How Real Estate Accelerates Net Worth
Posted on July 23, 2007
Filed Under Real Estate, Finance
I bought my first home in early 2000. Much to my parent’s chagrin, I purchased a cold, hard loft in Chicago’s gritty Fulton Market neighborhood. Surrounded by meat packing factories and industrial warehouses. It was a condo conversion. I paid $250K, with $50K down. The $50K down payment was comprised of the fruits of my 4 years of working in corporate America. I’d lived with my parents for a couple years, then moved to an apartment. I’d managed to save $50K in those years.
In 2003, as the Treasurer of the condo association, I resigned from the board and sold because a special assessment was a certainty. I got $300K for my place - $200K paid of my mortgage, I got my $50K down payment back, and gained $50K in profits. That was when I experienced the power of real estate. I had spent four years saving up to collect $50K. And in two year’s time, I made $50K for what? Nothing but living in loft.
So with $100K in my bank, I resisted the urge to trade up. Instead I bought two one bedroom condos in the South Loop, a good rental neighborhood where the rents cover the mortgage, taxes and assessments. I lived in one, and rented the other one out. In the meantime, I also put money down on a pre-construction condo in Evanston, a Chicago suburb that is home to Northwestern University. This all happened in 2003, where my net worth at year end was $100K. As of today, my net worth is a tad under $500K.
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