rates allowed me to buy in the city like no other.
Generally, with an investment property, you have to come up with a 20% down payment and are subject to a different interest rate because of its risks. However, because I would live in this property, I qualified for 5% down with the standard conventional mortgage rate. I set my budget to no more than $150,000 and decided to purchase a less expensive property the second time because my housing costs are the highest expense in my budget. I wanted more flexibility and stuck to my budget. I turned on alerts to Zillow, Trulia, and Realtor.com and kept looking for weeks. There were so many options to think about: did I want to park, what were the rental restrictions, how far did I want to be from certain attractions, etc.? When shopping for a place, be sure to look at your needs and future buyers/renters’ needs. I finally picked eight properties that I wanted to see, which ranged from $99k-$150k.
Some were already remodeled, others were early 2000s style, while one was an utterly antiquated look. Automatically I connected with the outdated property and knew it was the one I wanted to go with. When investing, you have to look past the current state of the property. Many people could have looked at this property and would have been horrified. It smelled horrible, had post-World War II wallpaper in every room, and the most disgusting carpet imaginable. I looked past all that and saw the potential this property could bring me. It had a stunning lake view with large windows, a 10-minute walk to the beach, public transportation down the street, parking available, reasonable HOA fees for all the amenities, and people lived in this building for at least 5 years. I also looked at previous sales in the same building — remodeled, same size unit, lake view, and sold for $45,000 more than what I would be purchasing this property for. I knew I just needed a budget of $7,000 to fully remodel it. I also can rent the unit out for a profit, which is the other reason I was so interested in it. The closing process took about 35 days. But with the holiday season, the process took longer than expected, and I started a new job that extended the paperwork process. After inspections and appraisals were done, then it was a waiting game. Once we were clear to close, I went in right before Christmas to finalize the close. After that, I was given the keys and began the remodeling process.
I look forward to staying in this place for at least two years, then deciding if I will rent it or sell it. It all depends on the market. But if I can buy a second house, I’m sure you can too!
Thanks For Reading!
This article is a personal story of how Gabby Ariza purchased her second piece of real estate during an unlikely time. We hope this article was really informative for you and helps you achieve your real estate goals. If you enjoyed it and want to check out more real estate articles by us, be sure to check out 6 Reasons Why Real Estate Is The Best Investment. We’d love to hear your thoughts in the comments below on what you liked, wanted to learn, or even your success story! Let us know how to help you more! Be sure to follow us to get more updates. We truly appreciate your support! 🙏😇