Will the Remaining Units in the Silver Tower Go Rental? 303 W. Ohio in River North
Crain’s is reporting that the 82 unsold units in the Silver Tower at 303 W. Ohio in River North are on the market as a block and could sell for as much as $16 million.
From Crain’s:
The project’s court-appointed receiver, Steven Baer, managing member of Chicago-based Rally Capital Services LLC, hired CB Richard Ellis Inc. to sell the units in bulk in anticipation of Bank of America Corp. taking possession of the building. The bank filed a $40-million foreclosure lawsuit in January 2010, alleging that Silver Tower’s developer failed to pay off a past-due loan.
Of course, any new buyer of the bulk units would have several options:
Sales have picked up in the building over the past year.
When the suit was filed, only 75 units, or about a third of the building, had sold. But sales ramped up last year after Jameson took over the marketing and the building cut prices by up to 35%. Buyers closed on 72 more units, and another 15 are under contract, Mr. Baer says.
All together, buyers have closed on 147, or roughly 65%, of the 229 units at Silver Tower, according to Mr. Baer.
Is going rental for part of condo buildings the wave of the future for some of these buildings?
This is the third high rise building we’ve seen with a possible bulk sale of units.
Silver Tower’s unsold units for sale as a block [Crain’s Chicago Business, Andrew Schroedter, March 8, 2011]
As MUCH as $16 million? Or as little as $16 million? Under $200k/unit would be a steal, even for the 82 least desirable units here.
When you look at the Silver at night it sure doesn’t look like there are lights on in 65% of the building.
“When you look at the Silver at night it sure doesn’t look like there are lights on in 65% of the building.”
Maybe they are sleeping…
“But observers predict an investor would pay $14 million to $16 million, or up to $195,000 per unit.”
DC: Apparently someone is going to get a steal and these should sell quickly for this price.
Sabrina – that depends on what’s left in the inventory. If it’s primarily 1/1s, $195k per unit isn’t that big of a steal.
I was just paraphrasing what DB had said earlier in the thread- that anything under $200k would be a steal.
Yes- we don’t know if all 82 units are 1-bedrooms or if it’s a mix of 1s and 2s.
What can the current condo owners of silver tower do to prevent this. If 66% of the units have been sold, then don’t they have control of the building? Could they write a clause in the condo bylaws saying that no one person could own more than say five units? As an owner there I would not want someone buying out a third of my building to then go and rent all of the units.
“If 66% of the units have been sold, then don’t they have control of the building?”
Nope. The condo board is turned over to the residents when 75% of the units have been sold or within 3 years after the first sale.
Plus- I would be surprised if the current owners, even if they had the 75% threshold, voted to prevent renting. Since the bust has happened I don’t know one new construction building that has voted to restrict rentals except for 340 E. Randolph- but I believe they grandfathered in original buyers. All the other buildings that restricted rentals did so pre the bust (buildings that started closings in 2005-2006.)
But given the 75% threshold is looming here- maybe that’s why they are suddenly doing the bulk sale (because there won’t be any way for current owners to stop it.)
I haven’t been following the Silver Tower debacle much lately but without further research (I was on my phone) that seemed like a good deal to me. I just scanned Redfin for what’s listed there and it is a lot of 1/1’s but also quite a few 2/2’s mixed in and some 3/2.5’s listed at $600K+. I think a buyer at $14-$16 million will make out pretty good.
Too bad for the early buyers here
Now I understand why the mondial is selling so slowly. Who wants to buy a unit now if a large number of units might be auctioned off or sold to investors who will turn the building into a majority rental.
Modial is different bag of tricks, less prime location.
I think MoMo would be a good comp to this, though MoMo is in the loop.
This stinks for owners as they will have a hard time selling anytime soon. Likely problems getting financing. Buildings should seriously consider limiting rentals in some fashion (require you live there 2 years before you can rent, rent for limited time, etc…)
Sabrina,
I’m not certain about 340 OTP. Can someone check on that?
Thanks
I visited the buildings a couple times recently while condo shopping. Don’t forget that a lot of the remaining units are right next to the L and I wouldn’t want to live anywhere below floor 30, if at all, if I’m in one of those units.
Is Mondial still selling units? I haven’t been to it in a while, but I see it occasionally when I pass by on Halsted, and it looks completely vacant. It has a great location for CTA, but the neighborhood within walking distance is pretty terrible (not for crime, there’s just nothing to do).
Sabrina, R&D 659 has also restricted rentals, and closings started in 2009, or very late 2008.
This tower has definitely filled up compared to a year ago. I have visual of the north face of this building and it appears to be accurate to the numbers posted here “65% sold”
Sonies:
We have always disagreed on the apparent occupancy. I just do not see it from my vantage point although I know you have a different view of the building. Is it possible that some of the 65% are investors who are not living there and hoping to flip and will eventually rent their places out?
I think that there is commercial space on the bottom of the building. I would like to see that rented out.
So what other buildings, you all think will join this one? I for one am baffled by why the developer is not offering aggressive discounts on one museum park west which looks pretty empty to me at night.
I’m wondering still how 757 Orleans is selling units. Since silver thower was foreclosed on, silvers prices have been much lower at least according to redfin.
I think there are at least 7 rentals currently available at 340 OTP.
Miumiu, you should know better. The developers ‘can’t just give them away’ you know. If they wait just a little bit longer everyone knows the market will turn around…
“I for one am baffled by why the developer is not offering aggressive discounts on one museum park west which looks pretty empty to me at night.”
true HD : )
“As MUCH as $16 million? Or as little as $16 million? Under $200k/unit would be a steal, even for the 82 least desirable units here.”
Its called buying in bulk. You (and I) are just poor proles. Big money can negotiate terms that seem a steal to those willing to pay full MSRP. It’s the basis for the saying “money makes money”. Proles will line up to give him a 20-40% return.
As an aside I don’t think a bulk purchase would set comps for already sold units.
“I for one am baffled by why the developer is not offering aggressive discounts on one museum park west which looks pretty empty to me at night.”
Museum Park West is a great example of never trusting a developer until the final product is completed. The top of the tower was not at all how it was presented at the pre or even mid-construction phases.
People like Joe Zekas will never touch on the dishonesty of developers to save a buck but it’s a rampant practice.
Interesting info Bob. Do you have links to the pictures by any chance? I love the north facing 2/2s. They are a big though so not sure it they will ever come to our price range.
http://www.redfin.com/IL/Chicago/1201-S-Prairie-Ave-60605/unit-2102/home/21850114
MPE though has smaller north facing 2/2s that are more reasonable for us, but they are all resales (not developer units) hence, harder to negotiate on.
“The top of the tower was not at all how it was presented at the pre or even mid-construction phases.”
“Museum Park West is a great example of never trusting a developer until the final product is completed. The top of the tower was not at all how it was presented at the pre or even mid-construction phases.”
Do buyers really care what the top of a tower looks like. I seriously doubt it effects sales. Look at the Elysian. They drastically redesigned (V/E’d) the top of that building and buyers could care less. Sales have been pretty good there.
“I love the north facing 2/2s. They are a big though so not sure it they will ever come to our price range. ”
That’s a fabulous living room!
What’s that you say? It’s the lobby? Why’s it the first interior pic then? Do people actually hang out in their condo lobbies like it’s a hotel bar or something?
“Do people actually hang out in their condo lobbies like it’s a hotel bar or something”
Once you reach 65+ you are mandated to spend your days in the lobby checking up on the neighbors. Those people can be quite nosy. I guess that they have nothing else to do but hang out, bug the doorman, and watch drunk single residents bring home talent and make questionable decisions.
I just want to hire a 70 year old Pauly D. type old man with character to sit in our lobby yelling CAB’s here…CAB’s Heeere! Now that would be funny!
R+D 659 recently blocked a bulk sale to a group that wanted to rent out the units.
Admittedly, the scenario is not exactly the same due to the units to be sold were designated for low-income people and the buyer wanted to rent them out on short term bases to mental patients, but it is at least a precedent. Their association has also already been turned over.
On the other side, 400 N LaSalle had a successful bulk/rental sale work.
“I think there are at least 7 rentals currently available at 340 OTP.”
Like I said- they DO have a rent cap there but they grandfathered in original buyers (from what I heard.)
I never heard that R+D 659 had a rent cap in place. No one talked about it when the developer wanted to sell the below market rate units in bulk to Thresholds to then rent out. If they had a rent cap in place, there would be no reason for Thresholds to want to buy there and the condo board wouldn’t have had a fit.
Bob,
What is it that compels you to keep lying about me?
I’ve called out more dishonesty in the real estate business more effectively than anyone on CribChatter – because I do it from a base of knowledge rather than blind attitude.
Shot video at Silver Tower last June, with Jameson, which has been a client for nearly 25 years.
http://www.youtube.com/watch?v=eCv8H-ZB8q0
Groove can also search YouTube and find a buyer testimonial to annoy him.
Watch this video from three years ago, Bob, and explain to everyone how this fits with what you said earlier.
http://www.youtube.com/watch?v=p9THUoOQldQ
We’ve done many things along these lines.
miumiu:
http://www.skyscrapercity.com/showthread.php?t=432354
“Do buyers really care what the top of a tower looks like. I seriously doubt it effects sales. Look at the Elysian. They drastically redesigned (V/E’d) the top of that building and buyers could care less. Sales have been pretty good there.”
Sales have been pretty good because people buying now know what they’re getting. I’d imagine if you talked to those who bought pre-con they wouldn’t be too fond of the redesigned top on the Elysian.
thanks Bob. it was much nicer indeed.
Clio and Miumiu, I see you guys posting a lot of comments. I am new to this site, and I wanted to get your opinion on a unit I was looking to purchase. I wasn’t sure what the best way to contact you was. This is the unit I am looking at, and I think I can get it for 485K. Do you think that is a good deal? or is it still overpriced at 485 because it is a store front and duplex down?
“3-Bedroom Wicker Park Victorian Storefront Listed $80K Under 2006 Price: 1530 N. Paulina”
http://cribchatter.com/?p=9717
young…. With whom you are asking you clearly made your decision already.
Mondial is a good deal for people who don’t mind being a bit “off the beaten path” after a day of work in the hustle + bustle of downtown. The loft rentals across the street have been popular for a long time.
The big stumbling block, as I see it, is the architecture. It’s very angular, ultra-modern,and definitely an “acquired taste.” Not all condo buyers are into the “sleek” look.
“Groove can also search YouTube and find a buyer testimonial to annoy him”
[loud bang and Groove appears from behind a cloud of smoke]
My name was spoken so now i am hear, dont be afraid nothing to fear, i come to make jokes not harm you my dear, i watched the testomonials and it brought a tear, not a happy one i swear, a it is a sad one i wear. from far to near, from there to here, funny things are everywhere.
*sorry y’all, i’ve been reading way to much Dr. Seuss lately
MiuMui,
OMPW i think i see like 5 lights on at night, and the dudes that have the rental listings a not nice and actually worse than the people in OMP(E).
I dont know if it has changed since i looked, but i found OMP to be more “home” like than OMPW hotel feel.
and good luck haggling prices they are in lala land over there. I tried to get a guy to come down in price, no budge. i tried to get him to throw in two parking spots instead, no budge. i even called him back a month later, just to see how stubborn, i said how about $150 a month off, and the ficker wouldnt budge.
the funny part is the guy didnt rent it out until 10 months later. and it sat vacant the whole time with no income comming in, and you see why specuvestors are broke now!
gringozecarioca, I’m open to any feed back.
“This is the unit I am looking at, and I think I can get it for 485K.”
Why don’t you make the offer and see what the bank will do? Honestly- the banks are taking forever on the short sale deals. You’ll have to find out if the current asking price is “approved” and/or if the bank has indicated any wiggle room. Because, if not, you’ll likely be waiting 3 to 6 months to hear back. And sometimes you never hear back.
“3-Bedroom Wicker Park Victorian Storefront Listed $80K Under 2006 Price: 1530 N. Paulina”
http://cribchatter.com/?p=9717
Okay- just checked on this. It’s already under contract so it looks like someone else is going to buy it (unless it falls out- which is happening a lot right now.)
@ Young, I am very RE unsavvy despite being very chatty over CC : )
I am in market for 2/2 in town in down town area so honestly I know very little about other areas. Clio has made money in RE and actually knows what he is talking about. So he might be able to answer your question.
The place looks nice though.
@ Groove, I agree I like MPE much more too and they already have the condo association in place. So groove, you were trying to buy or rent?
Young,
Unfortunately, I am becoming more confused as each day passes. I recently experienced my first real estate loss in 16years and it has shaken me up a bit. Chicago is a strange market – because there is so much land and so many different neighborhoods (unlike Boston, New York and, to some extent L.A. and S.F). It is kind of like Las Vegas, Miami, Phoenix – in terms of land availability and neighborhood choices. To be quite honest, I am a little more skeptical about Chicago real estate (especially in under-established neighborhoods). The one thing I am certain is that the nicer areas/suburbs are ALWAYS going to do well. Buy a bargain property in L.F., Kenilworth, Winnetka, hinsdale, Oak Brook, Gold Coast (within a few blocks of Michigan/Pearson) and you will do well. Otherwise, all bets are off….
“@ Groove, I agree I like MPE much more too and they already have the condo association in place. So groove, you were trying to buy or rent?”
we were looking to *rent an 05 tier for only year, just to get it out of our system.
but once you walk into a 01 tier you will open up you check book on the spot 🙂
twisted by the dark side young clio has become
I know they are to die for. I really want me an 05. It has stopped me from liking anything else. 01’s are Robert Pattinson of RE, I don’t even want to see tour one as it might make sell my 1BR to afford it!
“twisted by the dark side young clio has become”
….when in Rome…
here is the only 05 you should buy,
http://www.redfin.com/IL/Chicago/1211-S-Prairie-Ave-60605/unit-2505/home/21786656
We almost, almost were swept up buy the 01 tier that on the long drive home in traffic we were finding ways to cove the rent for one year.
by the time we got home we had the WTF moment and came back to earth.
Groove – that is a beautiful unit. Unfortunately, I think it may be overpriced by 200k. One thing that somebody could do is rent this place and, as prices continue to fall, make the owner an offer of 500k – he/she may be willing to sell at this lower once he/she has calmed down a bit. Again – it is all about psychology
Young, I have no personal opinion on this specific property. I am just generally bearish and think you can be very patient.
My earlier comment was that I felt you were asking the respondants that would probably be most bullish in argument and in general I like to seek the advice of those whose opinion differs from yours and whose opinion you really don’t want to hear.
I really pretty much agree with all else clio said, Chicago was a city I always felt you needed to keep an eye on new build cost exactly because of all the available capacity.
Oh Groove I know. I love it and have it in my favorites but it is so expensive even compared to other 05s. High ceilings are not worth 100K more. I think this seller is out of touch with reality, look at:
http://www.redfin.com/IL/Chicago/1211-S-Prairie-Ave-60605/unit-3405/home/17560927
and even this one needs to come down quite a bit but at least it includes a parking spot.
miumiu – I have to disagree – groove’s unit is so much nicer and seems so much more spacious with the higher ceilings – I think that makes all the difference.
yes it is nicer, but not by 100K. BTW, I don’t like any of the kitchens. Specially I will for sure change the granite to a lighter thicker one. The 3405 has much worse photos and horrible furniture. Once you are inside, they don’t look that different at all.
“Oh Groove I know. I love it and have it in my favorites but it is so expensive even compared to other 05s. High ceilings are not worth 100K more. I think this seller is out of touch with reality”
Not really he is more toward reality i think see; (unit/last sale price/last sale date
#4405 825,000 3/30/2010
#4105 845,500 2/15/2010
#3705 800,000 8/14/2009
#3505 795,000 7/24/2009
#1705 690,000 6/29/2009
#3405 810,000 3/3/2009
OH yeah G-style data baby. bow dow too the new and improved groove!
But even 3405 of your list is now listed way below its sale price. I think the prices are down quite a bit.
“But even 3405 of your list is now listed way below its sale price. I think the prices are down quite a bit.”
I think these units in this building are going to fall much further (30%). If I owned in this building, I would try to get out ASAP. cut your losses and get out now. I think it is going to get a lot worse for this building and the S. Loop in general.
I bid 485, and the bank accepted. I am second guessing right now.
“But even 3405 of your list is now listed way below its sale price. I think the prices are down quite a bit.”
agreed, 2505 to some may not be the better deal to pay 100k for more light and higher ceilings.
i still think 800k for a 2 bedroom apartment is ridiculous! but would i rent it for a year or two, heck yes!!!!
Young
A few questions before you panic:
1. How long are you planning to live there?
2. What was it that attracted you to this place (ie, did you need to live there because of work, children’s schools, etc.)
3. How stable is your job?’
The key to your confidence in purchasing this property lies in the answers to those questions. For some, this would be a great buy and a very positive life choice at 485k. For others (like me who is purely an investor), the unit would not be worth 485k. Again, it all depends on the person and use.
Young – $485,000 is roughly 23% off the peak bubble Dec 2006 price. Are you getting a deal? Well yeah. Are you getting a bad deal? Probably not. Could you do better in the future? Most definitely. It’s depends on how long you’re willing to wait. Just today there was an article that foreclosures are way down, in Chicago Feb 2011 foreclosures are off by 44% from 2010; and it isn’t because there are less foreclosures, it’s because the servicers and banks are so messed up that the pipeline is getting very clogged. So if you buy today you can expect that tomorrow it will lose value and maybe moreso in a few more years beyond that. But if you need somewhere to live ‘today’ and you’re ready to stay put for a long time (and possibly experience a loss when you try to sell 5, 7 or maybe even 10 years in the future) then sure, buy it today. Just don’t expect that you’re getting the best deal. All you’re getting is the ‘best deal today’, but, there will be even better deals in the future.
Is the neighborhood that bad? I know the first rule of real estate is location location location. But it is 4 blocks east for north/damen/milwaukee and its near north ave, so you have the choice to bus over to the red line or walk to the blue line. I’m also concerned about the store front look. Do people generally get concerned about that?
“Is the neighborhood that bad? ”
No, the neighborhood isn’t bad.
Is the FSBO listing on Redfin the same unit?
WTF, i get no snaps for the “G” style data?
screw you guys i am taking my spreadsheet and going home!
1. How long are you planning to live there?
Unclear. Atleast 2 years, but maybe as long as 5-10 years. Atleast for the first year, and maybe 2 years, I will have 1-3 room mates paying rent.
2. What was it that attracted you to this place (ie, did you need to live there because of work, children’s schools, etc.)
I looked at about 50 places with my Realtor. I’m looking at the 500k range, and I’m not sure if it was because she showed me crappy units, but I didn’t see anything “unique”. I really like the open floor plan (big living room). I won’t have kids for say maybe another 5-10 years, but I want resale value to other families so I don’t get stuck with it forever. In the next 3 months, I need to either find a place to rent or buy. Plan to live with 2 others.
3. How stable is your job?
Relatively stable. I am pretty responsible with money and I think I can afford this.
One scenario I can imagine, is that I end up getting sick of the area, or wanting to move to river north or Lincoln park type place in the next couple years.
“One scenario I can imagine, is that I end up getting sick of the area, or wanting to move to river north or Lincoln park type place in the next couple years.”
Rent.
Yes. Unit f.
Young – you should rent.
Groove, you are funny.
Clio, if you think even MPE units will drop 30% given their great views and being in a nice new building, then I assume you have a similar expectation for say Aqua. I mean why should someone pay 50% more with higher assessments to see almost the exact view? Also it is not like the neighborhoods are drastically different or far apart.
Young:
If you live here with two roommates and plan on selling to a family, you are severely mistaken. Schools alone will preclude you from selling to a family who can afford to take this place off your hands.
Kill the contract quick during attorney review, like right now, this exact moment, you can kill for any reason at any time during attorney review. Call your lawyer NOW.
“Also it is not like the neighborhoods are drastically different or far apart.”
Really? You think that it’s not substantially different to be two blocks from Streeterville vs. being in the Sloop? Really?
Not that I don’t think Aqua and MPE units won’t track each other somewhat, but the locations are decidedly different.
“Kill the contract quick during attorney review, like right now, this exact moment, you can kill for any reason at any time during attorney review. Call your lawyer NOW.”
HD:
Notwithstanding the … optimistic … resale view, if Young *knew* this was the ‘hood for Young for the next 10+ years, would your advice be the same?
anon, to me they are not differnet enough to warrant 50% price difference and assessments.
Young,
I really hate to say it – but I would probably rent if I were you – even if it costs you a few thousand extra and you means you may miss out on profit taking – believe me, mobility, at your age (which, I presume is in your late twenties/early thirties) is priceless.
miumiu –
I think the neighborhoods are TOTALLY different. Even when I compare my units at 111 e chestnut to my other units at 33W ontario – the prices that they command and the buyers/renters they attract are TOTALLY different. Prices at 111 E. Chestnut continue to be ridiculously high (this is in spite of 111 E. Chestnut being a crappy crappy crappy old building and 33 w ontario being a very new nice building).
“anon, to me they are not differnet enough to warrant 50% price difference and assessments.”
That’s fair, but do you not see the neighborhoods as drastically different? I do.
Were I looking for a 2/2 within 2 blocks of Mill/Grant Park, with a budget of around $1mm would I prefer to save $300-400k (or add a br) and live in MP? Quite possibly. And I *highly* doubt I’d pick Aqua, in any event.
I don’t buy that they are different enough for 50% price differnce.
You guys need to quantify your statements. If MPE will go another 30% down, the other ones have to go down too. There are tones of old, high assessments buildings in down town that cannot hold a candle to MPE.
OMP is a celebrity magnet. If you live there you get to bump into famous people like Mark Giangreco!
http://www.chicagomag.com/Radar/Deal-Estate/January-2010/ABC-7-rsquos-Mark-Giangreco-Buys-in-Museum-Park/
miumiu – I totally agree that it doesn’t make sense — but I see it everyday. I am telling you – look at the units at 111 E. chestnut and compare them to units at 33 W ontario – and then look at the price difference. People DO pay a RIDICULOUS premium to live on a certain block and certain area (even if they can get a much nicer unit a few blocks away). I don’t understand it – but it is true.
“If MPE will go another 30% down, the other ones have to go down too.”
Uh, I said that:
“Not that I don’t think Aqua and MPE units won’t track each other somewhat[.]”
And I also agreed that the difference isn’t worth 50%. Probably especially when comparing MP with Aqua, as they apparently have radically different living experiences, with the rentals and hotel to be in Aqua.
The disagreement is whether the two locations are drastically different. You say “no”, I say “what? are you nuts?”.
anon(tfo) if Young *knew*, which is hypothetical give the statement “At least 2 years, but maybe as long as 5-10 years”, then I might say exactly what I said above, it’s a good deal today but not a great deal. It’s 20% off bubble peak, which is not insignificant, but it’s good for today if you need to buy today for whatever reason (and yes parent who have children in a school district with no rentals probably *need* to buy bc renting is not realistic). I wouldn’t however expect any apprecation and there may even be a loss 10 years down the road.
Clio – 111 E Chestnut stays high because Jane Byrne lives there, dontchyaknow. J/K.
Chestnut is a much different street than Ontario. It’s much quieter because it’s not surrounded by tourist activity like the schlock that’s on the Ohio/Ontario corridor. Quiet appeals to those who want to live downtown and have money to burn.
The only way i would buy ) real estate now in chicago (AS A NON-RESIDENT INVESTOR is either:
1. It is in an extremely established neighborhood (1-3 blocks from Michigan/Pearson) or the Astor st neighborhood or LF/Kenilworth/OB/Hinsdale.
or
2. It is a ridiculously great buy
Of course – if you are looking to buy for yourself/family – that is a totally different story and you shouldn’t be so concerned with getting the cheapest/best deal out there – you should be looking at what you like and how much you can afford.
“It’s much quieter because it’s not surrounded by tourist activity like the schlock that’s on the Ohio/Ontario corridor.”
Anonemoose – I agree that 33 w ontario is busy – but 111 e chestnut is, by no means, quiet. It is a nightmare getting in and out of the garage (right next to bistro 110) and, when you step outside the revolving doors, you are attacked by mobs of people with big bags from Filenes basement/Marshalls or whatever stores are right in front.
I am also afraid of inflation. So I like the “idea” of owning something physical like a home.
If I back out now, there is a good chance I lose whats in the escrow (5K). Not terrible, kind of sucks. Would rather make the better decision for my self, which ever way I go.
“I am also afraid of inflation. So I like the “idea” of owning something physical like a home.”
Yeah – but I am not so sure if you will like the “idea” of maintenance (roof repair, appliance replacement, furnace/AC repair/replacement, window replacement, etc.). You can always find affordable rentals – and, more importantly, your life circumstances are likely to change in the next 10 years (as will be your priorities). I am very big on buying – but, in your case, I would definitely definitely hold off – you will thank me in 10 years!
Young – you won’t lose the money in escrow – even if you are past the 5 day attorney period. Just get an inspection and back out because of something they find (and they WILL find something). If that doesn’t work, threaten to sue and they will likely surrender the money.
Clio giving legal advice again…
Young – You need to review the contract and/or consult your attorney. Sounds like you’re a first time homebuyer, so hopefully you have an attorney.
HD – this is just common sense – you don’t have a monopoly on the legal world and I’m sorry if law affects everyone and everyone has had experiences with it. Medicine, on the other hand, is NOT common sense, is extremely different for each individual, and the stakes are much higher – so a non-medical person giving medical advice is very different (I had to put in my rebuttal before you attacked my profession again).
“this is in spite of 111 E. Chestnut being a crappy crappy crappy old building”
Not true at all! 111 E chesnut is a much nicer building than 33 W ontario!!….the prices stay high because of the people that live there (wealthier, better maintained) vs. the foreclosed crap shack that is 33 w ontario. Not to mention Gold Coast (111) vs extremely high traffic RN tourist trap (33) in THE worst part of RN…
We already did the inspection (a few months ago). Could I do another inspection? yes, I have an attorney. I will consult her. I am a first time buyer.
“Not true at all! 111 E chesnut is a much nicer building than 33 W ontario!!”
uhhh – I own units in both buildings. I can guarantee you that 111 E chestnut is a piece of crap (despite the better neighborhood/reputation). Seriously, the garage is hard to navigate, the elevators are INCREDIBLY slow, and the utilities are EXTREMELY high – electric heat – one of my units is empty and the electric bill has been between 400-600/month over the past 2 months. When Com ed compared other similar units – they found that the average bill for that tier WAS 400-500/month). Also, the windows aren’t sealed well, the hallways are depressing and the people are snobby with no reason to be. I could go on – but why? Just look at the pictures or visit the properties yourself
MiuMiu,
Oh gosh yes the differnce of hoods is unmistakeable. Lake Shore east (or the burb on the lake as i call it) lives like a intown for burbies and is very secluded from the grimey hustle and bustle of the loop and is very eerily serene. except for the howling wind, dont know why but the buildings cause major “wind tunnels”
the south side of the park (OMP) has a more neighborhood feel to it and a younger vibe. it attracts different clientele than the northside (which i see as a positive).
it is funny how only 2 miles with a park in-between can have a whole different vibe.
I really dont know if people looking at aqua would be the same that would look at OMP (i dont think so), we would need a realtor(tm) to chime in on that.
now aqua is a different beast i have not seen its “amenities” that they are clamoring about but if its better that museum parks i can see why its hyped.
but then you have to share it with the hotel and rentals.
lool clio did your dog die or lambo get crashed or soemthing? you’ve been so sad lately, where is the JOY!
Clio – I have some very close peeps that live in 111…wealthy peeps on high floors…slow elevators, high elec bills, snobby people? Child-please. Seems like this is all you care about (though valid points) – the carrying costs and elevators!
Leaky windows can be fixed. How about the pros: awesome location, beautiful views, sound proof interiors (as far as city goes), great staff, no rodents/bugs, snobby people opposed to no people…I am merely comparing the two buildings and 111 is much nicer imo. Not to say that 111 is the Palmolive or Trumpity Trump….
Interesting that you all think 2 miles over the park makes a big difference. It might be because my husband and I are not from here that we don’t pick up the vibe. It is very interesting how much one misses due to lack of same cultural background.
One thing I love about SL is that it is very international and ethnically diverse. Most our neighbors/friends are couples from all over the world.
MiuMiu,
my wife grew up in eastern europe until she was 20something and she picks up that vibe right away.
and no matter the background just the trek from Lake Shore East’s park to lets say macy’s is a huge difference in so many ways.
I am sure you are right Groove. I just didn’t notice it. I like gold coast and SL more than the down town area partially because they are more residential and less touristy, but that is about as much I could tell about them. This is why I value the CC chat so much. I have learnt so much from you guys.
“lool clio did your dog die or lambo get crashed or soemthing? you’ve been so sad lately, where is the JOY!”
Maybe he can only deny reality for so long?
http://www.calculatedriskblog.com/2011/03/corelogic-house-prices-declined-25-in.html
Calculated Risk has three real estate stories up on it’s main page today. Two dealing with the continued carnage and a third about how only 60% of short sale transactions actually close.
“and the stakes are much higher – so a non-medical person giving medical advice is very different ”
No clio. That’s a sweeping generalization and completely wrong. There are very high stakes in both realms and not so high stakes.
Ask Marni Yang whether the stakes are high for her legal quandry? (BTW another reason to hate Quinn is she’ll never suffer the same fate as her victims).
clio- medicine?
I didn’t know practiced medicine.
I thought you were a chiropractor.
Alleged internet doctors sure are arrogant.
He is lashing out because his dream of becoming a land baron is now at risk.
Actually what the advice Clio gave is common sense, it is like telling someone who has a cold to drink a lot of liquids so I am not sure why HD was so upset.
I’m not upset, I just like giving clio a hard time.
miumiu, the problem is that he gives advice that is wrong and/or based on his misunderstanding of something or wrong assumptions.
For example, with respect to his current bad legal advice, depending on the drafting of the sale contract and the status of the attorney letter comments / agreement on price reductions, and where they are in that process, it’s very possible that young could lose his earnest money if he just decides not to close. That seems to be what young is saying and clio is telling him otherwise. And clio is likely wrong.
Or worse … which is why I said to call the lawyer asap!
“it’s very possible that young could lose his earnest money if he just decides not to close. “
“I am sure you are right Groove. I just didn’t notice it. I like gold coast and SL more than the down town area partially because they are more residential”
i love the south loop over the GC as i cant stand traffic but the reason i love the Loop (downtown) more because i live in a residental area and dont work in the loop either. so my exposure is different than others.
“Or worse”
Do you actually see sellers extracting more than earnest money from a breaching buyer? How, apart from scare tactics?
If Young hadn’t done the inspection yet Clio was right. BTW, I have only bought two properties in my life so please correct me if I am wrong, but both times I first have an offer and only after they got accepted did the inspection. Otherwise, the inspection money gets wasted.
I know of some sellers who sued a well-capitalized buyer who engaged in a strategic breach of a residential purchase with a long closing date after they had gone out of their way to accommodate him. The fact that the losing party (in most residential real estate contracts) has to pay attorney’s fees provides for a lot of leverage.
He settled with them pretty quickly for a pretty big number (well in excess of the earnest money). I don’t know if you can compel specific performance in Illinois (I doubt it).
I wonder, how often has a Seller sued for specific performance on a purchase and sale agreement, and seen it succeed to conclusion? It has to be very rare.
“If Young hadn’t done the inspection yet Clio was right.”
Well, he had, so Clio was wrong. If he wanted to account for the possibilities that would change the answer he should have done so. Lawyers get held liable when they give bad advice based on wrong guesses about stuff they could have figured out. There is no “I could have been right if the facts had been different” defense to malpractice.
“That seems to be what young is saying and clio is telling him otherwise. And clio is likely wrong.”
JJJ – are you an attorney? do you have extensive experience in real estate law or real estate transactions? if not – then YOU need to shut the f up. seriously, my advice is not wrong at all – I have actually gone through scores and scores (if not hundreds) of real estate transactions (closed as well as abandoned)and have seen this type of scenario many times. A good attorney can usually get your earnest money back even if it is very close to closing – I have seen this at least a dozen times.
Thanks JJJ. Fair point on “I could have been right if the facts had been different”.
You are all wrong. Only a buyer can force a seller to sell – all real estate is considered unique. The breaching buyee can be sued for money damages only.
The legal malpractice standard is not merely bad advice, as you all above seem to believe. Don’t forget that lawyers have determined the standard over many years and the bar is very high.
HD:
Don’t let facts get in the way; you’re reducing the base of future paying clients.
“You are all wrong. Only a buyer can force a seller to sell – all real estate is considered unique. The breaching buyee can be sued for money damages only.
The legal malpractice standard is not merely bad advice, as you all above seem to believe. Don’t forget that lawyers have determined the standard over many years and the bar is very high.”
To whom are you addressing this? Whether specific performance is available doesn’t really matter – it wouldn’t be a realistic remedy even if it were available (I said that I expected that it is not – it’s interesting that a buyer could theoretically enforce specific performance but very hard to see how it would play out in practice – would the seller be compelled to, or deemed to have, executed the appropriate documents, etc.?). What matters most in this context is whether or not the applicable sale agreement has a limitation for breach limited to the earnest money or allows for other damages (and whether additional damages are limited by statute and whether that statute can be contracted around).
As for the legal malpractice comment, obviously this is not the place to describe to laymen how legal malpractice works – I was just making the point that it’s irresponsible to give blanket advice without considering all the possibilities. The only time I have been involved in a legal malpractice claim, I was being deposed related to the actions of a counterparty’s counsel (it was great! – we got to play the games doctors play in deps and charge for our time), and I’m not familiar with Illinois case law. However, if the theoretical buyer young chose not to close because he got cold feet based on advice from counsel that he would be able to get his earnest money back, but didn’t have a right to terminate the contract under its terms and applicable law and didn’t get his earnest money back, it’s not that hard to envision a successful malpractice claim.
“I have actually gone through scores and scores (if not hundreds) of real estate transactions (closed as well as abandoned)and have seen this type of scenario many times.”
Hey, what a coincidence, that’s the basis on which I consider myself a gynecologist!
Wait, we’re talking about a Seller forcing Young to buy as per the signed contract. Can the Seller sue for specific performance?
“Only a buyer can force a seller to sell”
“Can the Seller sue for specific performance?”
hd says no, and from 8 seconds of half-ass internet research I agree.
“lool clio did your dog die or lambo get crashed or soemthing? you’ve been so sad lately, where is the JOY!”
I think clio is sad because billions were lost in stock market today, leaving less for future down payments.
“In the event the buyer without justification decides not to go ahead with the purchase, the seller has two general remedies. First, he may be entitled to damages which could include retaining the earnest money deposit. Second, in usual cases, the seller may also sue for what is called specific performance, which means that a court may order the buyer to complete the purchase as provided for in the contract. Legal fees incurred by a seller in seeking damages or specific performance are paid by the seller, unless the contract imposes this obligation on the buyer.” http://www.chicagobar.org/AM/Template.cfm?Section=Real_Estate_Seller_s_Rights_and_Obligations&Template=/CM/HTMLDisplay.cfm&ContentID=2361
JJJ: Well done
During the boom specific performance contracts were filed all the time. Sellers would agree to sell at X and then some other buyer would come along and bid X+$20,000 or $30,000 (you know how the boom was), so the seller would breach, at that point the buyer had the choice of walking away, negotiating some kind of settlement or suing for specific performance. Often the specific performance route was worth it especially if you thought the land/house/commercial building would only increase in value by the time the judge ordered it sold. Let’s just say I haven’t seen as many specific performance cases come across my desk lately.
I looked briefly at an old copy of Galaty on Google Books, and it suggests otherwise (that the available remedy is damages equal to the purchase price less mitgation like the value of the property), but I’ll defer to hd. Even if it’s theoretically available as a remedy it’s very unlikely to be granted for practical reasons.
Dan: The CBA article is not correct. The seller is limited to money damages which is the difference between the buyer’s purchase price and the ultimate selling price. If it sells for more money than then there are no damages and no claim against the buyer. If it sells for less than the buyer’s original contract then he can sue the buyer for the difference.
WTF are you talking about?
“anon (tfo) on March 10th, 2011 at 4:32 pm
HD:
Don’t let facts get in the way; you’re reducing the base of future paying clients.”
It’s all based upon the premise that real estate is unique and a buyer can force a seller to sell the property. The seller is not looking for a unique remedy, he is looking for money; and he can get money from any other buyer and recover the difference from the original buyer.
OK – I understand that everyone loves to play “bash clio” but to be serious for a minute (for “young”‘s sake), I think that the law is not as clear/absolute as some of you think. There are ways to get around a lot – on every deal that has fallen through with me (and there have been dozens) – the prospective buyer always demanded (and got) their deposit back – regardless of the stage of the deal. This is because they all threatened to sue for a variety of reasons (and believe me, in real estate, there is always a reason you can find to back out of a deal – no matter how small it is). To tell you the truth, this is why celebrities ask for such ridiculous things in their contracts (ie, water at 58degrees, only green m and ms) – so that if the venue fails to provide such things, they call it a breach of contract and have grounds for suit – and no, I am not a celebrity but I have a friend who is an attorney in LA for MANY celebrities.
HD – you keep bashing me for giving law “advice” – what about YOU giving real estate advice? You don’t even own a house/condo – so why do you (or the others on this site) constantly give this type of advice? What do you have to say about that JJJ (because I know you have some sort of personal issue with me – I’d like to hear your idiotic response).
“WTF are you talking about? ”
You’re giving away the milk for free. You let people step in it based on bad information, soon enough they’ll be paying $300/hour to have you fix it for them.
Young- take any anonymous advice given to you on the Internet with a grain of salt. Talk to your lawyer ASAP and really think hard about the costs and benefits of each of your options.
“take any anonymous advice given to you on the Internet with a grain of salt. Talk to your lawyer ASAP and really think hard about the costs and benefits of each of your options.”
Other than the possibly too late advice to rent, far and away the best advice in the thread for your situation.
I did not realize how applicable entertainment riders about candy colors and water temperature in California are to real estate transactions in Chicago, so I guess I must defer to the expertise of your friend’s MANY entertainment law expertise. MANY. Anyway, see how far some claim that the seller breached the real estate contract and you can get your earnest money back at any time will get you in Cook County. I am sure that hd could tell you MANY stories.
Clio, I am glad that you asked! I don’t have a personal issue with you, but here’s my problem with the way that you behave on here: you act like an insecure narcissist who gives bad advice on topics you don’t fully understand because you think you are a hot shot, and you think that giving advice on things that are nuanced and complex, even if that advice is wrong, makes you seem like more of a hot shot because you can reference your experience. I don’t care how much you want to show off around here – I’m here because I enjoy it and find it interesting here, regardless of the fact that I don’t care for everyone – but it actually gives me MANY discontent to think that someone could read what you write here and think that it’s right, follow that advice and get burned. That would suck. Why do you care more about trying to be right and showing off than someone stopping by getting bad info? You don’t care if you say wrong things and will never admit that you’re wrong, but others here care about the information here being accurate and useful.
JJJ – I don’t think I am a hot shot at all. I am just giving Young some advice because he specifically asked ME (and miumiu) for it. This has nothing to do with you so I don’t know why you are butting in.
“but it actually gives me MANY discontent to think that someone could read what you write here and think that it’s right, follow that advice and get burned.”
uhhh – this could be said for any of the MANY MANY posters that give real estate advice (or ANY) advice on this site.
Seriously JJJ, stop for a minute and think about it: You are criticizing me for giving advice – but that is what EVERYONE ELSE HERE DOES. So you CANNOT just personally attack ME for this. Good God – do you realize that your irritation with me must have to do with some deeper psychological issues.
This building looks so soulless. It looks like it belongs in the South Loop.
Just looking at this building the quote “Accounts payable, Nina Speaking..just a moment.” comes to mind.
At least SoNo although soulless as well is nice looking and didn’t disparage the monolith appearance much via carefully placing balconies. This developer made a concrete & glass turd.
“Why do you care more about trying to be right and showing off than someone stopping by getting bad info?”
My information and advice is based on 16 years of doing real estate – I am not forcing anyone to listen to me or do anything I tell them. I am relating my experiences – which is a lot more accurate than 99.9% of people on this site who don’t even own real estate and still spout their opinions as fact, etc. Go bother them…
Bob – can’t you see I am having a private argument with JJJ – stop interrupting us about your posts on real estate!!!
Dude, try to recognize the difference between people saying what they think a property might sell for or be “worth” and you telling some poor fool that he can breach a real estate purchase agreement without damages.
“you telling some poor fool that he can breach a real estate purchase agreement without damages.”
first of all, I stand by what I wrote –
second of all, of course he is going to go through an attorney (how else would he do this?). His attorney can give him the specific information – but without me telling him to go to this, he may never even ASK his attorney about backing out.
third of all, don’t call me “dude”
fourth of all, look back at all of these threads – there is a lot more advice being given than people telling “what they think a property might sell for or be “worth”.
fifth of all, book a double session with the psychologist this week – you need it.
“If I back out now, there is a good chance I lose whats in the escrow (5K). Not terrible, kind of sucks. Would rather make the better decision for my self, which ever way I go.”
The earnest money should be liquidated damages, right?
As I also understand RE contracts, I believe you have to agree to release the earnest. So it seems to create a bit of a perpetual situation that a motivated seller would want to avoid. Chances are you get the earnest back. 5k is chump change on a 500k spread in Wicker Park. You will lose $5k the first month after you own it when the next CS index posts.
Wicker Park is not what I would consider to be a no brainer area either. Walking away, if you conviction it is the right call, seems to have little downside.
By the way, I find it very hard to believe anyone would act based on posts on CC without consulting with an attorney either before, during or after the fact of any of these posts.
The worst I could see someone doing is the old “I heard that xyz results from abc” conversation with the person who actually knows the answer and ultimately sets them straight.
I agree JMM. Actually one can learn a lot from internet. I did not for instanc even know there is something called writ of mandamus. I came across it in some forum and then got a lawyer to practice it for me.
I find the argument “Well, no one should rely on the advice they get here” pretty unconvincing. It’s true but not a reason to excuse bad information.
I see a clear distinction between obvious opinions (“I hate basements,” “That place is worth nowhere near that” or “Why would anyone want to live here?”) or speculation about the future “this place won’t sell for that price!”) and legal conclusions.
I look at sites like this as a great resource for the youngs of the world, and I love the idea that it creates better information sharing for a market which is absurdly free from clear information. (For example, my other big beef on here is with hd when he always assumes that recorded amounts are close to owed amounts. In that case, it’s a guess that is often true, but I don’t want people to think that it always is.)
ha! I don’t need or want cribchatterers as clients. I’ve got enough, too many actually, but that’s a problem I won’t complain about having.
Yeah sometimes earnest money is liquated damges but not in teh general RE contract that everyone uses. There’s always a reason to cancel the contract and usually the earnest money just gets refunded but sometimes litigation ensues. Look at what One Museum Place is doing filing suit against every buyer who backed out to keep the earnest money. No mortgage contingencies in new construction contracts.
“#anon (tfo) on March 10th, 2011 at 5:29 pm
“WTF are you talking about? ”
You’re giving away the milk for free. You let people step in it based on bad information, soon enough they’ll be paying $300/hour to have you fix it for them.”
I think that a great lesson is to always put the minimum amount of earnest money down. I used to be an idiot and always give 20% at the time of the contract (to show the sellers that I was serious – also the real estate agents always encouraged me to put as much down as possible). However, I realized that many agents/buyers will accept as little as 1000 as earnest money. In fact, I don’t think I have paid more than 2000 in earnest money for any of the properties I have bought in the past 5 years.
Is the current one in use the multi-page one called Multi-Board 4.0? Is there a link to download it? thanks
PS what happened to the double-sided 8×14 CAR contract?
“the general RE contract that everyone uses”
“Young- take any anonymous advice given to you on the Internet with a grain of salt. Talk to your lawyer ASAP and really think hard about the costs and benefits of each of your options.”
Many first time buyers get cold feet as it gets close to actually going through with the deal. Young- you would not be the first to be having second thoughts.
“Many first time buyers get cold feet as it gets close to actually going through with the deal. Young- you would not be the first to be having second thoughts.”
It is human nature. When I bid on eBay and get outbid, I wish I had bid $1 more. If I bid and I win, I think “damnit, I won, I don’t want it anymore”.
It might be Dan, it’s been a while. I do far fewer closings since 2007.
“#Dan on March 10th, 2011 at 8:11 pm
Is the current one in use the multi-page one called Multi-Board 4.0? Is there a link to download it? thanks
PS what happened to the double-sided 8×14 CAR contract?
“the general RE contract that everyone uses””
I believe it is true that if you walk and the seller doesn’t refund the earnest, they cannot sell the place to someone else.
Is that a Mexican standoff?
http://en.wikipedia.org/wiki/Mexican_standoff
I always balked at using that one in business meetings for obvious reasons.
““I have actually gone through scores and scores (if not hundreds) of real estate transactions (closed as well as abandoned)and have seen this type of scenario many times.”
Hey, what a coincidence, that’s the basis on which I consider myself a gynecologist!”
JJJ,
by far the best post of 2011!!!!!! i bow down to your greatness 🙂
Disgusting and highly offensive…… that’s all I have to say – and almost every woman and many men would back me up on this one.
Young, if you buy the place, then we can all watch whatever happens over time… you can be a test case for all the prognosticators here…
good one JJJ
Thank guys for all the advice, but I do have a few more questions. I didn’t have access to a computer over the weekend, so sorry that I disappeared for a few days. My mom actually voiced some concern about the “store front” look (large windows on the front of the unit and how you can step right out onto the sidewalk. I personally would feel safe and don’t see a problem with this, but how do others feel about it?
Also someone made a comment about bucktown not necessarily being a “hot” neighborhood. I put lakeview and bucktown in the same category in terms of being “hot” or “up and comming”. I do think bucktown is more convenient than lakeview though. Much closer to the city and the beach. Especially if you just hope on the 72 down north ave. You can also get to the red and blue line easily from this location. I wouldn’t want to live west of damen though, that’s starting to get a bit too far. The only thing that’s not convenient is going to cubs games, but I rarely do that and I can always cab it.
So here are the numbers:
Purchase price: 485K + 10K renovations + closing costs
Say I put down 25%: 120K
Mortgage ~= 380K
Interest Rate = 5%
Monthly Nut = ~= 2000 (for the mortgages)
Assessments = 450
Tax = 9500/12 ~= 800
Insurance ~= $50
Total Monthly payment = 3,300
At least for the first few years, a large portion of the 2K mortgages is interest. I can write that off. I can also write off my taxes correct? This is a blind guess but say 1400 is interest. So I can write off a total of 2200 from my income. Depending on tax bracket, this saves X. Lets use 35% tax rate, so this saves 770. Does that mean that if I can rent for more than 2500, it will be cash flow positive? Overtime as more of the mortgages becomes principle, this “benefit” will go down though.
I plan to live here, but I want to explore how much I would have to rent it out for in order to not lose a ton. If it takes me a while to sell, or if I decide to live somewhere else in the future, I can always rent it out.
I am going to make this into a 4b/3bath. There is no need for a second “living room” downstairs. I plan on having room mates rent, which will be great for a year or two, but it won’t be the situation forever.
Oh and to comment on the escrow stuff. I appreciate all your advice. I’ll talk to my attorney. If I decide to pull out, I’ll fight for the 5k, but be prepared to lose it as well. Lesson learned for the future 🙂 I won’t be taking the escrow money into account in my decision.
young you are doing awesome. Great attitude about the escrow. Everything i learned always seemed to come at a price.
Several things. You are close in your aanalysis and i think someone here will clean it up for you. I am not near a computer so tough to type it all out. On the surface though u do have to add in an opportunity cost of the 125k since that money will no longer be earning for u. Another huge thing….
when u r looking at renting you are missing what to me has been a huge benefit. U get to depreciatte the asset and take a loss on that. That could be big and has been the difference to me in my 1 rental property the past 3 years but need to learn about passive loss limits depending on career classification…
young, be careful about your idea of switching a room in the basement to a bedroom if think of renting the place out. Make sure it’s up to City Code, code, code!
one of the rental units we have is half-duplexed to the basement, and we NEVER call it a 3rd bedroom, for liability purposes. It actually does have a door leading to the back of the basement and from their to the outside, plus a stair from the first floor coming down to it, but the windows don’t open. Don’t know if it would meet code, but honestly, the place only has one bathroom, so we’re not keen on having more than 2 adults in the unit, anyhow.
“young, be careful about your idea of switching a room in the basement to a bedroom if think of renting the place out. Make sure it’s up to City Code, code, code!”
Right. You really have to be careful with this. I have heard from people that the city inspectors are nitpicking everything in renovations because they aren’t busy and have nothing else to do. Someone was telling me that they were duplexing down in their 2 flat and wanted to make the duplex down into a separate unit eventually. The city wouldn’t let her do it (wouldn’t even let her put in the piping for a possible kitchen there) because the city wanted the neighborhood to have less multi-units and more SFH.
So you’d think if you already owned a 2 flat that it would be a no brainer to be able to make it into a three flat (it had its own separate entrance already) but the city put the kibosh on it.
Young, there are too many other questions here. If you are at a certain income level, the mortgage deduction phases out or you hit the Alternative Minimum Tax. So no one can answer that part of it.
Also- the mortgage tax deduction is simply just 30 cents on the dollar. So you are spending $1 to “save” 30 cents.
Don’t forget- commission, transfer tax, closing costs etc. adds up to at least 8% of the sale when you go to sell. So you’ll need at least 8% appreciation to just break even.
I’ve said it many times- if you’re not going to live in the property for 10 years you shouldn’t be buying. Real estate is a long term play now. Those trying to sell in 2 or 3 or 5 years have been getting crushed.
Obviously- the past doesn’t necessarily dictate the future- but even when there IS appreciation it will likely be the Chicago historic norm of 1%-3%.
“So you’d think if you already owned a 2 flat that it would be a no brainer to be able to make it into a three flat (it had its own separate entrance already) but the city put the kibosh on it.”
3-units is different from 2 from a zoning perspective *and* you rarely have the lot width to meet the off-street requirement without tearing down the garage.
“If you are at a certain income level, the mortgage deduction phases out”
Actually, the phaseout is dead for ’11 and ’12 with the taxcut extension. AMT is still an issue, as is the *fact* that switching from standard deduction to itemized one should account for only the excess deductions over the lost standard deduction.
“I’ve said it many times- if you’re not going to live in the property for 10 years you shouldn’t be buying.”
I think 7-8 years. And it also depends on metro area. If someone lived in metro Detroit and was looking to buy I’d tell them go for it as I’d be doing the same if I lived there.
I also estimate that if I don’t purchase, I will spend about 1500 on rent. 2500-1500 = 1000, so I only have to get over 1000 from room mates to make this cash flow positive. (When I live there). That is how I was thinking about it. I don’t plan to market it as 4b ever. Just make it so 4 people “could” live there. I’ll add the closing costs on to the 125K to calculate my roi.
How young is Young?
You’ve got the financing secured for this purchase?
Mostly I’m not sure why you’re in such a hurry to buy so much so soon. Is this your first real estate purchase?
“Just make it so 4 people “could” live there.”
It’s not a SFH where you won’t have neighbors. It’s a condo building which might mind that you’re turning a 3 bedroom into a 4 bedroom- maybe without having it be up to code etc.
Personally- I always tell people who are unsure about neighborhood or the property or whatever to just rent in a few neighborhoods and try them out first. No harm there.
Good luck Young. I hope it works out for you. Remember, many first time buyers get cold feet.
To me it seems like the numbers really work out and I get to live in a pretty nice unit. As I get older, I will also not be in the same situation (have room mates that I know that want to rent). I have also lived in/visited a lot of large cities, and 500K doesn’t seem like a huge purchase. Relative to most large cities, it actually seems like a steal.
given recent sales at Silver Tower (per redfin), is Silver Tower more stable now? Is it worth the risk?