Buy a Foreclosure, Renovate and Sell: 1814 N. Bissell in Lincoln Park Closes
We last chattered about this 2-bedroom townhouse at 1814 N. Bissell in Lincoln Park in November 2010.
See our November 2010 chatter here.
It had been bank owned previously and sold under the 1999 price.
It was then renovated with a new kitchen, baths, and what looked like flooring and lighting.
The townhouse looked brand new.
But there was still the location- which was directly on the Brown Line el on the back side of the property.
Still, the townhouse sold quickly for just $24,900 under the November listing price.
Was this sales price in line with the neighborhood?
Brian Grossman at @Properties had the listing.
1814 N. Bissell: 2 bedrooms, 2 baths, 1 car parking, no square footage listed
- Sold in April 1989 for $182,500
- Sold in December 1999 for $239,720
- Lis pendens filed in April 2006
- Bank owned in May 2009
- Sold in June 2010 for $220,000
- Was listed in November 2010 for $449,900
- Sold in March 2011 for $425,000
- Assessments of $100 a month
- Taxes of $4405
- Central Air
- Washer/Dryer in the unit
- Bedroom #1: 15×13 (fourth floor)
- Bedroom #2: 16×10 (third floor)
- Family room: 16×16 (lower level)
Wow, go Flippers go!
I wonder what the real numbers were here. We can all speculate that the investor put $20k in and walked away with $185k but reality is probably a much different story. The fact that it was initially listed in Jan 2010 for $329k and did not sell until June at $220 paints a different picture.
I have been toying with the idea of sharing a GoogleDocs spreadsheet to post various rehab investment costs. I manage some of my own, but if anyone here is interested in sharing some investment scenarios let me know. I can post some basic framework spreadsheets for typical rehab types.
The best part about these follow ups – I get to go back and see all the rediculous comments made by posters during the last go-round. I guess all those “300k” range estimates were quite a bit off. I’ll start listening to my own common sense rather than the “experts” here who are hoping the housing market continues to tank…
It is the lack of inventory that supports prices just a bit. Or its 2006 again; I can’t decide!
And by inventory I mean reasonably priced inventory.
There are a lot more people hunting around, but most are looking for bargains. Some actually have down payment money to spend this time around. I think this person overpaid slightly, as it’s right by the el.
As I see it people are either looking for an amazing bargain or something really fresh and beautiful at a decent but not cheap price.
Its amazing what yuppies will buy!
1999-
If you need an “expert” to convince you not to pay 2006 prices you probably are fixing to make a big financial mistake.
dahliachi”As I see it people are either looking for an amazing bargain or something really fresh and beautiful at a decent but not cheap price.”
I agree the units in my building that are moving are cheap 1 bedrooms that need some work but are cheap. And totally gutted, high end renovations of large 2-3 bd room units (with views, terraces, etc…) at prices more reasonable that the boom. During the boom it was hard to find large, high end (above builder grade) units. Now they are more common. You won’t get them cheap, but you can get them at reasonable prices.
Have any of you ever lived right by the el? I knew someone who did and it was pretty quiet, and kind of novel. It was not loud enough to wake you up unless you were a very light sleeper. I don’t think that most people care as much about not being near the el as the CC regulars seem to.
Ostensibly, everyone got what they were after. Buyer got a “deal” and flipper got a huge return.
Is that the reality? For all we know, buyer overpaid by 100k and flipper netted nothing.
Groove: I resemble that remark and I laughed on a conference call.
BTW – shout out to you: I registered for Citi Mini. I also just picked up a used Orbit G2 system for less than a Graco. Happy camper.
JJJ,
but your asking someone to PAY almost a 1/2million to live next to an “EL”
right the “EL” is not that bad except and at points where there is turns and slow downs or stops.
“Have any of you ever lived right by the el? I knew someone who did and it was pretty quiet, and kind of novel. It was not loud enough to wake you up unless you were a very light sleeper. I don’t think that most people care as much about not being near the el as the CC regulars seem to.”
Buyer overpaid by 75k. Look out below when they goto sell in 5 years..
“Have any of you ever lived right by the el?”
I live by the el (brown/purple line) and the only time its annoying is when its rush hour and they have the 8 car trains going. Those are really loud, but even still inside my condo its barely noticeable unless you have the windows open, then its kinda loud but it isn’t very frequent (10 or so seconds every 10-15 minutes).
living on the red line is another story, I don’t know if I could deal with that all the time 24/7, as the brown line stops running around midnight-1am I believe and doesn’t start again until 6am or so.
It doesn’t interrupt my sleep, just my ability to have the windows open as much as I would like. Also it is quite loud when you exit my building since the brainiacs put the building entrance on the el tracks side.
I was at a party in Catalpa Gardens this past weekend and it’s right next to the red line el tracks. Didn’t notice the el at all but then again it’s not like parties are quiet.
We will have to see what the financing looked like on that one…
“And by inventory I mean reasonably priced inventory.”
supply and demand SON
you don’t get to determine housing prices, especially since there is always someone who makes more money than you willing to pay more than you
“willing to pay more than you”
Willing to pay more sure. Makes more money? Speculation.
Would love to see the financing details on that 420k sale. I bet they found a way to skirt around that 84k down payment.
“Groove: I resemble that remark and I laughed on a conference call. ”
i also do balloon animals, and corporate events. for info and booking please see;
www. Deargoshyuppieswillpayanythingforalincolnparkaddress dot com
“As I see it people are either looking for an amazing bargain or something really fresh and beautiful at a decent but not cheap price.”
I agree. In addition, market data indicates there are not enough bargains available, nor enough buyers to maintain pricing of the “fresh and beautiful” properties. Of course, the “f&b” buyers will always be out knife-catching because many can afford to overspend and accept the risk. There just aren’t enough of them to absorb all of the f&b props built during the debt-fueled bubble years at current asking prices. Low volume in this environment will only be reversed with further price drops.
“Would love to see the financing details on that 420k sale. I bet they found a way to skirt around that 84k down payment.”
Why $84k? Why not $42k with lender-paid mortgage insurance (which adds about a half percentage point to the borrower’s tax deductible borrowing cost)?
“Of course, the “f&b” buyers will always be out knife-catching because many can afford to overspend and accept the risk.”
…and the back-tracking starts….
“…and the back-tracking starts….”
And the lies continue…
HD – can you please email me – I have a legal question – joethefirstcc at gmail.com
Sorry man, no private e-mails for me on CC.
“#Joe I on March 8th, 2011 at 9:42 am
HD – can you please email me – I have a legal question – joethefirstcc at gmail.com”
“Why $84k? Why not $42k with lender-paid mortgage insurance (which adds about a half percentage point to the borrower’s tax deductible borrowing cost)?”
Why buy almost a half million dollar asset if you can’t get the most preferable financing terms available. Oh wait..what is it? Is it because this purchaser isn’t even financially prudent enough to save up 20% for a downpayment to be able to do that?
Today’s 10% down buyer is tomorrow’s stuck seller. Good thing they purchased a recent rehab as they’ll be living her quite awhile.
I am amazed there seems to be an endless supply of lemmings willing to jump off the (financial) cliff. Then again lemmings aren’t known for their communication skills so it’s not likely they could learn from the wails of previous lemmings on the descent down.
“Today’s 10% down buyer is tomorrow’s stuck seller. Good thing they purchased a recent rehab as they’ll be living her quite awhile”
I dont see why the amount you puts down makes you any safer or not.
You should buy places based on how much you can afford a month and if you the house is a good deal. Personally i gauge affordability by what kinda of income it could produce. If the Rent could cover PITI + some that to me is good value and a safe investment. Because if I ever fell on hard times I could rent it out.
Of course if you only put down 3.5% with mortgage insurance it might be hard to get that point, but if you can its a sign that you are getting a great value.
Anonny,
I bet someone like you who considers 10% down to be acceptable can’t make sense of the below article can you?
“CoreLogic … today released negative equity data showing that 11.1 million, or 23.1 percent, of all residential properties with a mortgage were in negative equity at the end of the fourth quarter of 2010, up from 10.8 million, or 22.5 percent, in the third quarter. ”
“Together, negative equity and near-negative equity mortgages accounted for 27.9 percent of all residential properties with a mortgage nationwide….
The consensus is that home prices will fall another 5 percent to 10 percent in 2011. If so, the most that negative equity will rise is another 10 percentage points, all else equal. What’s important is not just the share of at-risk loans (i.e., loans with less than 10 percent equity) but current price movements.”
“The aggregate level of negative equity increased to $751 billion in Q4, up from $744 billion last quarter but still below $800 billion a year ago. Over $450 billion of the aggregate negative equity dollars include borrowers who are upside down by more than 50 percent.”
http://www.calculatedriskblog.com/2011/03/corelogic-111-million-us-properties.html
Maths are hard.
“I dont see why the amount you puts down makes you any safer or not. ”
It’s SUPPOSED to make the BANK SAFER but they just unload the crap to Fannie & Freddie so us taxpayers get stuck with the bill when owners like this default (ie: prior owner).
Ok so general question HD – was in a fender bender out of state over the weekend, he says its my fault, I say his. He was active (cursing at me) at the scene, but calmed down when we got out of the car. The claims adjuster I spoke to today now at my ins co says he is claiming he was injured. I have legal coverage at work, got the name of a few attorneys in that state, but have no way of reviewing them.
What is the best way to vet these guys? How do I know if I even need an attorney? Is it better to go with someone in IL where I live or where the accident took place?
Basically due to extensive government involvement in the housing sector it allows flippers like this one to get outsized returns on a risk adjusted basis and when things go bad, as they inevitably do in high-return, high risk situations, the taxpayers get stuck with the bill.
” today released negative equity data showing that 11.1 million, or 23.1 percent, of all residential properties with a mortgage were in negative equity at the end of the fourth quarter of 2010, up from 10.8 million, or 22.5 percent, in the third quarter.”
Yeah – but so what? Worse could be said about new car owners – but as long as they don’t need to sell right now, it really doesn’t matter. People need to stop concentrating on the negatives (especially if it doesn’t affect them). Feeling scared and depressed about your house value when you don’t have to sell (and don’t plan to sell) is as dangerous and foolish as feeling good about yourself when the market was hot.
but clio, how are people going to get a HELOC to buy a new boat, because their neighbors just got a new benz (on lease)?
Exactly sonies – this whole housing meltdown has a silver lining. It will truly separate the men from the boys!!
“Feeling scared and depressed about your house value when you don’t have to sell (and don’t plan to sell) is as dangerous and foolish as feeling good about yourself when the market was hot.”
I tell you what’s foolish is taxpayers for allowing people like you getting rich off the backs of taxpayers because dodo birds like this buyer wouldn’t be able to fork over 420k for this place if they actually had to bring a downpayment to close which would protect the bank.
The majority of underwater owners are those who brought too little to the table. You’re right the majority won’t have issues if they don’t need to move. They still impact market valuations.
“I tell you what’s foolish is taxpayers for allowing people like you getting rich off the backs of taxpayers..”
Huh? How am I involved with this transaction – and how am I getting “rich off the backs of taxpayers”?
Bob, while I of course bow before your math skills, I’m sure you understand that the stats reflected in the article to which you link don’t exactly account for every property. For instance, take this place on Bissell.
Let’s assume that they paid $425k, with 10% down, on a 5 year ARM. That means that rather than getting a rate of, say, 3.75%, they get a rate of 4.25%, with the mortgage insurance covered by the lender. After four years, how much has been paid towards the principal? I’d venture to guess that after four years, they’ll be pretty close to 20% equity – and that’s assuming zero appreciation. Or at least if they opt to re-fi in four years, they should not have too hard a time getting an appraisal that shows 20% equity (and if they’ve not paid enough towards principal – and again, assuming zero appreciation – they can simply kick in a bit to hit 20%). And for each of those four years, they’ll have enjoyed a mortgage interest deduction in excess of the standard deduction.
“Huh? How am I involved with this transaction – and how am I getting “rich off the backs of taxpayers”?”
Not this transaction but you are a self-admitted former flipper in Boston. Same exact dynamic there.
I’m not blaming you–it’s definitely a case of don’t hate the player hate the game but I think this game absolutely sucks if taxpayers get stuck with the bill as is currently the case.
“After four years, how much has been paid towards the principal? I’d venture to guess that after four years, they’ll be pretty close to 20% equity – and that’s assuming zero appreciation.”
Fair assumptions but is that what we’re seeing in the market today? Let’s look at one observational data point–how much equity did the prior owner build up who bought at a much lower cost basis? Were they even able to see for what they paid for it and if not why not?
Darwin’s most famous quote is the past is the key to the present. To assume that the current flock of purchasers for these “F&B” properties paying much higher costs bases is somehow going to be more conservative than the current crop of those going bust I find hard to believe.
Joe I – you don’t need to hire an attorney. Your insurance company will hire an attorney to defend you even if it is an out of state claim.
“I’d venture to guess that after four years, they’ll be pretty close to 20% equity – and that’s assuming zero appreciation.”
At 4.25% interest, and a principal amount of $382,500, that $42,500 in principal doesn’t get paid until payment 72, assuming no additional principal payments.
“Your insurance company will hire an attorney to defend you even if it is an out of state claim.”
Terrible advice – HD – you must be incredibly naiive. The insurance company lawyers are going to do what is best for the insurance company. Each individual SHOULD seek legal advice – especially if they have a lot to lose. I seriously can’t believe you, as an attorney, don’t realize this.
I still maintain that this was a gut rehab and not cheaply done. The builder still made a profit though.
You are right, Clio, only if you are the one injured or making a claim–then you can not trust the insurance company which wants to settle for the least amount of money possible. So it is generally good advice to never take an insurance company’s initial offer of a cash settlement. But if another driver is suing you and you have insurance, your insurance company has a vested interest in making sure that it pays the least amount possible, so it will hire a good attorney to vet the man’s story. Right, HD?
Clio – he bought car insurance. The insurance company is legally obligated to defend him. Unless he was on the job at the time of the accident, then his employer’s insurance company (whether it’s a car or gen lia, probably car though) is legally obligated to cover him unless they get a judge to say they don’t. I don’t tell you how to read a CT scan, you don’t need to tell me how to practice law.
“The majority of underwater owners are those who brought too little to the table. ”
the rest are just the fools who either put up 20% or paid off their HELOC, yet live next to those who brought too little to the table. 😀
Endora, basically yes.
Joe I – how do you get legal coverage through work? Do you mean because you are an employee they will cover you for things taht happen on the job?
“At 4.25% interest, and a principal amount of $382,500, that $42,500 in principal doesn’t get paid until payment 72, assuming no additional principal payments.”
Yes, and the amount they will need to “simply kick in a bit to hit 20%” after four years would be $15k.
hd – I’m sorry but you are 100% wrong. The insurance company is only looking out for the insurance company – not 100% of your own personal interest. This happens in medical malpractice ALL THE TIME. Sure, the insurance company doesn’t want to pay out and will hire attorneys to represent you – but anything over and above the policy limits – they just don’t care about. In addition, they will often try and get you to settle to avoid a trial, etc. – this may not be in your best interest (for accidents or medical malpractice). It is ALWAYS advisable to seek independent counsel – no matter what the case (especially if you have a lot to lose).
In terms of auto insurance, I have a friend who was in a car accident – the other guy sued him and the insurance company settled with the other guy – but only included the clause that the other guy couldn’t get any more money out of the insurance company – they didn’t say anything about him suing the guy again – and so, guess what? – 5 years later, this guy is suing my friend for lingering disability and my friend’s insurance company is refusing to represent him (stating that they already satisfied the claim and were no longer involved)
about the el-
I used to live on this block. The el wasn’t that bad at all. I don’t remember it being an issue. Now, my husband used to live on Wilton and that was BAD.
“how do you get legal coverage through work? Do you mean because you are an employee they will cover you for things taht happen on the job?”
Legal referral service. Common benefit available thru many employers.
Hey, Clio, your back? Awesome?
ok now i am gone see yall later.
I was not on company business, I pay each month for an added benefit of legal services with an outside firm. Basically get free consultation, coverage if I am sued in civil court, etc. Problem is I don’t know how to evaluate the lawyers in the state where the accident occurred. The claim adjusters are still working out who was at fault.
Clio, thanks for that story. If the ins co settles I will try to ensure I am absolved of future claims as well.
Here’s the Chicago February attached and detached sales data with median and short sale/REO % of sales:
2007 1,703 $270,000
2008 1,305 $290,142
2009 870 $218,125 31%
2010 1,257 $176,000 46%
2011 1,063 $150,000 51%
Unless you have low limits insufficient to cover a generous claim but are not judgment-proof, there is no reason to hire your own counsel for a minor auto accident occurring in the normal course, even if it’s in another state (as long as you’re in the US). Just let your insurance company handle it. (Your prepaid lawyer would probably tell you the same, although it wouldn’t hurt to get them involved to advise you. They are unlikely to be very good, though, and you shouldn’t let them handle anything directly.) Medical malpractice claims are not auto accident claims.[1]
[1] You shouldn’t take legal advice from doctors (or from anonymous lawyers on the internet!).
JJJ – ok – you really need to stop this baiting. I don’t know who you are and don’t really care. Don’t talk about what I do or who I am – you really don’t know anything about me – how do you know that I haven’t stolen someone’s identity or know the person I purport to be (seriously, what doctor do you know that has as much time as I do posting on cribchatter?). Don’t be a moron. Keep the discussion about general topics – not individuals.
Joe I, seriously, your insurance company is on top of this. I wouldn’t worry too much about it.
Clio, why don’t you try to stay on topic?
As long as you keep giving bad advice on topics you aren’t familiar with (even with your possible fake internet persona), I’ll keep calling you out for that bad advice. You seem to take any disagreement as a personal attack or baiting, and we have discussed my view of that previously. You cite your (supposed – I have taken you at face value but now you are saying that you might be making it all up) expertise and professional qualifications as a reason that you are familiar with real estate and law, and I (and others) have pointed out that you are generally wrong on these issues. hd is a lawyer and there are other lawyers here as well. I’m not sure why you seem to take such personal offense at a statement that a professional qualified in a completely different field is not qualified to opine on legal issues.
I am not sure how respond to your argument of how you might be a big liar, but I’m not sure that it helps your credibility.
” I’m not sure why you seem to take such personal offense at a statement that a professional qualified in a completely different field is not qualified to opine on legal issues.”
…uhhh – because what I am advising is common sense and I have seen several people burned by insurance companies (who they thought were working in their best interest). My only advice to everyone on every subject is to keep an open mind and take advice from many people – then use your own judgement (based on experience) to decide what is best for you. Just because someone is an attorney (or a doctor or a real estate agent) don’t “shut your mind off and blindly follow their advice. You have to keep your eyes open….. that’s all I am advising.
If in doubt with your insurer, remember the phrase “bad faith”. Don’t pull it out w/o basis, as that is counter productive, but if you have genuine reason to believe that they are not acting to protect your interests, too, those two words can cut thru a lot of BS.
“how do you know that I haven’t stolen someone’s identity or know the person I purport to be (seriously, what doctor do you know that has as much time as I do posting on cribchatter?).”
haha the jig is up
In the SFH market on the north shore, rehabbed properties at a serious premium. I say rehabbed because new construction tends to be way more expensive (at least the ask is), but a reasonably priced existing SFH gut reno is a hot commodity. It seems true in the city as well. People really do not like moving in and then doing the work (meaning with a GC) and many cannot or have a strong preference not to (lots of small children, pregnant wife, asthma, etc).
Properties proximate to the El used to suffer from a higher incidence of break ins though I am not sure in gentrified Chicago this is still completely true. The cops used to say the noise provided glass break coverage and was therefore more attractive. Otherwise I am not sure the noise is much of an issue if it is built properly. People usually get used to whatever noise there is anyway (Park Ridge effect with ORD traffic).
“guess what? – 5 years later, this guy is suing my friend for lingering disability and my friend’s insurance company is refusing to represent him (stating that they already satisfied the claim and were no longer involved)”
Geez feel bad for that friend
The condos are all pretty tiny, but thats something thats factored into the price. I checked out all the 2 bedrooms that went up for the Auction Jameson was doing in the fall, but ended up not bidding on anything.
There were just better offers out there at the time, having said that I think the buyer got a good price.
oops wrong discussion on that last one!
I don’t think there is any harm in having an independent lawyer review the proposed insurance company settlement (particularly if you don’t have to pay for it!). You’d want to be sure that the settlement agreement settles all claims and you don’t have any residual individual liability. Keep in mind your insurance coverage limit, too.
“Here’s the Chicago February attached and detached sales data with median and short sale/REO % of sales:
2007 1,703 $270,000
2008 1,305 $290,142
2009 870 $218,125 31%
2010 1,257 $176,000 46%
2011 1,063 $150,000 51%”
Thanks G. Fascinating data on so many levels. I am giving this year’s number the benefit of the doubt because of the blizzard (that maybe 100 or so sales were stalled because of that.) But probably not- but just trying to be as generous as possible.
More interesting is that half of all sales are distress sales now. Wow. Obviously- that is pushing down the median price quite dramatically. Without those sales, though, what would the market be like?
Pathetic. If you strip out the REOs, virtually nothing is selling.
By the way- anyone know what the inventories in Chicago look like now? I know they are ramping up for the spring selling season.