200 N. Dearborn Markets the “Perfect 10 Reasons to Buy”

If you get the Wall Street Journal in Chicago, you may have noticed the 2-page spread in the weekend edition marketing American Invsco’s 200 N. Dearborn condominiums in the Loop.

It’s called the 200 N. Dearborn Chicago Stimulus Program and is limited to only 50 units for 60 days.

Here are the Top Ten Reasons to Buy (according to the ad):

  1. Own for less than it costs to rent: “On all of our eligible convertibles, one bedrooms, and two bedrooms, your monthly mortgage payment, taxes and assessments will be less than the market monthly rent. Our special 20% down payment interest-only financing plan makes this opportunity possible.”
  2. 10-year fixed 2.5% interest rate: “This is NOT an ARM (adjustable rate mortgage). The interest rate does not vary or fluctuate.”
  3. No principal for 10 years: “You will enjoy low monthly payments.”
  4. Build equity 4 times faster over 10 years: “Our equity build-up plan will allow you to pay down your principal four times as fast as a traditional loan over a 10 year period.”
  5. No points or mortgage insurance required
  6. Rate is not reliant on your credit report: “Your loan application will take into account exceptional circumstances and all reasonable borrowers will be considered.”
  7. Simplified loan application
  8. Provides protection against job loss: “If you were to lose your job, you will be allowed non-payment of your monthly mortgage payments for up to 12 months. Missed payments will be deferred until the end of your loan. You will need to remain current in regard to monthly taxes and assessments.”
  9. Offers custom elite upgrades
  10. Unit must be owner occupied: “This is a special program limited to purchasers using this unit as a residence. No investor purchases will be accepted.”

The advertisement goes on to say:

“Another benefit, due to the low mortgage interest rate, is that purchasing power is actually increasing at 200 N. Dearborn. There is also a growing sense that the first signs of a bottoming out is in sight.”

“So now is the perfect time to purchase your home in downtown Chicago. These favorable market conditions have created a once-in-a-lifetime opportunity to own your own home. We envision this program possibly being used as a national template in re-energizing the real estate market and the economy in general.”

Oh, and if you’re wondering about Reason #8, the protection from job losses, the advertisement provides more details:

“If at any time during the ten year term of the loan borrower loses his/her job, the borrower may skip monthly interest payment for up to 12 payments. If after 12 missed interest payments, the borrower is still unable to make further payments, but is current on payment of taxes and assessments, the lender will take back the unit without any further financial legal obligation, leaving the borrower’s credit rating intact. The borrower must make at least three (3) scheduled payments and be current on his/her mortgage interest, taxes and assessments in order to qualify for the Reassurance Package.” (italics are in the advertisement)

Additionally, if you’re worried about qualifying for this program, you shouldn’t be.

“Most buyers can qualify for this program regardless of price range, income, credit score, type of financing or the home you chose. This offer is limited to 50 condominiums sold or for 60 days- so don’t delay!”

Will this kind of “program” work to move condominium units?

Pre-register and get more information on 200 N. Dearborn’s special stimulus seminars website [Stimulus Seminars]

36 Responses to “200 N. Dearborn Markets the “Perfect 10 Reasons to Buy””

  1. two words: american invsco

    i don’t care what incentives they are offering. anyone with any sense would never buy anything from this developer/brokerage. they simply cannot be trusted.

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  2. Can someone explain to me why buying in an American Invsco building is so bad? I have been following along and understand that they screwed their initial conversion people by offering them ridiculous rental rates, etc. But what if I want to buy from someone who got screwed? Some of the condos in their old seem like a decent deal now, in foreclosure. Thoughts? I’m moving to the area in a few months and considering buying a 2br.

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  3. With this promotion not taking into account credit score anybody with a good credit score can be assured this is a great path to financial ruin. Its going to attract a lot of speculators who already shot their FICO in an attempt to capitalize on RE appreciation.

    Yeah no thanks. Its a great warning that my potential neighbors have already been financially irresponsible and are likely to do so again in the future and default/go into foreclosure, thus depressing comp values. Invsco..lol.

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  4. Seems like American Invesco is trying to advertise and promote the same kind of tactics that got us into this mess to begin with. “Bad credit?! No Credit?! No problem! We’ll give you a place to live… it’s the American Dream!!”

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  5. $394,800, 1bd. 1fb price? on MLS. $1245 mortgage 2.5% 30 year + $400 ass fee + RE taxes? seems to be more than renting. Plus loss of $78,000. Did I miss something in this great deal?

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  6. Don’t question, just buy!

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  7. @pitdesi

    I think that’s a separate question than this 200 N Dearborn offer. I personally think everyone who buys into 200 N Dearborn during the conversion is going to experience the same result as all their other buildings – 10 E Ontario, 440 N Wabash, etc etc.

    I think it looks tempting to buy from someone who got screwed during one of their conversions. However I think that’s a risky investment. A bad conversion can lead to foreclosures, which probably means the condo association will have difficulty raising funds for maintaining the building. This could lead to signficantly increased monthly assessments, or even a special assessment down the road.

    I would also speculate that your future appreciation is likely going to be next to nil. If a high percentage of units have mortgages that leave them “underwater”, just imagine how long that could take to work itself out.

    Finally American Invesco didn’t just create problems by offering low rental rates. The primary issue was that they got unqualified buyers into units they couldn’t afford, and that those units were overpriced relative to the market and their theoretical rental value. That seems EXACTLY what is happening here too.

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  8. How does this work:

    “No principal for 10 years: “You will enjoy low monthly payments.””

    And

    “Build equity 4 times faster over 10 years: “Our equity build-up plan will allow you to pay down your principal four times as fast as a traditional loan over a 10 year period.” ”

    How are you paying down principal w/o paying principal? I don’t get it (well, I do, but…). Taken at face value, how is this not contradictory?

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  9. I live in this building, went to this presentation, and they’re full of shit. They used a $300k studio as an example of paying $900 something a month. Ok that’s great but that is INTEREST AND ASSESSMENTS ONLY. They’re aiming this at the same people that got us into this mess, the ones that dont understand they need to pay the loan off.

    300k for a studio is ridiculous. The carpet is nasty, the elite build outs are poorly done (handles on the cabinets dont even align!). Hell they dont even replace the cabinets (which are kind of gross as well). The elite buildout consists of:

    Ripping out the existing counter top (not cabinets) and slapping cheap granite up
    Putting handles on the kitchen cabinets
    Replacing the carpet, putting in baseboard/molding whatever
    A few new light fixtures and..
    A painted door

    Not worth it, they still have the same cheap feel to them. Not to mention the management is horrible, every time I come to them with a problem I have to remind them of the legalities of not handling it. They have also violated numerous tenant laws since I’ve been here, including trying to show off my apartment without my permission (Illegal entry).

    Stay away until this building is (and it will be) in foreclosure.

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  10. Oh and I was in the elevator with one of the American Invsco employees. He mentioned the elevators will be needing a replacement in the next 4-5 years at a cost of $1 Million an elevator. So $4 million dollars / 304 units = $13,137 special assessment per unit.

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  11. I got a postcard in the mail promoting this offer… said it was only available on owner-occupied units. Will this prevent the fiascos that happened in the other AI buildings? Or will people find ways to try and goose the system by moving in and then renting a year later? I’m assuming once the contracts, etc. are signed, there is really no way to prevent somebody from renting out their unit unless the association rules forbid non-owner occupied — right? And what are the odds of that rule in this building?

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  12. While on the AI subject, some of the short sales in 10 E. Ontario are getting downright ridiculous.

    i.e. 07210208 is listed as a 1,093 sq ft unit on the 51st floor for 169K.

    Like Laker explained, the big worry is unbound assessments or specials popping up from foreclosed units. But if prices are getting this low, it is reasonable to think that competent buyers are out there willing to snatch them up and help rebuild the association. Just a thought.

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  13. How is this legal? I wish there was a market for buying put options on individual buildings… Shit, maybe that will be my path to millions… create a market for individual buildings defaulting… kinda like CDOs

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  14. I really feel bad for the people that are gonna get scammed into buying a place here with these rediculous prices and awful terms.

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  15. Steve Heitman on May 11th, 2009 at 8:23 am

    Stay away. Stay far away…

    They are so shady!!!!!

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  16. “So $4 million dollars / 304 units = $13,137 special assessment per unit.”

    Well that’s under the assumption that there’s 304 units paying their assessments… its probably a lot lower than that, unless there’s more idiots out there than I thought!

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  17. im confused.

    can someone explain to me how this ISNT a 10 year ARM?

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  18. “can someone explain to me how this ISNT a 10 year ARM?”

    Its a 10 year interest only it looks like. Based upon reading #3) “No principal for 10 years: “You will enjoy low monthly payments.”

    just…. lulz!

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  19. Prediction: in 11 years there will be a flood of foreclosures and shortsales in this building.

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  20. “I really feel bad for the people that are gonna get scammed into buying a place here with these rediculous prices and awful terms.”

    Thats where you and I differ, Sonies. I don’t feel bad when stupidity gets rewarded by the consequences of their flawed decision making processes. As the old saying goes “a fool and his money are soon parted”. I’ve got the popcorn ready for this one like any Invsco conversion.

    What I absolutely don’t want happening are any taxpayer funded programs to help out idiots that buy into buildings like this/get themselves into this situation.

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  21. “No principal for 10 years”

    plus

    “Build equity 4 times faster over 10 years”

    equals

    How does this not violate consumer protection laws?

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  22. Well Bob, lets just say I won’t be losing any sleep over the people that buy here.

    “What I absolutely don’t want happening are any taxpayer funded programs to help out idiots that buy into buildings like this/get themselves into this situation.”

    Agreed. Fucking communist dickhead congress are going to ruin this country and personal responsibility.

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  23. Sonies,

    exactly! so after 10 years or interest only, basically for the rest of the term (assuming 20 years) the rates are not fixed and become adjustable (or is it an ARM 10/10? is that even possible?). dont they mean that its not a ARM5/1 or an ARM3/1, etc?

    anon(tfo),

    it probably doesnt violate them by them by having small print somewhere explaining how you dont HAVE to pay the principles, but if you compare it to some other mortgage rate plans, you COULD POSSIBLY build equity 4 times as fast. *shrug* thats about the only way i can think of anyway.

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  24. You can have interest-only 30 year fixed rate loans. You basically have an interest-only payment for the first 10 years and the in year 11, the loan amortizes the remaining principal over 20 years. So if you never prepay principal, your payment can go up quite a bit in the 11th year.

    It also sounds like they are hawking a mortgage accelerator plan as well. These basically can payoff your mortgage early by essentially applying all your disposable income to the mortgage through a HELOC. The problem is that most people don’t have a lot of disposable income to really make the program work effectively.

    The problem is conventional lenders aren’t doing anything with fixed rates and i/o features at attractive rates. Having good credit is also a must. I am goign to dig around and see what the game is here on this. A 2.5% rate is for sure being bought down by the developer (the suckers buying in this building with inflated pricing).

    The other things I am trying to figure out is how they are going to get around the new appraisal laws that went into effect on May 1st requiring a firewall (google HVCC) between the appraiser and the lender. No way some of these places are going to appraise out with truly independent appraisers.

    My guess is that there are several mortgage plans available… not that this is one all encompassing mortgage.

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  25. Sounds like Invsco is now offering Option-ARMs. Except instead of recasting at the 5-year mark or sooner, these recast at year 10.

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  26. ah, thanks edumakated! your right, that does make more sense.

    i have no interest in this particular place, but its always good to get clarification and some extra knowledge.

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  27. this would be a great deal, if the product didn’t suck.

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  28. actually this is a great deal for the developer. If you default after 5 years, they get to take back the condo and sell it again. After you paid them 5 years of interest. This is the same scam those “rent-to-own” landlords do. My Aunt does this in Indiana, and while its legal and profitable, I still feel bad for those people.

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  29. “this would be a great deal, if the product didn’t suck.”

    And it still all depends on the price.

    My quick look shows the Invsco prices totally detached from the prices of the re-sales. The 1-br 08 tier (abt 770 sqft) has a couple of re-sales at $230k (1008) and $278k (1708) and Invsco listings at $339k (3108), $380k (408) and $398k (3508).

    If Invsco were offering the financing deal on market-ish pricing, it could be okay. But (imo) they aren’t.

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  30. Am I having a stroke or is it 2005? All this crap is exactly what created this mess! I don’t understand this at all. Regardless of how creative the financing is that is offered, eventually these places have to be re-sold.. and if you owe 300k on some crap that nobody wants for more than 180k & nobody can afford w/o the insane incentives/mortgages offered here… there will be a problem. Or, am I missing something?

    Why don’t they just rent these? They need the cash that bad? Or, they know the bldg is such a dump they want out?

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  31. Now AI is shilling this on CL.

    http://chicago.craigslist.org/chc/reb/1166042322.html – $400000 / 2br – 2.5% Interest Only (Seller Finance) 200 N. Dearborn (loop) (Loop /Chicago/ Downtown)

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  32. American Invesco – The nations leading horrible condo company!

    The only developer I cannot stand more than AI is Mark B. Weiss. He builds the worst condo/commercial buildings in the city. Small projects with shoddy construction.

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  33. The only thing they did a good job with is the photos in that Craigslist ad. They must have a great photographer who can make those craphole apartments look good in a photo.

    And I’m still dying to know how a 2/2 for $450,000 is cheaper than renting.

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  34. So according to the craigslist ad, you need 20% down to get the interest only 2.5% rate.

    Hopefully anyone that was capable enough to save up that downpayment has enough sense to avoid this shill and Am. Invesco in general

    Anyone looking to but a foreclosure, mark you calanders for approximately 10 years from now.

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  35. I’m just shaking my head at this scam. NObody in their right mind would overpay by nearly 150k for a 2/2 with interest only for this AI scamola.

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  36. I was curious about this so I went on Sunday to see their pitch. The models I saw were pretty nice but not very open, so the square footage felt weird.

    The 10 year 2.5% deal is a balloon mortgage, so the entire amount is due after 10 years, the idea is that you would refinance.

    The equity accelerator claim is based on making the payments you would otherwise make if you got a 6.5% 30 year fixed, but taking advantage of the 2.5% interest for 10 years. I believe the calculation said you could pay off the entire purchase in 14.5 years.

    All-in-all, there’s some nice features to the building, and if you could negotiate them down on price, it might be interesting… but if the condo association is in trouble as mentioned above, well then it’s not that great of a deal.

    That said, I bought a unit at 182 W Lake St from American Invsco and from my personal experience, they did an OK job. I know some of the other owners at Century Tower and I’ve never heard too much complaining about AI… that said, there are quite a few empty apartments on my floor alone, so I think the rental market is shot through with holes.

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