A Brick Loft in a Popular Loft Building: The Donohue Annex at 727 S. Dearborn in Printers Row
There are two Donohue loft buildings on South Dearborn in Printers Row. We’ve chattered about them both.
The Donohue Annex, at 727 S. Dearborn, is smaller and has concrete ceilings, not the timber found in the next door Donohue building at 711 S. Dearborn. This is a big selling feature in this building for those concerned about noise.
This 2-bedroom unit just came on the market in the Annex. It also has the distinction of having deeded parking (which is available at 801 S. Plymouth across the street but which many buyers don’t purchase.)
The unit has 11 foot high ceilings, exposed brick and hardwood floors. The listing says it has big windows that face Dearborn.
It also has in-unit washer/dryer but no central air (window units only.)
Carol Dorsey at SourceOne Realty has the listing. See the pictures here.
Unit #610: 2 bedrooms, 1 bath, 1400 square feet
- Sold in August 1991 for $125,000
- Sold in January 1996 for $152,000
- Sold in March 2003 for $285,000
- Currently listed for $384,000 (deeded parking across the street included)
- Assessments of $700 a month (includes heat, water, cable)
- Taxes of $2696
- No central air- window units
- Washer/Dryer in the unit
- Bedroom #1: 13×11
- Bedroom #2: 12×8
- Office: 8×7
- Living room: 18×16
- Dining room: 12×12
- Kitchen: 14×11
Apply to 91-96 rate of increase to the 91-09 period, you get ~$276k. The asking price is a total wishing price.
NO THANK YOU!!
Yeah at 384k? um…. no
This is one of those places that just makes you sad.
All the plants on top of the kitchen cabinets, the leather couch crammed into that corner, the price…
Knock 100k off and it might sell
I don’t think the pictures are flattering at all – the virtual tour has some much better shots. Not saying that it’s for me, but the pictures make it look much smaller and darker than it is.
Looks like parking is actually included this time?
. . . or, for 80k less, you could have the identical unit 706 upstairs (but w/out parking).
Although, to be fair, unit 601 is a totally valid comp at $345k (sold 12/15/08, and without parking).
So the price seems crackers at first, but it is a nice building– for the area.
And that parking space is a very big deal (still, have fun with the parking if anyone ever drives to visit you. . . .
Hi all — I have a rather general question that is prompted by the assessments on this property.
Short backstory — grew up in Chicago, left in ’94; now, 15 years later, life changes have led me to start making regular trips back for weekends. So I’d like to buy a place for visits, Loop, Near North, Lincoln Park — perhaps as far north as Lakeview, but nothing west of State Street or south of Jackson.
Okay. I have a good read on prices where I live now, but for Chicago I’ve just been reading the blog here and looking at various websites. But assessments? In general, what would be considered a fair trade-off in the city? What would be outrageous, what would be a steal, and what would both tend to include? I don’t care about “fitness centers” or “convenience stores” or any of that nonsense, but services? Yes, absolutely.
Thanks everyone.
No central air? ONE Bathroom?!? No way!!
OK lets start with the assessments. WAY too high for what is offered…
Heat $150 at most for 6 mo out of the year;
Water $40 mo and that is being VERY generous and taking 6 showers/baths a day;
My cable is $120/mo and I have every channel available through Dish Network
So that is around $310…where is the remaining $390?
Second, when you are faced with these hideous water, plumbing and heating pipes everytime you turn around, you get creative and do everything in your power to conceal them. Paint them the color of the walls, go black, grey, silver…anything but white. Distracting to those buyers who are seeking some unique features.
It seems as though using comps to determine pricing has gone the way of stating accurate square footage. Again, what on earth are all these remaining relitters doing to truly earn a commission?
$304k for 706, a duplicate unit above you,
$384k for this unit
$345k for unit 601.
How can there be a parking space (across the street no less) selling for $80k? And how does that factor into this whole equation? Correctly doing a market analysis is a relatively easy process and when donce correctly can make your transaction so smooth.
Third, buy furnishings that will fit in your unit and spend some time figuring out how to stage to give the visitors the ‘impression’ of ample square footage. Nothing kills a sale faster than the seller oh so proudly stuffing as many huge pieces of discount furnishings into a tiny place as if to say “Hey I got all my trash in here I think you could too”.
No central air eliminates over half of the potential buyers. But having parking included and the washer and dryer in unit are both positive features.
I just don’t see a market for units like this. The loft craze died almost as quickly as it started (according to a few life long Chicago residents, one of whom is an Interior Designer). Now had the developers who invested in loft conversions used some foresight when converting these old buildings into living spaces followed of course by some quality craftsmanship and creative use of space, these places would be snatched up the minute they came onto the market.
I am so done looking at these half assed attempts at creating unique and modern units in historic buildings buildings.
What more is there left to say for places like this?
“My cable is $120/mo and I have every channel available through Dish Network
So that is around $310…where is the remaining $390?
Second, when you are faced with these hideous water, plum”
Building maintenance/reserve, lawn, other services.
The rest of the assessments are building maintenance (3 engineers on site, who are available any time and are skilled to do significant plumbing/electric work on units), and fixing a really cool elevator once in awhile (the oldest in Chicago) that does tend to need some upkeep. And (I live in the building) there are no duplicate units in the building. No two are alike nor have the same footprint. No other unit on the market in this building has parking included. I bet it sells for $350k, in December, when the charming Christmas tree place is open across the street and the new park opens up, also across the street.
If I’m paying $380+ for for a 2 bedroom in Printer’s Row it better damn well have AC and 2 bathrooms. I think they’d be lucky to get above $290 for this.
“I just don’t see a market for units like this. The loft craze died almost as quickly as it started (according to a few life long Chicago residents, one of whom is an Interior Designer).”
Westloopelo: It just goes to show you you have a lot to learn about the Chicago real estate market. This building (and Printers Row in general) have some of the best loft buildings in the city and they are still in high demand by buyers who want the authentic loft experience.
As Denise says above- the Donohue and the Annex are very unique buildings because each unit is different. They were among the original loft conversions way back in the 1980s and weren’t “ruined” (my words) by developers. The true original loft features were preserved in most of the Printers Row buildings- including the brick, the big windows, the timber or concrete ceilings.
They haven’t converted these types of lofts in probably a decade (and all the “good” buildings have now been converted.)
Printers Row, by the way, is a great neighborhood. Within walking distance to Grant Park and most people’s offices in the loop.
I encourage people to attend the south loop loft walk tomorrow (tickets are $30 cash at the door) to see some of the great lofts in the neighborhood.
“Okay. I have a good read on prices where I live now, but for Chicago I’ve just been reading the blog here and looking at various websites. But assessments? In general, what would be considered a fair trade-off in the city? What would be outrageous, what would be a steal, and what would both tend to include? I don’t care about “fitness centers” or “convenience stores” or any of that nonsense, but services? Yes, absolutely.”
Chitown Expat: It’s impossible to really answer that question. Every building is different. The older the building, usually, the higher the assessments because it just costs more to maintain.
Also- does the building have long hallways that will need to be recarpeted at large expense very few years? Does it have balconies hanging off the side that will need maintenance every 10 years? Is it brick and will need tuckpointing? Are the windows 25 years old and will need to be replaced soon?
Pools and rooftop decks are among the most costly to owners because of the increased insurance costs and maintenance fees.
In my opinion, there are no “steals or deals” in assessments. The maintenance costs are what they are so how is one building able to be so much cheaper? It’s because you’ll ultimately pay more later (in a special.)
Some older buildings boast that they’ve never had a special assessment in decades. That’s a well-run building, in my opinion.
New construction buildings have artificially low assessments that re-set higher a few years after closings because the board takes over and they have to build a reserve. So- don’t get sucked in by the new construction assessments.
If you’re in a downtown high rise, it’s not unusual to have assessments from $600 to $800 a month for a 1300-1400 square foot unit.
Also, some parking spaces will also have an assessment attached. Be aware of that.
Anyone else with any advice?
Sabrina i agree printer’s row is a great part of town, the lofts in the area are well done. imo rooftop decks are awesome; the el can be a bit noisy in the area with the zaging.
Again, I live in the Donohue in a timber unit, so perhaps I can provide answers to the above and what I know of them, for those who are interested.
This building’s maintenance services are top notch. The reserves are very solid so the chance of a special are unlikely. The windows in the entire building were all replaced as specified by historic district standards back in 2005. It is a well-run building with store front restaurant presence, as well as a lot of residence leadership. A well run building is worth paying for.
I know for a fact the owners of #610 have two very small children so participating in the Loft Walk in an official way was not possible for them. However, they plan to leave their door open, and be home, when their kids are not napping. Stop by if you are in the area, I’ve heard there are some good lofts on the official list.
There is no el sound at all, as this unit faces west. You can hear the fireworks in the distance on Wednesday and Friday nights, which is nice, in my opinion but Westloopelo may not like that . . .
Sabrina, thanks for those answers. I know that assessments will vary — often widely — yet one of the comments one most frequently encounters in Crib Chatter is: “Those assessments are crazy!”
So I think the question still stands — what would be the basis of such evaluations, or is it just carping?
“This is one of those places that just makes you sad.
All the plants on top of the kitchen cabinets, the leather couch crammed into that corner, the price…”
Jon: when you buy a place, the good part is you get to move your own furniture into it. Comments about the furniture or plants are not constructive.
“Apply to 91-96 rate of increase to the 91-09 period, you get ~$276k. The asking price is a total wishing price.”
Anon: Your math equation doesn’t include the $40k for parking so you are not comparing apples to oranges.
Thanks Denise for elaborating on the assessments. Good to know that for a building of this age there are maintenance staff ready 24/7…I am sure they are needed!!
“Westloopelo: It just goes to show you you have a lot to learn about the Chicago real estate market. This building (and Printers Row in general) have some of the best loft buildings in the city and they are still in high demand by buyers who want the authentic loft experience.”
Nice try Sabrina. Most if not all of the comments you direct at me are of a negative nature. You seem to be taking MG’s lead as you do take great pleasure in questioning me and my knowledge of the RE industry in Chicago or otherwise. More than happy to provide you with some shallow material for your enjoyment.
Had I been guilty of that which you accuse me of (not knowing the RE market) how could I be at the point I am now? While I have taken a hit as all investors have lately, I am still succcessful and living quite comfortably. The projects we have completed here have been a huge success. Those which did not sell are being utilized as rental property.
My business allows me the invaluable opportunity to be in constant contact with many of Chicago’s RE ‘experts’ in all aspects of the industry. Historic buildings (and areas), preservationists, regentrification groups, public officials who specialize in housing, appraisers, inspectors, new construction developers/builders, contractors and anyone else who has a stake in Chicago’s RE game. There maybe a small amount of information that I do not possess about this city and this industry, but with a quick phone call I can find all the information I need.
With the huge amount of money I put into buying and renovating homes and contributing to the regentrification of neighborhoods, I would be beyond an idiot to go into any market and blindly start throwing money out for projects and areas I know nothing about. If this were my mode of operation, I would have been out of business years ago. So please, keep your comments on things you know about and don’t speculate what I do in my business or what I do or do not know about Chicago.
You feature several ‘authentic lofts’ and how much ‘we’ love them weekly and yet I am having trouble recalling any followup as to whether or not they sell or have had any price reductions. It would seem IF there were such a strong demand for them (according to well connected and extremely knowledgable friends who have been in Chicago RE all their lives, including my brother and his crew, such is not the case) there would not be the serious over supply of them on the market now.
In addition to many an expert’s educated opinions, there are all the negative comments on your own forum that show there is hardly such a high demand for such styles of living nor do their features seem to be very popular.
As far as Printer’s Row being a unique and nice neighborhood, I will agree with you to a point on that topic. While it was ‘groundbreaking’ for the RE scene in Chicago at the time of the first few conversions, other cities were already well underway in converting old factories and warehouses for housing options. Again in speaking of this area with RE friends, most believe PR has had it’s heyday and is now in the process of having to lower prices to generate any interest and it is struggling to keep the residents it does have. All the new construction in the area is dwarfing these places in both scale and in popularity.
This featured unit is a very poor example of a true loft. Not only is it not staged for sale, the size and layout of the space is not usable for anyone other than a single person. Regardless of the building’s history, I seriously doubt it will find a seller at this price point. Unique spaces are a bonus, but put a unique space in an area that is beyond it’s time and is being populated with new construction projects and it quickly loses it’s appeal and is overlooked in favor of the newer units. It may be around for years to come, but I don’t think the demand to actually own and live in it is that great at all. You simply overstated your case and opinion.
Now I am not at all dumping on lofts as I personally own a converted warehouse building from the mid 1800’s in NYC. I spent a year + of my life renovating and modernizing this historic building to perfection. All of my work (I did 75% of it myself) has been a great project and the finished product has provided me with one of the most unique, true warehouse lofts in the city.
The building itself contains my own residence/work space of 3400+ sq ft and also has 4 other units which all have their original tenants some 17 years after I completed the conversion.
I took great pains to ensure all of the building’s original features (exposed and painted brick walls in excellent shape, industrial 2 door elevator, original and restored 24 ft windows, multi-level interiors following the original usage and the original 24″ thick concrete floors. I would not, for any amount of money, sell this building nor will I break up the units for individual sale although I have receivced over 10 offers to sell outright or to trade for two newly constructed penthouses in the cities most popular buildings. I will keep this place for the remainder of my life and will enjoy every minute of it.
Westloopelo: I never made any comments about your business. I could care less about your business. Clearly your “business” isn’t lofts in Chicago’s Printers Row (since you know so little about them.) As I said before- you should be attending the South Loop Loft Walk going on today. It would open up your eyes since you’ve never been in these buildings.
You admit you’re from another city and still learning about Chicago’s neighborhoods. It’s great you consult various “experts” as any good investor should.
As far as demand for lofts- it’s mirroring demand in the overall market. There are hundreds of million dollar properties on the market in Chicago right now (and every other major city in this country)- that means there’s no “demand” for that product, right?
Great lofts in good locations will sell – just like any similar property that is unique and in a good location. Price, of course, is also key in this market.
“You feature several ‘authentic lofts’ and how much ‘we’ love them weekly and yet I am having trouble recalling any followup as to whether or not they sell or have had any price reductions. It would seem IF there were such a strong demand for them (according to well connected and extremely knowledgable friends who have been in Chicago RE all their lives, including my brother and his crew, such is not the case) there would not be the serious over supply of them on the market now.”
Compared to the new construction? Any data from your experts to back that up?
“All the new construction in the area is dwarfing these places in both scale and in popularity.”
Yes, it does appear you are claiming the lofts are more oversupplied than the new condos. Just make that “quick phone call” and “find all the information” and prove your claim. Until then, this is just more of your BS.
“Unique spaces are a bonus, but put a unique space in an area that is beyond it’s time and is being populated with new construction projects and it quickly loses it’s appeal and is overlooked in favor of the newer units. It may be around for years to come, but I don’t think the demand to actually own and live in it is that great at all.”
Prove it by making that “quick phone call” and posting the data.
“You simply overstated your case and opinion.”
Pot, meet kettle.
Back to the property….
I like this place, though parking across the street is a wee bit inconvenient.
As mentioned, it’s probably best suited for a single person, but hey, there are still some of us out there :O)
I like this place, but I don’t see it being worth $100K over the 2003 price in today’s market. It’s no more “unique” now than it was then.
I believe I am the only resident in this building that is participating in this discussion, so here are a few comments, should they be helpful.
As for it not being staged to sell, you may be right, but with two small children, the family that lives here can’t exactly remove the cribs the children sleep in. That may mean someone won’t come and see it, but someone who is in the market for a unique loft in this neighborhood hopefully will not be deterred by something as cheap furniture or poor staging.
Someone mentioned it is ideal for a single person. I agree that would be ideal, or a childless couple that both work downtown. Having lived here long enough to know the previous owners, it was an elderly couple. The current family put in two rooms, one of which you see in the photos. They used DIRTT (Do It Right This Time) and those walls can be removed easily if their layout does not meet the buyers specifications. They upgraded the kitchen with all new appliances and added significant storage space above the master closets. Also, they bought the parking space which is included in this sale. My point with this is that they did not just mark up their property by $100k, but added the parking spot and did many upgrades.
It is worth a look for someone in the market for this type of square footage with parking, as I believe it is the only place with parking available in the entire neighborhood.
they should get brownie points for including parking, many have griped about it being separate and for 30-40K.
Sabrina,
Again you are speculating and jumping ahead of yourself without the real knowledge and facts to back up your statements/assumptions about me or my business in Chicago.
My third purchase here was made before I actually became a Chicago resident and is an authentic loft (according to Chicago’s standards) located in the heart of PR. While I was a bit unsure of how this rehab would do in the market after it was renovated (it was a mess that had been abandonded and vandalized) I went ahead and purchased it and made it my first project once we relocated to the city.
I spent a good amount of money on it initally and on the labor it required to be brought up to a salable condition. I had it on the market for six months priced below it’s appraisal with no interest at all. At present it is being occupied by three members of my crew. During off time and on weekends we continue to make repairs to the place all the while paying an exhoribant amount on special reserves and regular assessments. Wrong decision on my part but it was one done in a hurry with little research in the area. Beautiful unit now but the area just does not generate any interest.
As I stated above, I do really love lofts if they are done correctly, And yes, to correct your false assumption I have toured many, many units that are or have been for sale in this area of the city. I have spent a lot of time in the PR area and while I do find some positive aspects, the negative does matter to me more. I could not, in good conscience recommend PR to anyone who is seeking a good deal on a loft. All of these units were poorly converted with inferior products before and during the regentrification process of this neighborhood. Of the tens of units that we saw in PR, only two were rehabbed after the original conversion and were worth the asking price…the rest are one huge mess. This is an observation by myself and by a number of people who are familar with the conversion, the area or those who actually live in the area in these lofts.
But then who am I to argue with you, the queen of Authentic lofts?
Re G…poor comeback and a very weak indication of your infatuation with me. The whole post really did not make sense…I expected more from you!
And yes, it really does take merely a simple call to clear up any questions I may have about any area of the city or for that matter, any house that is currently on market. For the short time I have been in the city I have been very fortunate to have had the opportunity to meet some of the most highly experienced and educated RE people who comprise the Chicago RE scene….which explains why we have not met…
“Anon: Your math equation doesn’t include the $40k for parking so you are not comparing apples to oranges.”
When did they buy it and how much did they (you?) pay? I’ll compare apples to apples, but my guess is it is still unflaterring to the current ask, b/c you didn’t do the simple math.
wloopelo,
Some advice…
more is LESS!
Nobody wants to read your rambling diarrhea of the keyboard. And why get so defensive? Ego much?
“wloopelo,
Some advice…
more is LESS!”
And double carriage returns!
Makes it much easier to read, and it’s only one (1!) extra keystroke.
Only one bath is a problem at this price. Wonder how feasible it would be to convert the nearly useless 8 x 7 “office” into a second bath.
Printers row is a great neighborhood. It’s as downtown urban as possible, has the old historic charm thing, but also has the tremendous advantage that it doesn’t attract a lot of tourists or suburbanites on nights/weekends. This allows it to maintain a true neighborhood feel. Hopefully that movie theater they are opening nearby wont ruin its low key ambiance.
Westloop,
sorry side track question, im just curious. The loft you own here or in NY, what is the heating and cooling like for a resident?
back in my labor/construction days, i did some work on two lofts (different chicago areas) and to me just didnt seem effecient on the HVAC. the first one we were was always freezing cold in the place and it wasnt even cold outside. we did some work in another in the summer time, and until the owner showed turned on the to huge industrial ceiling fans it was a fricken oven. i cant tell you if either of these were “authentic” lofts cause i dont know the difference.
just from my brief experience lofts dont seem to be efficient at all on the heating and cooling thing. Just curious to find out from a year round owner/person who pays com ed what its like.
Dear Westloop crazy person. Please do not move into the Donohue. It is filled with really interesting people who appreciate the neighborhood and the charm, and the relatively affordable cost of owning a unique loft here. Not that you ever would, since you find fault with everything, even Sabrina, who is just trying to chat. Sheesh.
A loft “if done right” . . . that means different things to different people. The couple who moved in had no children when they arrived in ’03. They adapted the space as they needed to, so it would work for them, and it looks unique. There were many interested people on the loft walk, and otherwise, who know that they can easily re-adapt this unique space to work for them. Whether it be a single gal working downtown, an elderly couple who is retired, a young college grad who landed the dream job. All these types would see it for what it is. An oportunity to make it into a terrific space for them if the current set up does not work.
No A/C is no big deal for many, the solo bathroom is huge.
Am a local realtor and have heard there have been many showings but no offers yet.
Lets break down the market segments Denise posited as potential buyers:
1)single gal working downtown: this segment is significantly smaller than a few years ago as there are fewer jobs in the US today than in 2000.
2)an elderly couple who is retired: possibly but an elderly couple already established financially has a lot to choose from. And most prefer the Gold Coast over the Near South Side.
3)a young college grad who landed the dream job: this segment is decimated and I would guess almost non-existent. This segment has taken such a hit I would think its not even worth mentioning anymore.
Parking’s been backed out at $25k. Currently listed at $359k plus $25k for parking.
I love Printer’s Row. IMO it has the best combination of neighborhood feel and proximity to the loop. I looked and thought pretty hard about buying a place in the 711 S Dearborn bldg but I just couldn’t justify paying the assessments. I know they’re necessary to maintain such an old, historic building, but I’d rather let someone else pay for that cost while I enjoy its beauty from the outside.
So its the same price… 359k+25k=384k and going to sit on the market for a looooooooong time. I’d be surprised if this sold at the 2003 price.
““Anon: Your math equation doesn’t include the $40k for parking so you are not comparing apples to oranges.”
When did they buy it and how much did they (you?) pay? I’ll compare apples to apples, but my guess is it is still unflaterring to the current ask, b/c you didn’t do the simple math.”
Looks like the owners think the parking is worth $25k NOW, not $40k+apperciation.
“No A/C is no big deal for many, the solo bathroom is huge.”
Let’s see here.
Pay $385K for no A/C, $700 assessment, one bathroom and to park across the street in this neighborhood?
Total Fail.
Backing out the parking can be a good way to stimulate some interest because the cost moves into some buyer’s price range. It also sends the message they are willing to sell the unit without the parking. If they did that, I’m sure they’d still be able to sell the parking for $40k as there are NO parking spaces for sale nearby and a lot of neighborhood residents would see that as a bargain. Or they could rent it easily for $200/month if that’s what I’m a realtor in the area and had no showings this entire weekend. A first. The market is dead. Once it picks up again, someone will buy this place. It may not be at $385k total, but it won’t be too much under. It is comparably priced to other 2 bed/1 bath places. ONLY place with parking in the neighborhood.
It was taken off the market. Owner moving out of state and is now for rent ($2000, including parking, or without parking for $1800).
This is going back on the market in a few weeks at $359k (incl. parking). For rent now at $1800/mo (incl. parking).
My calculations show that the owner is slowly bleeding to death:
$305k mortgage (yeah I know more than the 2003 purchase price!) at a hypothetical 4.250% 5/1 ARM = $1,501 per month
Plus $700 a month assessments. = $2,200
Rent is only $1,800 and doesn’t cover all the costs.
The market isn’t coming back. Not anytime in this decade.
Sell at or near your 2003 purchase price ASAP to stop the bleeding.
Unless of course you don’t have any cash to bring to the table. Then short sell.
I am neighbors with these people and while I don’t know their finances or the amount or terms of their mortgage, they plan to own the loft for the long term and rent it out. They plan to purchase a home in Madison. Being in it for the long haul is the only way to go in this market. A short sell is the equivalent of selling all your stocks at the depths of the economic crisis instead of riding it out. Hold on to your suffering stocks and buy cheap elsewhere to take advantage. Market will recover but you’re right – probably not fully this decade.
Assuming that HDs mortgage data is accurate, the refi to $305K took “own the loft for the long term” out of the equation. Renting out a 2nd residence at a loss is typically not a good idea. It’s probable that this residence is not going to jump in value anytime in the next 5-7 years.
$255k first
http://www.ccrd.info/CCRD/controller;jsessionid=CC4BFF6F260B68F093B64B9063B70387.CCRDAPPSRV2?commandflag=getDetails&optflag=DetailsCommand&county=il031&userid=null&userCategory=7&nameid=-42819&ptrno=460124679&instrumentnumber=0515746010&fileDate=06/06/2005&doctype=MORTGAGE&partytype=&name=REGENCY%2BSAV%2BBK&officeid=70&lastname=REGENCY+SAV+BK&proptype=&pin=09163001111009§ion=24&township=38&range=14
$51k second
http://www.ccrd.info/CCRD/controller?commandflag=getDetails&optflag=DetailsCommand&county=il031&userid=null&userCategory=7&nameid=-10953&ptrno=460124680&instrumentnumber=0515746011&fileDate=06/06/2005&doctype=MORTGAGE&partytype=&name=PUBLIC&officeid=70&lastname=PUBLIC&proptype=&pin=26071030900000§ion=24&township=38&range=14
$270,750.00 original mortgage on a $285k purchase. 5% down – 95% financed.
Rent for 1,800 and pay 2,200.
YOU CAN’T MAKE MONEY IN REAL ESTATE WHEN YOU’RE LOSING MONEY EVERY MONTH.
That’s a principal tenet of real estate.
They’re not really underwater but there’s not any equity either especially after paying transaction fees. Any equity that had they cashed out in the 2005 refi. What do they expect?
Rent out the unit while living 3 hours away in Madison? BAD BAD BAD idea.
Sell first, take a loss if necessary, then move. It’s sad to see the some people make terrible financial decision over and over again.
Homes will someday become ‘affordable’ again when units like this get washed out of the market.
The great depression made a lot of rich people poor. Often it takes years and years to recover. Holding onto a bad decision just drags out the pain.
“A short sell is the equivalent of selling all your stocks at the depths of the economic crisis instead of riding it out.
This discussion is very 2005 (where you could easily own multiple properties and the bank isn’t going to care.) Most people who are renting out their properties because they need to move are also renting in their new locations. There is no way most people could get a loan while having the first property hanging over them.
For instance, I know someone who bought a 1-bedroom in Uptown in 2005. They had a baby and needed to move by 2008. They couldn’t sell to come even close to breaking even so they moved to a rental in Logan Square (into a 3-bedroom) and rented out their condo at a loss of $400 a month.
They’ve been doing this for 2 years.
So a renter is living in their lovely 1-bedroom with granite counter tops and stainless steel appliances meanwhile they’re stuck in a lower quality rental.
But they’re “riding it out.”
Oh- and their renter asked for, and got, a slight rent reduction last year because rental prices are falling in the neighborhood.
How long will people realistically do this (the bleeding) until they finally decide to simply walk away?
I wonder…
“Being in it for the long haul is the only way to go in this market. A short sell is the equivalent of selling all your stocks at the depths of the economic crisis instead of riding it out. Hold on to your suffering stocks and buy cheap elsewhere to take advantage.”
If they paid cash for the place this might be a valid comparison. There is no alligator to feed by not accepting stock realities.
So they are loosing $4,800 a year? But what is the final number after taxes? Wouldn’t a significant portion of that be recaptured?
SteveA, with vvacancy, repairs and depreciation they will have an even greater passive loss. However, it is only recouped with passive income. Without that they will just be feedin’ the gator.
It’s the declining rent and value that will add to the pain.
“But what is the final number after taxes? ”
Mortgsge interest/property taxes cannot be deducted for a rental property. I think the IRS code specifies that the owner must live in a second home for at least 14 days a year to qualify a second home for deductions.
Oh the perils of being an accidental landlord. It’s not as easy as you think. Try screening tenants while living 3 hours away.
“Steve A on February 8th, 2010 at 8:32 am
So they are loosing $4,800 a year? But what is the final number after taxes? Wouldn’t a significant portion of that be recaptured?”
““But what is the final number after taxes? ”
Mortgsge interest/property taxes cannot be deducted for a rental property. I think the IRS code specifies that the owner must live in a second home for at least 14 days a year to qualify a second home for deductions.””
????
I don’t understand. What about Schedule E, Rents and Royalties?
You sure can take mortgage interest and property taxes, and insurance and all expenses on a rental property you are not living in.
Agree with HD on living far away. But don’t you get to depreciate the value of your rental property as well as declare all the costs associated with it?
Yes you do, but, you reduce your cost basis and you have to pay capital gains tax on the amount depreciated over the years. So they’ll be paying a nice tax bill by the time they actually sell the unit. Unless of course they do a like kind exchange. I’m not a tax accountant nor a tax lawyer so take this for what it’s worth.
“Steve A on February 8th, 2010 at 9:52 am
Agree with HD on living far away. But don’t you get to depreciate the value of your rental property as well as declare all the costs associated with it?
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