Selling Within a Year in Lincoln Park: 2545 N. Clark
How long do you have to live in a property to cover your costs? Many sellers are finding out it’s more than just a year, or two, or in some cases, even three.
2545 N. Clark is a 2006 and 2007 conversion of a small courtyard building in the heart of Lincoln Park.
A one bedroom unit is on the market a little over a year after it first sold.
Unit #1: 1 bedroom, 1 bath, no square footage given
- Sold in December 2006 for $285,000
- Currently listed for $314,900
- Rental parking available nearby
- Assessments of $138 a month
- Century 21 Sussex & Reilly
The historical rule of thumb has been that you plan to hold for at least 5 years if you don’t want to lose money. In a declining market, it could easily be a decade or more. To say the least, this place is not worth more than it was in December of 2006 (assuming the conversion/rehab happened before then). This seller will need to come down to less than $300,000 if they are at all serious about selling.
as with many economic things, people often don’t consider transaction costs/carrying costs and focus on the top-line nominal increase.
5-6% commission wipes out 2 years of appreciation (in “normal” years), then add property taxes, repairs, etc., etc.
but alas this preaching is going straight to the choir as pretty much everyone here gets it.
How many of the recent buyers (in the last two years) put enough equity down to “come down” in price- as you indicate Pete? (And I agree with your assessment.)
Reality may finally hit some sellers that they’ll have to bring quite a big check to the table to pay closing costs and their agents. How many will be willing to do so? (or even have the money to do so?)
It makes you wonder what we’ll see going forward in the next six to eight months.
This kind of pricing is all too typical for units sold in 2007. The seller lists a modest increase from prior sale, just enough to give them some wiggle room on the price, as well as to cover transaction costs, in the hope that they can unload the unit without showing up with a big check.
Of course I’m betting this unit sold with a high LTV loan and they don’t have 20k onhand, so it is likely that they not only do they prefer not to fork over 20k+ in cash at closing, but rather they can’t as they don’t have it.
So instead this property will stay listed in the pollyanna hope that a greater fool will come around to purchase it. It will likely even be marked down a few thousand, maybe 5, but nothing significant as the seller can’t cover a loss. If the real estate market doesn’t rebound soon (it won’t), this will either go foreclosure or rent out at a loss to the owner.
285k, amazing. How much is a 1br in Lincoln Park of this size? $1200/month?
I think $1400 for this place is more like it, but that doesn’t justify $285K, let alone $314K.
If you use $1400 rent X160, you come up with $224K. However, that is BEFORE deducting the assessments and taxes, which are expenses you must cover over and above your mortgage payments. I don’t know what the assessments are for this, so I’ll guess $200/month taxes and $150 assessments (if the heat is not included). That means that your mortgage can’t be over $1050 a month, if you are going to break even renting the place. So let’s use $1050 as the ‘real’ rent, that which you’d pay just for the use of the space. The price would then be $168K.
But there’s the mortgage interest deduction, so maybe you’d give $200K,at the most.
What do you all think would be the right price for this place, given current conditions and trends?
while the colors are very contemporary, the owner needs to lighten it all up so the rooms don’t look as small as they apparently are