The Flippers Are Back! Yay! 2550 N. Lakeview In Lincoln Park
If there is any doubt that the real estate market has changed in 2012, look no further than this story from Crain’s about 2 different flippers in the new construction luxury high rise at 2550 N. Lakeview in Lincoln Park.
We’ve seen plenty of “renovators” or “rehabbers” in the past couple of years.
Those are investors who are taking beaten up properties, usually foreclosures, and rehabbing them and putting them back on the market for profit.
But flippers are different.
Flippers buy new construction properties at pre-construction prices, wait for the building to be built and for there to be appreciation, and then sell the units at a profit to new buyers without any rehabbing or renovating.
According to Crain’s, there are two flippers looking to sell units, in bulk, in the new high rise.
The investor has hired @properties agent Tricia Fox to sell purchase contracts for the 15 condos and 30 parking spaces at Lincoln Park 2550 even before closing on them. To sweeten the deal, the investor, whose identity could not be determined, also is offering to pay property taxes and assessments for a year after the sale.
“There are plenty of people looking to tie up capital right now, and there’s limited inventory,” Ms. Fox said.
The client isn’t the only investor trying to cash out. Another undisclosed buyer also wants to sell a portfolio of one-bedroom units in an “investor blowout” at the tower, according to marketing materials from Coldwell Banker agents Elena Frankel and Patrick Santry, who are handling the sale. The agents did not return messages.
The building has 218 units.
Crain’s is reporting that the developer has said he has contracts on half the units.
According to the MLS, there have actually only been 25 closings. Appraisal Research said 43 have closed. Some units may be slow in actually being put into the MLS as having closed.
There are apparently 67 units under contract.
All of these units the flippers are trying to sell therefore make up a big chunk of the units under contract in the building which have not closed yet.
Ms. Fox declined to say what her client has agreed to pay for the condos and parking spaces but said the contracts were signed before construction began. Asking prices have since risen at the project, allowing the investor to price the portfolio at $700,000 per unit, or 30 percent below current listings marketed by Ricker-Murphy, Ms. Fox said.
That price undercuts the developer, which had sold just 43 units in the tower by the end of the third quarter, according to a report from Chicago-based consulting firm Appraisal Research Counselors. Another 67 units were under contract at the end of the quarter, the report said. Asking prices for the developer’s units at the tower range from $465,560 to nearly $11.5 million.
Ricker-Murphy co-principal John Murphy declined to comment through a spokesman.
Because Ms. Fox’s client would assign the purchase contracts rather than sell real estate, the investor would not have to pay transfer taxes and other closing costs. That discount allows her client to sell at a modest gain, Ms. Fox said.
“The seller is not planning to lose money, but they’re motivated to sell at a reasonable price and not make a killing,” she said.
Ms. Fox declined to disclose the makeup of the portfolio but said the units are “smaller rather than larger,” with a mix of west and east-looking views. A potential buyer could rent out the units at projected monthly rents between $2,500 and $3,200, she said.
Ms. Fox said her client aims to sell its contracts before the end of the year.
“From the time this building started marketing until now, we’ve certainly seen a lot of shifts in the marketplace,” Ms. Fox said. “The time is right for my client to let go.”
Asking price for the 15 units?
$10.5 million.
With a time table of the end of the year, this flipper has only 4 weeks to sell $10.5 million worth of luxury apartments.
Will it happen?
There are so many other questions- where does one begin?
- With investors apparently buying luxury units in bulk, will 2550 N. Lakeview simply become a very nice rental tower?
- If these flippers succeed, will flippers show up in The Ritz and other buildings?
- Are flippers a sign that the condo market is “back”?
- Is there really “limited inventory” when inventory in the upper bracket, once the Ritz comes on the market, is multiple years? Or is “limited inventory” referring to rentals and investment properties?
- Is this even a successful investment for someone renting out these units at only $2500 to $3200 a month? (I’m assuming they’re 1-bedrooms at that price because the 2-bedroom units are already renting in this building for $4000 and up.)
Questions, questions, questions…
Investor looks to flip 15 units at Lincoln Park 2550 [Crain’s Chicago Business, David Lee Matthews, November 29, 2012]
I feel the market has really picked up over the last 6 months to a year. As someone who has been scouring listings over that time looking to go from renting to purchasing, I feel the ship has sailed on getting a condo in a desirable area on the super cheap. I cant speak for the market over 250k because thats out of my price range, but any halfway decent listings below that price point are become more rare and are moving quick.
So, a bunch of one bedrooms for sale at $700k a piece? I wonder how much of a premium to the seller’s contract price $10.5 million is. I think that this speculator is more likely to lose money than make money.
As opposed to the listing the other day, this one really may have something to do with the obamacare tax.
The more I read about 2550, the less appealing it becomes.
Seems like this investor may not want to close on these properties and is more interested in salvaging what he/she can on the investment rather than losing the earnest money.
If demand for these things was all that great (1) the building would have more closed sales and (2) this investor would not be trying to unload his purchase contracts.
700k per unit = 2,500-3,500 rent = horrible investment
“Investor” my sweet behind. More like bagholder.
“700k per unit = 2,500-3,500 rent = horrible investment”
$700k (w/ ~$10k in prop tax) = $3500 rent = horrible rental property investment *even if* assessments/repairs/vacancy all = 0.
I had to share this real estate propaganda/puff piece with you guys… its good for a laugh…
http://tinyurl.com/d525qqg
I love this building in so many ways, but none of them are positive. I love that the developer took a huge risk during the bust to break ground and carry on with the development. I love that it is a high end building in a premier location competing with a not so limited supply of competing properties. I love the ridiculous $/sf of developer listings. But most of all I love the fact that there were people even more maniacal to think that they could buy contracts in the bust and turn them for a profit shortly after… this building is full of entertainment!
This is the old “tie the property up, and see what you can do with it” bullshit. The contract buyers ain’t gonna succeed in “selling a contract position”, and they’re not stupid enough to lose deposit money either, so they don’t really have anything at risk, the deposits are refundable is my guess. This doesn’t sound like good news for the development, they should vet their contract purchasers.
Does anyone here know anyone personally who would buy a unit from a “contract purchaser”? who wants to assign or sell their position? WTF… instinct should tell you to avoid shysters.
“The investor has hired @properties agent Tricia Fox to sell purchase contracts for the 15 condos and 30 parking spaces at Lincoln Park 2550 even before closing on them. To sweeten the deal, the investor, whose identity could not be determined, also is offering to pay property taxes and assessments for a year after the sale.”
Seriously…read this over and over. What kind of person makes their living doing this crap? Why should anyone trust them? Yeah…I grew up wanting to be an astronaut or a fireman (a real job)….but my life ended up where “I put down deposits on condos …. and try and sell the contract position for money”. That’s my living. How pathetic. How could you explain such a thing to a child? ….gee what does your daddy do? Oh, he’s a condo contract flipper! Only in Highland Park.
Actually the way this works, it’s not as bad of an investment as it looks. The investor has $10.5 million in contracts of which he put down 10% or just over $1,000,000. All he really needs to do is sell just 2 of the 15 and he has recouped his initial investment back, that shouldn’t be too hard, especially when he is less than the developer price.
While I’m not a great fan of flippers, it’s no different than anyone buying something that they perceive to be under-priced and selling it later for a profit. It’s up to the developer to set up appropriate protections (sufficient non-refundable deposits, contract clauses that give developer 1st option in any resale w/in 24 months, etc.). And, if you’re going to make fun of flippers for how they make a living, why not commodity traders? other types of investors?
Most importantly–while this might be a reasonable point of discussion/debate, once again you have to add your ethnic slur!!! (of course you’ll no doubt come back and say that the Highland Park reference wasn’t to any ethnicity but only referring to astute businesspeople or some other BS).
Helmet the bigot: “Seriously…read this over and over. What kind of person makes their living doing this crap? Why should anyone trust them? Yeah…I grew up wanting to be an astronaut or a fireman (a real job)….but my life ended up where “I put down deposits on condos …. and try and sell the contract position for money”. That’s my living. How pathetic. How could you explain such a thing to a child? ….gee what does your daddy do? Oh, he’s a condo contract flipper! Only in Highland Park.”
helmethofer, no stupider things could possibly be written than what you wrote.
I actually grew up wanting to be a capitalist / investor / speculator / flipper. And I’ve already become a self-made millionaire within 7 years of finishing grad school. I’m not Jewish and grew up middle class, far from Highland Park. So the racial stuff doesn’t really offend me, but it does show your closemindedness.
Perhaps you would rather have a “real job” and piss away your money by buying things you think to be overvalued so that you can make a loss. Or live in a society where value creating judgements and actions are not allowed.
Anyone who adopts your way of thinking, might end up having a job shinning shoes or preparing food for the more intelligent open minded investor/speculator class. Now that’s a REAL job. After all not everyone has the brain power to make it in investing or speculating, and such people who do will need servants.
” the deposits are refundable is my guess”
your guess is probably wrong. if the developer is in default in any way (not being able to secure a construction loan or perhaps delivering the units extremely delayed) then the deposit money is likely returned. i severely doubt that if a buyer just decides he doesn’t want the unit anymore he will get his deposit back.
I was walking by the building this weekend and wondering what are those steel structures they are building on the St James side? Are those the framework for mega-expensive houses already listed on MLS?
“I was walking by the building this weekend and wondering what are those steel structures they are building on the St James side? Are those the framework for mega-expensive houses already listed on MLS?”
The Morningstar CEO/founder is building a huge mega-mansion on a bunch of the lots.
Sabrina – thanks! I wonder why all the current houses seem to be on the St James side and not Deming, but maybe they are just starting on that side first.
“Perhaps you would rather have a “real job” and piss away your money by buying things you think to be overvalued so that you can make a loss. Or live in a society where value creating judgements and actions are not allowed.
Anyone who adopts your way of thinking, might end up having a job shinning shoes or preparing food for the more intelligent open minded investor/speculator class. Now that’s a REAL job.”
You are full of BS. Speculators are weasels. It’s not a profession, a skill, or anything to be proud of.
Good luck with your cheap life. You seem crass enough to enjoy telling people that you’re a condo-flipper. How shallow. I know plenty that have adapted to your way of thinking, and they are too stupid to learn a real skill or profession or discipline. They’re not open-minded, they’re losers. I know plenty of speculators that are at the shoe-shining level these days, hurting badly. I know plenty of accountants too, without a care in the world because they have a job, skill, equity, and a real net worth.
” preparing food for the more intelligent ”
Even a chef has a true skill and expertise at something….and what to the speculators do? Yeah, they blow their money on something they’ll crap out 24 hours later, eating at expensive restaurants. Billy Dec and real entrepreneurs just take easy money off the speculator fools, that are materialistic, vapid, shallow losers about to go bust, if they haven’t already.
Even the top “hedge fund” guys barely beat the market speculating. They make their fortunes from management fees, not “flipping”.
I’m just going to stop here, dealing with liars and ignorance.
“And, if you’re going to make fun of flippers for how they make a living, why not commodity traders? ”
Exactly the same. See how well some of them are doing these days? Shining shoes….
“I actually grew up wanting to be a capitalist / investor / speculator / flipper.”
Wait, are you the “Leapfrog” dude? Your high flying stock is below $9 a share. I saw it today on CNBC while on my treadmill in my office. LOL!! Yeah, you’re the bullshitter who alters his statements and got busted here on CC, right?
Besides, I prefer to know intelligent people, like those who grew up wanting to cure cancer, patent new ideas, etc. — not be “flippers”.
I’ll bet anyone here the speculators who are trying to sell a contract position, will fail. Buyers don’t like these types of arrangements, they shy away from them, and they don’t trust these types of Sellers, and they certainly don’t want to look like the fool, giving the shyster his profit…..just so the corpulent shyster can go eat at some Melman restaurant and then brag about how brilliant he was that he “unloaded a unit on some sucker, for a quick flip profit”…. the buyers of these units aren’t that stupid,
Selling a contract position usually only works when you have an institutional buyer represented by an acquisition employee veep, like flipping something to a Life company or pension fund advisor. No individual in this builiding is going to want to buy from some flipper of a mere contract position, giving a shyster a windfall. Unless they can flip these to some international money or something. This kind of crap is Boca Raton stuff, and we see how well shysterism worked out in the SoFL condo scene.
“The Morningstar CEO/founder is building a huge mega-mansion on a bunch of the lots.’
CASH BUYER. (not a speculator, flipper, loser)
A man who created and built a business. That’s a real man, not like the shysters trying to “flip” a meager, 10% down, leveraged “contract position”. Brad F. identifies with the flippers and is trying to pass it off as virtue. Fail.
Leapfrog Brad is back!
The millionaire who’s purportedly been squatting in a Rogers Park Condo ad nauseum.
Brad F. (August 29, 2012, 4:27 pm)
CLIO: ” HAHAHHAHAHAHAHA….OK – you are obviously exaggerating….”
—
Uhmm…”obviously exaggerating”? Really? That’s what you think? Why would it be so hard for anyone to believe that some random guy in his 30?s who is very opinionated about financial matters and writes in complete sentences would have a couple mill stashed up? It’s not like I’m claiming to have $200, or heck even $20 mill. Just $2 to 3…
And here’s a screanshot of my liquid bankroll. If you’re the type who doubts me or votes me down, I left a little water mark for you. Enjoy. http://imgur.com/JL9FP
helmethofer: ” I know plenty of accountants too, without a care in the world because they have a job…”
Ha, who’s money do you think they are busy counting, numbnutz? They’re busy being clerks / totallers for the specualtor/flipper class. There’s a difference between making your own money and counting other people’s money. Accounting isn’t even really a profession. Maybe a quasi profession. It’s more of a servant who can do math.
Oh, and the Morningstar guy building a mansion that you mentioned, he got his start as a flipper! He was flipping xmas trees on the side of the highway. I knew that just off the top of my head. I just proved you wrong with your own freakin example. You’re done. Now back on your treadmill (in more ways than one).
Yep, that’s a screenshot of my bankroll, glad someone remembered. I only posted it because someone called me out on it. Most people around me have no idea that I have that.
*DON’T FEED THE TROLLS*