Developer Slashes Prices on Larger 2-Bedrooms in Avenue East: 160 E. Illinois in Streeterville
No, the Avenue East development at 160 E. Illinois in Streeterville has not yet sold out.
We’ve chattered about this building numerous times over the last 3 years as it started closings in 2007 just as the housing market started to weaken.
It is located right next to the Mag Mile.
Several larger 2-bedroom units recently were reduced and appear to still be from the developer, including Unit #1008 which says it is part of the developer close out.
At 1716 square feet, it is not the typical 1200-1300 square foot 2-bedroom unit.
It has the usual bells and whistles of a new construction home including hardwood floors and the kitchen has stainless steel appliances and grainte counter tops.
This tier faces south and east.
The listing says it has been reduced 36% from its original asking price.
Is this now a deal for the square footage and the location?
Gail Spreen at Streeterville Properties has the listing. See the pictures here.
Unit #1008: 2 bedrooms, 2.5 baths, 1716 square feet
- Originally listed in December 2007 for $904,900
- Numerous reductions
- Listed in June 2010 for $649,900
- Reduced
- Currently listed at $579,000 (parking included)
- Assessments of $988 a month (includes heat, air conditioning, doorman, cable)
- Taxes of $1561
- Central Air
- Washer/Dryer in the unit
- Bedroom #1: 13×15
- Bedroom #2: 11×12
What is with the light fixture in the larger bathroom. My parents have that from 1989. For this price, you think they could fix a few things. The second bathroom is pretty small also.
I like the kitchen.
Did the builder qualify with some tax credit to somehow get the taxes this low? If this unit has been on the market for two years, as the building started closings then, the builder saved a ton of money on taxes. There should be no way they are this low. When a buyer purchases this unit, will the tax assessor reasses the unit to a higher level?
I live in the building and love it’s location and size. Illinois street is cut off on both sides so the location feels kind of exclusive. The developer saved this corner tier for the end because they thought they would be the easiest to sell with large floor plans and tons of windows- but the with the market timing, now they’re stuck with several of them. I remember checking out some of the higher floor 08 units back when they were priced in the $900s and liking them a lot. If this didn’t have those massive assessments I would be really interested.
Unfortunately, I think that the unit is too “blah”/ordinary for a luxury condo buyer and still way too expensive for a deal-seeker/regular person (total monthly cost will be a little over 4k). This is a problem… I guess the developers could go after investors and guarantee a certain rent (that will cover costs) for 3 years and try to convince these investors that the price will almost certainly go up in 3 years at which time they can sell.
Where is Joe Zekas to tell us what a great value this place is? Did he start his new career as an apartment rental advertiser yet?
This unit really needs to be staged. It is cold and ugly right now and will have problems attracting any buyers (especially someone in this price range). I know that a lot of people on this site think that wealthy people are really smart and hold the financial aspects of any deal as their #1 priority/concern – I actually have found this not to be true at all. I think wealthy people value time and peace of mind over any financial considerations. So, my feeling is that if you stage it really nicely, someone will buy it. The funny thing is that, of all my condos/houses that I have sold, the vast majority of the buyers have bought the house/condo fully furnished (in my last personal residence, the buyer actually bought my towels – used). A lot of these rich people don’t want the headache of decorating themselves.
If staging is an issue, this place will benefit from the fact that a couple of the higher floor 08 tier units are staged. These units do show much better with furniture.
Is it parking for one car or two cars from the listing…
effectively triple digit assessments on a brand new two-bedroom???
man, I forgot how much assessments are in high rise living.
“effectively triple digit assessments on a brand new two-bedroom???”
There are only 130 units in the building and there is a doorman and a large exercise room.
For a moment I thought the bar and furniture came with the unit! and then I realized it was the lobby. This unit looks pretty darn close to most of the other cookie cutter high rise units posted over the years. I’m not surprised with the substantial price reductions over the years. Keem ’em coming.
Hold up, I retract my previous comment. Case-Shiller index shows Chicago up 1%! The developer should be *raising* prices, not lowering them! You don’t lower prices when you’re coming off the bottom of the market..
“Case-Shiller index shows Chicago up 1%! The developer should be *raising* prices, not lowering them! You don’t lower prices when you’re coming off the bottom of the market..”
Great news!! It’s nice to know that the sun will come out soon!!
For a new building i a surprised by the layout, and rather like it. i love the half bath (guest bath) is tucked away from the entertaining areas and that they tucked away the W/D over there too.
I truly love that the dining area is separate yet opened enough not to make the living areas feel tight.
i like how the architect and developer understand how real people live and made a floor plan layout that work very well.
I agree Groove, that’s a pretty sweet floorplan.
Man, it wasn’t that long ago that these guys were asking similar prices for the really small 2/2s in here that have a small kitchen pushed up against the wall in the living room. Several Realtors (TM) told me that prices in Streeterville would NEVER go down. What the hell happened?
Heh a friend of mine bought a house in Schaumburg (yah I know) years ago furnished when he was moving up from condo to house. It was / is a southwestern motif – they’ve never really redecorated outside of a couch or two. That group of friends has always gotten a kick out of that particular move.
“It was / is a southwestern motif ”
Sounds exciting…for Schaumburg.
I like this place, its large and well laid out. Not a huge fan of streeterville though, which is interesting as I like river north and the gold coast. Also I’d like to add that the PACKERS SUCK and I have a headache today.
Gold Coast actually has a semi neighborhood feel.
In terms of neighborhood feel, I would rank it as…
#1 Gold Coast
#2 Streeterville
#3 River North – they should blow up Rainforest Cafe
On the flip-side, if I need a cab to go to O’Hare at 5 am in the morning, I’ll just walk outside my door in Streeterville/River North and wait less than 1 min.
“#3 River North – they should blow up Rainforest Cafe”
LMAO! I was having that discussion with my wife the other day as we walked past that thing… one time I was forced inside due to relatives (from my wife’s side of the family) thinking it would be a cool place to meet. I have never had more overpriced, awful tasteless crap food in my life. And then the kids… MY GOD THERE ARE SO MANY KIDS IN THERE. The place is so bad, words can’t even describe how badly I want that place to go away because every time I walk past that place and hear the terrible music, I am reminded of my awful experience there.
Crains did an article in yesterday’s copy about investors bulk purchasing of multiple units in new condo buildings, with intention of converting those units into rental properties. Worth reading; article fails to address impact on those affected buildings, since multiple rental units generally devalue prestige and value of remaining condo units, and destabilizes the condo assocation’s “owners only” advantage regarding enforcement of rules, civility, wear-and-tear on common areas. etc.
“On the flip-side, if I need a cab to go to O’Hare at 5 am in the morning, I’ll just walk outside my door in Streeterville/River North and wait less than 1 min.”
Really? I’d schedule it no matter where I am just in case.
I went to rainforest on a gray november day years ago and found it surprisingly pleasant.
The food is terrible at Rainforest cafe. They sell the ambiance if that’s what you want to call it. The food was as terrible as Planet Hollywood. Take away the animatronics and all you have left is terrible terrible food.
@architect,
I agree in that whilst i think investors will ultimately have to mop up a large amount of the Chicago overhang for the rental market, the FHA-approved status of these units will likely get revoked when someone a) owns more than 10% of units b) too many of the units become rentals. It will be interesting to see how actively HUD monitors this.
I own a unit in a RN block that has a rental waiting list. It may ultimately reduces values to investors but preserves the integrity of the block and prevents an effective condotel.
Yeah if I ever own a restaurant, every 20 minutes or so I’m going to play a thunder noise and flick the light switch a few times so I can charge 5x as much as the food should cost. Brilliant whoever came up with that idea
“They should blow up Rainforest cafe” – Can you please blow up that giant McDonalds as well. If I see one more suburban mom and her kids, who are all the size of adult polar bears, going into that place …..ugh
I like this unit but half a mil goes far in this market; well beyond a cookie cutter condo. Correct me if I’m wrong but, 505 N McClurg has slashed their duplexes down to 650k. I’d rather go with one of those if I had that kind of cash. I do like the building though. You cannot beat the location.
the alternative to condos going rental is condos becoming cheap enough for regular people on regular salaries to afford.
Renting individual units in condos is always tough to cash flow unless you can get it cheap enough. There’s special assessments, condo boards, assessments, etc. People used to do it and lose money every month because they believed the value of the condo would go up, and now that they’re not, they’re stuck with condo.
And just the management logistical nightmare of managing multiple units in multiple buildings…ergh.
Investors are looking for investment opportunties and yields above 0% and they’re stretching…
by regular people I mean above average income, not $35k a year and living in a 1700 sq ft condo in streeterville, you know what I mean.
“Renting individual units in condos is always tough to cash flow unless you can get it cheap enough.”
But that’s not what anyone is discussing in this thread. It’s the concept of an investor/operator buying *all* the remaining condos in one complex, and owning several dozen. Then it’s like operating an apartment building, but not owning every unit. Possible also to have a related-entity management company provide the association management services and roll in some of the costs of the assessments.
“On the flip-side, if I need a cab to go to O’Hare at 5 am in the morning, I’ll just walk outside my door in Streeterville/River North and wait less than 1 min.”
“Really? I’d schedule it no matter where I am just in case.”
That’s one of the things I miss about RN. Taxis on demand. You really can’t wait more than a minute at non-rush hour. Taxis don’t always want to come to Logan Sq. If I know I’m tight on time and it’s rush hour I’ll get car service.
“Is it parking for one car or two cars from the listing…”
It’s one parking spot.
The floor plan of this unit is really good. Both bedrooms have ensuite baths in addition to the guest toilet near the entrance. Plus there’s a den you could use as a TV room or office.
I’m renting an 1100 sq ft 2/2 for $2500 a month in the building. I think the owners of mine paid roughly the same two years ago as this much bigger/nicer unit is offered at now. Since rents in the building haven’t dropped nearly as much as the price discounts, I would think this would be a decent rental return even with the extra $300 a month in assessments. I would WAY rather rent this unit for $2800 than mine for $2500.
I think this is a decent deal.
Rock & Roll McDonalds could go too. I always have bad experiences in there, and its the most overpriced MCD’s anywhere… no dollar menu either 🙁 I avoid that place at all costs, sadly its the closest mcd’s to me
If we’re talking about restaurants in that vicinity, my kingdom for somebody airlifting that Portillo’s to LV
“If we’re talking about restaurants in that vicinity, my kingdom for somebody airlifting that Portillo’s to LV”
i f’ing love portillo’s its really not that good but have no clue why i love it so much.
cant take away the rock mcdeez nutz, i took so many dates there when i was thirteen, its a landmark for my preteen years.
The Hard Rock can go to, and if the McDeez has to stay, we could at lat get rid of that massive parking lot. I hate walking that stretch of RN. It feels way colder than the blocks around it.
“And just the management logistical nightmare of managing multiple units in multiple buildings…ergh.”
Believe it or not, it is not THAT bad. I have a mangagment company that does everything for me. Fortunately, my properties (yes, American Invesco) were bought at a reasonable price in 2000 and have still appreciated (even in this market). True, there are some months when the rents/asses. don’t cover the mortgages, but these are few and far betweeen. Basically, what I am saying is that if the numbers make sense, there are good companies/people out there to take care of the day to day, month to month crap.
Do the investors plan to lose money on each unit but then make a profit on volume?
In order for bulk investors to rent them out they need a very low cost basis because of assessments and taxes, much lower than prices are now.
I don’t see that happening yet. if units were cheap enough to rent out, then they would probably just sell on their own.
“Crains did an article in yesterday’s copy about investors bulk purchasing of multiple units in new condo buildings”
“I’m renting an 1100 sq ft 2/2 for $2500 a month in the building….I would WAY rather rent this unit for $2800 than mine for $2500.”
Kid, it seems as though your owners are losing money on your unit. I figured the costs on this current unit to be close to, if not at or above 4000/month. Would you be willing to pay 4000/month to rent this place (if so, let me know… I would buy this place!!).
“I don’t see that happening yet. if units were cheap enough to rent out, then they would probably just sell on their own.”
Not really – the down payment and qualification process for the mortgage is what is probably keeping the majority of people out of the market. Investor owners can bypass this step. I wish there was some company to match up investors with potential buyers so that they could come up with some mutually beneficial way to create a win-win situation (ie lease/option, contract sale).
“I don’t see that happening yet. if units were cheap enough to rent out, then they would probably just sell on their own.”
Do you think–maybe–the developers/banks might give a discount to one party buying *all* their remaining inventory?
They could even do a consensual foreclosure/DiL and dodge the transfer taxes to reduce the buyer’s cost basis/maximize the $$ going to the lender.
“Do you think–maybe–the developers/banks might give a discount to one party buying *all* their remaining inventory?”
They do it all the time. Not just in this market – in this way a investor or group of investor can pluck down 10 million and walk away with 25 of these units. It’s a win-win situation.
“They do it all the time.”
I know that. You know that.
I even suspect HD knows that, too, but is ignoring/forgetting for some reason.
Looked at a 2br in this building. The finishes and construction quality are way inferior to 600 N Fairbanks.
Who the hell ever thought this was worth 900K?
“Looked at a 2br in this building. The finishes and construction quality are way inferior to 600 N Fairbanks.”
Very true that 600 N Fairbanks is a lot nicer, same with 240 E Illinois… but that’s always been reflected in their prices. Both those buildings have always been more $/sqft from 2007 through to now.
These bulk condo purchasers are getting significant discounts; it’s firesale pricing.
Those condo units purchased by bulk-unit owners will be quickly leased, with discounted rent, for fast lease-up. Many renters stay for their one-year lease, then move again. There comes the extra wear-and-tear to the units and to the common areas, less general care and more moves for a renter than an owner. These affected condo buildings develop a transient population, with related security problems, noise problems, rowdy tenant problems, etc.
Tenants rarely exercise same degree of careful housekeeping, polite consideration, or better decorating, etc, than condo owners. “High rental percentage” condo buildings quickly develop an inferior reputation among realtors and future purchasers.
The condo-investor has virtually disappeared from the market, according to Crains and other real estate-related publications.
First thing I’d do is tear down those ridiculous “wall wing arms” framing the entry passage into the kitchen wall corner.
“Very true that 600 N Fairbanks is a lot nicer”
Colder, yes. Less traditional, yes. Nicer….no, not IMO.
(not to mention 600 F was a Bovis job)
Off topic but since there was no CS index post (because the world did not end in July yet).
http://www.bloomberg.com/news/2010-09-28/case-says-u-s-housing-market-will-grow-slowly-after-free-fall-tom-keene.html
I’m just questioning how good of a ‘deal’ the firesale will be. I’m not conveniently forgetting things. YOu shouldn’t take every deal you see at face value. The people who thought they were dividing up Same Zells empire thought they were getting a deal too and look what happened to that.
I know people who bought homes in 2007 and thought they were getting a deal becuaause it was 10% off the prior listing price. Look where they are now.
I pointed out assessments, wear and tear, possible specials and then taxes make it difficult to make money on these types of units.
And they have overhead. Individual investors have small overhead, vulture funds have lots of overhead and employees to pay. I’m just saying….
This seems to contradict today’s CS index number that shows 10 cities declining and the other 10 increasing; and furthermore, the overall rate of price increases appear to be slowing down significantly; combine that with the drop off in August sales numbers and by winter time, Mr. Case is going to have some serious egg on his face.
“#JMM on September 28th, 2010 at 1:46 pm
Off topic but since there was no CS index post (because the world did not end in July yet).
http://www.bloomberg.com/news/2010-09-28/case-says-u-s-housing-market-will-grow-slowly-after-free-fall-tom-keene.html“
“I’m just questioning how good of a ‘deal’ the firesale will be.”
You wrote:
“if units were cheap enough to rent out, then they would probably just sell on their own.”
Which *is* implicitly questioning how good a deal the firesale would be. Or misunderstanding the relationship of the bulk sale price to the MLS-listed price. Or something else that I’m not sure of, but is still causing a disconnect.
“furthermore, the overall rate of price increases appear to be slowing down significantly”
For Chicago the seasonally adjusted number was up very slightly (essentially flat) from June to July. Will be interesting to see what happens, especially into spring of next year.
I know HD knows better than the guy who put the index together, so I will refrain from any second guessing.
My bet is you see the index stay essentially flat in a band between 120 and 130 for the next year.
Anecdotally, I am seeing more price decreases at the high end but I don’t think that weighs as heavily.
“Anecdotally, I am seeing more price decreases at the high end but I don’t think that weighs as heavily.”
It’s keyed to last sale and is nominal, so a $250k house in 2006 selling for $150k in 2010 is (basically? exactly?) the same on the index as a $2.5mm house in 2006 selling for $1.5mm in 2010.
“It’s keyed to last sale and is nominal, so a $250k house in 2006 selling for $150k in 2010 is (basically? exactly?) the same on the index as a $2.5mm house in 2006 selling for $1.5mm in 2010.”
I thought it was (a) weighted by value and (b) probably sample weighted to weight up to the population. So depends on what the dollar weight of higher end homes is.
“I know HD knows better than the guy who put the index together”
Obviously, Case knows some stuff, both specific things about the index and housing generally. He’s hardly the last word though.
“I thought it was (a) weighted by value and (b) probably sample weighted to weight up to the population. So depends on what the dollar weight of higher end homes is.”
You’re right(ish) and I was wrong:
“Each sales pair is assigned a weight equal to the first sale price to
ensure that the indices track the aggregate/average value of all homes in a market.”
They also down-weight for longer-held homes (that is, a home sold in 2000 and 2010 will affect the index much (20-45%) less than a house sold twice in 2010).
I don’t know why nobody ever factors in the psychology of home buying!!!! When the stock market goes up, people feel more confident and WILL go out and buy houses. The people on this site may be smarter and more analytical than the rest of the population – but remember, it is the population that sets the prices of homes. Right now, all those people co-habitating w/ relatives or living in cramped quarters are just itching to get out and move to bigger/better places. They are just looking for a sign that the economy is improving… it will come.
Clio, the psychology of home buying right now is that the fence sitters are waiting for further price declines and those with homes don’t want a second or a third (And often are trying to get rid of the first!)
JMM: You’re not just the smartest guy in the room – you’re F**King smart, as somebody infamous once said …
“They also down-weight for longer-held homes (that is, a home sold in 2000 and 2010 will affect the index much (20-45%) less than a house sold twice in 2010).”
That would seem to amplify foreclosure REO sales, wouldn’t it?
“Clio, the psychology of home buying right now is that the fence sitters are waiting for further price declines ”
I have to disagree – I think there are definitely people on the fence scouring the real estate sites waiting for prices to come down, but I think the vast majority of America do not waste/spend their times thinking/studying real estate – so when they are told the economy is getting better and/or mortgages are getting easier to obtain, they will start looking. Don’t underestimate the stupidity and impulsiveness of the regular person out there.
“Right now, all those people co-habitating w/ relatives or living in cramped quarters are just itching to get out and move to bigger/better places.”
Yes because all those people who are forced to move in with their parents are prospective home buyers day 1. No interim period of renting or anything like that, just straight to the 20% downstroke and home ownership as soon as the economy turns around.
Sorry but that observation is borderline comical.
“Don’t underestimate the stupidity and impulsiveness of the regular person out there.”
I don’t think HD does. But this time around people need something called cash to buy homes. Oh and documented incomes.
“No interim period of renting or anything like that, just straight to the 20% downstroke and home ownership as soon as the economy turns around.”
Hey genius – you don’t necessarily need 20% down to buy a house/condo. Also, do you honestly think that there are not people out there figuring out ways to lend money to these people who would not otherwise qualify for a traditional mortgage? Come on, you are smarter than that….
“I don’t think HD does. But this time around people need something called cash to buy homes. Oh and documented incomes.”
Uhhh – no they don’t. It’s called a contract sale and I (along with an increasing number of real estate investors) would have no problem charging someone 5.5-6.5% w/ 5-10% down on a contract sale. It is a win-win situation: If the tenant walks away in 1-3 years, then you still have the downpayment and have been paid (like a rental). In 1-3 years, the market will also be improved and you can likely sell for more than you originally asked. If the tenant honors and sees the contract sale through, then you are set because you have been earning 5.5-6.5% on your money and are out in 1-3 years.
Whatever the downstroke is, you should know people who live at home out of necessity do so because they don’t have squat.
And no, I don’t think loan sharks are entering the mortgage business. That whole recording the note / mortgage tends to get in the way of things.
“That would seem to amplify foreclosure REO sales, wouldn’t it?”
They also discount “non-market” transactions, which would presumably include any transactions involving Lenders or Relos giving or receiving deeds.
Probably difficult to determine accurately where there is a pre-f/c short sale and subsequent flip, tho, and that’s pretty close to an REO.
“Uhhh – no they don’t. It’s called a contract sale and I (along with an increasing number of real estate investors) would have no problem charging someone 5.5-6.5% w/ 5-10% down on a contract sale.”
That is the same as seller financing. And this does not exist in the real world of existing homes. People barely have any equity let alone the wherewithal to play the banker.
Do you know how small a percentage of the market these arrangements are? If the number is increasing, as you say, methinks you have some tidy market data which would show its less than, well, 1/10% of the market.
“And no, I don’t think loan sharks are entering the mortgage business. That whole recording the note / mortgage tends to get in the way of things.”
You are wrong – they are – but we are not called loan sharks – merely facilitators. There are no notes on these properties. Again, I know people on this site are reluctant to believe this but there are people out there with a ridiculous amount of money. I understand that most of you don’t believe it because you are not surrounded by it – but put yourself in my shoes where everyone I am surrounded by has tons of money. Everyday I have people asking me asking where they can invest money (cash) in real estate. These people typically have 300k-1million to invest. I know this sounds obnoxious – and that is really not my intention – I am just putting out another side of this debate that is not well-covered in these discussion.
Oh, on this same topic, all of the people waiting on the sidelines for the glut of foreclosures may be disappointed to know that for every one of them (with the 20% downpayment and ok job) there are probably 5 rich shrewd people willing to pay 100% cash for these properties (the good ones). Who do you think the bank is going to accept? so, basically, don’t hold your breath and count on getting a good foreclosed property – the chances are slim.
“That is the same as seller financing. And this does not exist in the real world of existing homes. People barely have any equity let alone the wherewithal to play the banker”
JMM – you are correct and I’m not debating this point. The typical home owner does not have a lot of equity. What I am talking about are groups that are forming as we speak (type) that are pooling their money together in order to take advantage of the foreclosed homes and turn around and offer seller financing to people who are unable to qualify for a typical mortgage (99.9999999999999% of the country with all of the ridiculous rules out there now). Thes are sharp businessmen who see an opportunity and strike. The downside for the nice regular folk (like the ones on this site) are that the good foreclosed properties and really cheap good properties are all going to be bought up by these people. The regular joe gets screwed again!!!
“(with the 20% downpayment and ok job) there are probably 5 rich shrewd people willing to pay 100% cash for these properties (the good ones). Who do you think the bank is going to accept?”
The bank will take the most money, regardless of cash/mortgage check. They are getting paid regardless. Banks are very reluctant of cash buyers 6 figs+ due to the small % of them who actually will close on the property.
“The bank will take the most money, regardless of cash/mortgage check. They are getting paid regardless. Banks are very reluctant of cash buyers 6 figs+ due to the small % of them who actually will close on the property”
You would think so, right? But in my experience that is not the case. I don’t know if the banks are afraid that the person getting a mortgage won’t qualify, etc. – but 100% of the foreclosures i have been involved in have gone to the people who put forth 100% cash (even if it wasn’t the highest offer – I know because I lost out on several when I didn’t offer 100% cash and then looked up what they sold for and saw that it was lower than I offered).
Respectfully disagree. If the buyer comes to the table with a credible legit mortgage (not pre-approval or some random bank) and intended use is primary residence, they are much more likely to get the property IF they outbid the cash buyer – even buy a little. This is through my personal experience as well as bank employees.
To your point, yes, there are plenty of people who CAN buy a property with cash – especially the distressed or high return potential…but the number of them who actually close is low, because 1) they most likely already have a primary residence and 2)there are better investment strategies yielding higher return, lower risk.
Interesting, a-fed – I wonder if there is anyone out there who handles foreclosures on the bank end who can set the record straight. One question for you, afed, is how would the bank know it is for personal residence or investment? All of the sales contracts I have used have never specified type of use. In addition, if they did (and they don’t) I would write that my intent is for primary residence (whether it was or not).
Especially now, Clio, where banks are using REO’s and short sales as “feelers” for what a property is acutally worth. They want to know as much about the buyer as possible in order to establish a demographic and assist in pricing.
It also depends on the bank that owns the title I suppose. I’d imagine each has a different method of assessing and unloading…I can speak personally from JPMC, BoA, and DB.
Interesting and informative, a-fed. In my experience, though, all I did was fill out my own sales contract (which doesn’t state anything about personal residence vs investment property). Other than that and a bank statement showing I had more liquid assets than the property was worth, the banks NEVER asked for any additional information before accepting an offer/making a decision. Maybe things have changed (as the last one I participated in was in March).
Illustrating my point regarding seller financing, check out MLS # 07552304 – obviously someone ahead of the curve. Mark my words, you will see more seller financing, bridge financing in the coming years……
“Mark my words, you will see more seller financing, bridge financing in the coming years……”
I agree. In fact I could see this becoming a booming niche of the market in all metro areas with comparatively high RE prices.
Closed one in March as well with BoA. First thing after I put in the offer (at ask) was they told me there were three other offers, I called BS of course. Then they asked if it was my first place, primary residence, or if I was going to collect on the OBama bucks. I said primary residence, not answering first place or OBama. Turned out there was actually one other serious buyer – from what I’m told – cause I did go a few grand over ask.
Close in 30 days + approved mortgage over ask = get the place
Maybe it was a function of El Presidente’s refund since I have’t been involved since….
“Mark my words, you will see more seller financing, bridge financing in the coming years……”
Its sad ya know…because seller financing is more likely to give mortgages to people who wouldn’t normally qualify thus getting us right back into this whole mess. It will benefit some, yes, but in the scheme of things, any defaults are just going to be covered by the insurance co (or gov) thus putting THEM in debt…F-in sad.
“Its sad ya know…because seller financing is more likely to give mortgages to people who wouldn’t normally qualify thus getting us right back into this whole mess.”
No it isn’t. The sellers in seller financing aren’t going to be able to resell their loans to third parties who don’t know jack. In fact they’re probably going to be much better assessor’s of their creditee’s worthiness than any bank would ever be. Its not a corp drone loan officer disconnected from the process this is real money and losses to them if they misjudge. And this segment of the market is going to remain a niche (albeit a fastly growing one).
True a-fed, but not unexpected. Who determines if someone is qualified? Freddie/Fannie? Are you kidding me?!!! Those morons can’t see the light of day because they have their heads so far up their asses!!! I have always thought that instead of giving incentives to first time home buyers, the gov should be giving large incentives to investors (and even more to those who participate in seller financing). Why not spread the cost burden to all of these investors? Think about it – all of the properties would be bought up and re-sold w/ individual investors deciding what was right for them. Also think about this – who are the ones spending money – not the poor people – it is the rich. If you get the rich to buy run down properties and require them to fix them up, they are the ones with the money to hire the contractors, roofers, construction people – not the first time home buyers who, god knows, may even lose their jobs in a year or two and contibute even more to this foreclosure mess!!! God – November can’t come fast enough!!!!!
Thanks Bob – you said it much better than me.
“They also discount “non-market” transactions, which would presumably include any transactions involving Lenders or Relos giving or receiving deeds.
Probably difficult to determine accurately where there is a pre-f/c short sale and subsequent flip, tho, and that’s pretty close to an REO.”
They also purport to be controlling for the quality of homes but I really don’t see how they can do that with the data they are likely to have. In part I think they just drop outliers, which has its own issues. But their data is not likely to report a lot of renovations etc. that take place, nor the ever powerful forces of depreciation.
“In fact they’re probably going to be much better assessor’s of their creditee’s worthiness than any bank would ever be.”
BS. There are very few reasons why someone should be able to buy a 300k condo for less than 5% down. They developers just want to sell the property…then pawn off the mortgage. It’s a conflict of interest – big picture speaking.
“Also think about this – who are the ones spending money – not the poor people – it is the rich.”
Agreed. But this is an issue. Even in typical rebublican economics where the wealth is held at the top and trickles down…but its not trickling…If the rich go in and buy these distresses properties they are just going to rip off the next buyer, ahem, poor. Greed is good (couldn’t help say it).
“If the rich go in and buy these distresses properties they are just going to rip off the next buyer, ahem, poor.”
How? – I don’t get it. Information is free and if the next buyer doesn’t feel its a good deal then they won’t buy it. It is not the ideal situation but it is a hell of a lot better than having the houses/condos empty with the banks owning them. I don’t know why people don’t realize that the banks are MUCH MUCH MUCH MUCH MUCH worse than individual investors. They are MUCH MUCH MUCH MUCH MUCH greedier than the typical investor. Period
“Agreed. But this is an issue. Even in typical rebublican economics where the wealth is held at the top and trickles down…but its not trickling”
Exactly my point – there should be government incentives for investors to buy properties. Spread the risk and give the country back to its citizens.
Clio – how many times do we talk about this site sellers making a profit off buyers. Its not easy to pull up public records of reo’s for the non-saavy. Keep in mind most people are not as close to RE as us. I fully agree to give the country back to its citizens but not at the cost of an economic civil war.
a-fed look at the alternative though – do you think the banks and mortgage companies are doing a better job than individual investors? Do you think the government will do a better job? (on that note, you better all hope that you are healthy b/c government involvement in healthcare is going to be DISASTEROUS!!! – just look at stroger hospital if you want a peek into the future of healthcare if the government gets control).
“They also purport to be controlling for the quality of homes but I really don’t see how they can do that with the data they are likely to have. In part I think they just drop outliers, which has its own issues. But their data is not likely to report a lot of renovations etc. that take place, nor the ever powerful forces of depreciation.”
I suspect they make educated guesses based on holding time and borrowing history–a 2d mortgage taken out 15 years into ownership followed by a sale for much higher than area trend appreciation would strongly imply improvements. And they’d be wrong a significant %age, but it’s likely balanced by those that they miss that were improved.
“I guess the developers could go after investors and guarantee a certain rent (that will cover costs) for 3 years and try to convince these investors that the price will almost certainly go up in 3 years at which time they can sell.”
This is obviously what you got your self caught up in with those “sweet” Am Invesco deals that persuaded an investor with money and time to wait for a future sale while still recovering some of their sales price with renters for a certain amount of time…right? THe only difference is I bought in a market that can support this type of risk at my expense.
I am sure you can clarify that this approach definately will not work in Chicago because of the difference in real wealth and those who pretend to be wealthy. I predict in Chicago that during that three – five year guaranteed rental period, the low rent renters will do more damage that normal renters, thereby forcing you to actually lose money and be stuck with run down units that NO ONE wants to buy after that 3-5 time period. My Miami units will retain their value and will be well maintained by truly wealthy younger renters who cannot afford a bad mark on their credit record as I do report any delinquent rents.
I have invested a good percentage of my capital in many new construction luxury towers in Miami that were sold (at enormous discounts anywhere from 30 – 70% of the original pre burst pricing) with the understanding that the majority of units would be used as rentals.
So now instead of middle to upper wealthy young professionals buying new impressive units in great buildings, they are finally understanding and accepting the dangerous financial risk involved for themselves and are going rental for the next 3 – 5 years…entire buildings which were marketed to wealthy yuppies wanting to live a carefree luxury “look where I live” buildings are no longer wanting to own. They are driving their new sports cars while long term renting and allowing wealthier ppl to risk going to landlord status while they wait for a market that will never recover completely.
Win win situation for me and my new tenants. I own entire floors of uber luxury towers which I got for pennies on the dollar and rent them out at above market value. Mean while, my tenants can still brag that they live in the super hot new address _____________________.
They get the prestigious new “IT” addy and I have tenants for the next 3-5 years paying way more than it takes to make my money back.
“I know that a lot of people on this site think that wealthy people are really smart and hold the financial aspects of any deal as their #1 priority/concern – I actually have found this not to be true at all. I think wealthy people value time and peace of mind over any financial considerations.”
I call BS on this opinion!!
First, newly wealthy ppl in this economy ARE indeed fairly intelligent and they ARE considering these good deals as their #1 concern. If they did not place a value on this fact, as you insist, they would not be wealthy in the first place.
Second, personally, I am truly and VERY comfortably wealthy because of calculated RE investing over 27+ years as I valued sound financial decisions over peace of mind. I consider myself RE intelligent… 95% of my decisions turned out to be wise ones and I am not the only one out there who has been successful at this type of investing. While I made the majority of my money doing carefully planned rehabs that sold quickly, I have almost totally abandoned that practice and am now doing incredibly well in the Miami area market to the point of not having to do rehabs any longer. For me, the lack of sales at all levels of RE…for me the $500-$2 mil segment…turned out to be the most dangerous level to risk major bank hoping for sales of turn key units, which are not happening now or probably 3 – 7 years down the road.
“…….If staging is an issue…..”
In this current time period, staging is now longer the tool used to wrangle in buyers no matter what clio says. The few qualified or cash only buyers are looking past good staging and instead are looking for good bones that will not deteriorate in a few years.
Furniture and upper end appliances and granite and custom paint/cosmetic niceties are not the draw they used to be….thanks to buyers looking past the cosmetics of nice furnishings that will not be a part of the unit they eventually buy.
The impressive number of sales we have had over the last year (still a good number as I have been fortunate to be able to stay current on the trends and to keep our fingers on the pulse of what is happening in the major urban markets where I own multiple units) have been rehabbed units that were bare bones empty while being shown to buyers…or new upper level new construction I received at priced chopped levels.
Staging is no longer a draw…showing the true and desired features that make them different from other units on the market is what is getting them either sold or rented quickly.
“….i like how the architect and developer understand how real people live and made a floor plan layout that work very well.”
NOT at all true as there is too much usuable space utilized as hallways. A good and usable floorplan is one in which hallways are not used at all.
Useless den and dining room and what is probably a dark and dreary hallway off the entrance area. No windows in these areas are not a good use of space. Not at all.
“The condo-investor has virtually disappeared from the market, according to Crains and other real estate-related publications.”
Not this investor…for me this has turned into a very, very lucrative alternative to rehabbing and waiting for a buyer to have all cash or to land the now elusive mortgage and hard to part with @0% DP.
I have started to invest heavily in Miami area new construction luxury buildings and am considering other hard hit areas that have luxury buildings that are near completion with many buyers who have cancelled their contracts.
“Again, I know people on this site are reluctant to believe this but there are people out there with a ridiculous amount of money. I understand that most of you don’t believe it because you are not surrounded by it – but put yourself in my shoes where everyone I am surrounded by has tons of money. Everyday I have people asking me asking where they can invest money (cash) in real estate. These people typically have 300k-1million to invest.”
BS BS BS BS BS BS INSANE BS!!!
Surrouned by it or not (LOL) no one is investing in RE for themselves
I too am surrounded by people with TONS of MONEY…again LOL as they are not in the habit of revealing or asking for advice on how to spend/invest it. Those with real money are returning to the days of hiding it in their mattresses. If there were many moneyed types looking for units in which to invest, there would not be the number of available foreclosures and short sales on the market now would there.
As I have stated repeatedly, I have turned away from investing in units that needed rehabs as those are the ones that NO ONE is buying now….too much of a risk as ppl are still in the mindset of thinking there will be many troubles with electrical, structural issues, plumbing and other unseen problems that would cost the thousands of dollars they were going to be saving by buying at these greatly reduced prices. Not everyone (actually very few now) want a place that needs a ton of work…cosmetic work is not that same as having to replace a roof/appliances/flooring/structural repairs. Too much of a risk.
I have removed a bunch of comments that aren’t really a discussion of anything at all. Enough already. Please keep the topic to real estate. Thanks.
Thanks for your moderation as it definately was getting WAY too weird for me!