“Better Than New” For This 2-Bedroom in the Gold Coast: 1325 N. State Parkway
This 2-bedroom in the Ambassador House at 1325 N. State Parkway in the Gold Coast came on the market in April 2011.
It had sold the prior year and is now back on the market “better than new” with a complete renovation.
The building was constructed in 1969.
The unit now has dark hardwood floors and crown molding.
The kitchen has been opened to the living space and has custom cabinets, stainless steel appliances and carrera marble counter tops.
The bathrooms also have marble as well as Grohe, Toto and Kohler.
The unit has central air, and a washer/dryer was installed (the building DOES allow them- although it looks like the half bath was sacrificed for it in this renovation.)
Parking is available to rent in the building.
This unit is a corner B-tier unit with Lake, North and West views.
There are 2 other B-tier units currently on the market.
- Unit #15B: listed at $400,000
- Unit #9B: listed at $350,000
Will this renovated unit get a premium price for being “new”?
Ruth Ann Alexander at Jameson Sotheby’s has the listing. See the pictures here.
Unit #21B: 2 bedrooms, 2 baths, 1675 square feet
- Sold in March 2010 for $350,000
- Originally listed in April 2011 for $649,000
- Reduced
- Currently listed for $630,000
- Assessments of $1158 a month (includes heat, a/c, doorman, cable, pool)
- Taxes of $6109
- Parking is rental in the building for $130 a month
- Central Air
- Washer/Dryer in the unit
- Bedroom #1: 17×16
- Bedroom #2: 14×14
This place might fetch, oh, 20% more at the most for the money spent on renovations, but it won’t get anything like the premium that’s being asked here, which looks to me like it is priced to cover the cost of renovation plus a tidy profit for the seller.
Traditionally, in the days before the bubble, you almost never got back what you put into renovations, though you might recover most of it in the case of baths, or adding an extra bath, or building out attic space. But the more expensive the reno was, the less likely you were to recover your money.
Only during the Great Rampage could you make a profit on a complete renovation of a perfectly decent, but rather fusty and outdated, dwelling. Those days are over, and we are back to the norm. For one thing, prospective buyers might not like your “improvements”, and can always think of how they would have done them better, but most of all, they know that cosmetic improvements date and that once they do, you’re stuck with the same floor plan and space and elements as every other B tier apt in the building.
The place looks very nice and it doubtless is in better cosmetic condition that the other apts available on the same tier, but it is not worth 60% to 80% more.
homerun.
Lipstick on a pig.
Well, not a pig, exactly. Lipstick on a moderately-appealing-but-not exactly-gorgeous animal.
Lipstick on a hamster?
I’m fairly sure the market will decide that this is not actually “better than new”.
“Traditionally, in the days before the bubble, you almost never got back what you put into renovations,”
then what was the point of renovating?
“buyers might not like your ‘improvements’”, but Sabrina contends that buyers don’t have the time/money/desire to renovate, so what do you do?
Case 1: put in generic updates that might appeal to the greatest common demonator but make the unit look like every other unit out there
case 2: put in something trendy and unique that might not appeal to everyone and will become dated as soon as the next fade in kitchens hits?
case 3: leave it alone, adjust the price accordingly and let it sit because buyers want latest and greatest features and creature comforts?
“then what was the point of renovating?”
To live in a nicer home? If you are doing it for investment purposes, you really should consider why and what you’ll get back. Laura makes some great points. In the bubble, this kind of reno “made money” by virtue of market appreciation. If your property was going to be worth 10-20% more in 2 years even if you did nothing to it, it was easy to overlook that the new bathroom isn’t really adding much on top of that.
If course complete rehabs of cheap, dilapidated properties is a different ballgame…
The March/February case schiller changes are just in – Chicago was down 2.4%. Overall, the 20 city index was down 0.8%. The one year change for Chicago was negative 7.6%. Not good news.
We’re back to April 2001 prices on SFHs (index value of 110.57).
We’re back to March 2000 prices on condos (index value of 102.57).
It appears my call of a bottom in the 2014-2015 timeframe of 94-95 on the CSINSA SFH index is starting to look downright conservative.
Laura’s points are quite appropriate. TftInChi’s is right on: unless you are a real estate investor type re-do a home to meet your needs then you will be happy but to expect to make a profit unless you own the property a period of time (looks like more than 10 years) you may not make money but at least you enjoyed your surroundings.
How much did the highest tier drop?
Having just finished a high end kitchen rennovation- sub-zero, wolf, travertine, granite tops, cherry crown and two baths with hans grohe and toto. Total cost $150K. Put that on the other units available and you have 500K with the cabinets and color scheme desired. This unit does not sell for over 500K.
After looking at 15 b on trulia I revise my estimate to 450K. 50 k more into 15 b makes it just as nice
Madeline is dead on the money. The building is meh at best, so I am not sure supr upgrading the unit makes much sense. The assessments are very high too. And for heaven’s sake what is carrera marble?! Do they mean Carrara?
Buy 15B for $375,000 and spend $500 on some decorating magazines, warm gray paint, and trim molding. Save $250,000; buyer isn’t purchasing the seller’s decor. No brainer.
At first I thought this was a well staged flip, but by the looks of the closet someone lives there. In either case I can’t understand why anyone would buy in this building in 2010 with the intentions of living in or flipping a $600k+ unit. This does not seem like the type of building to attract that level of buyer.
“In either case I can’t understand why anyone would buy in this building in 2010 with the intentions of living in or flipping a $600k+ unit.”
Just guessing here but if it is indeed owner occupied and looking at the tax code indicates financial distress.
If they stay in it 2+ years they get up to 250k in gains tax free. Under 2 years (March 2012) means taxed on those gains. You do the math.
http://www.bankrate.com/finance/real-estate/capital-gains-home-sale-tax-break-a-boon-for-owners-1.aspx
Like others have said, this is a weird investment. I can’t see making a good return with a surface renovation UNLESS you get a great deal on the place and then you renovate so it will move more quickly. Maybe this is a make me move scenario where the owners are happy to live there but will move at the right price. Seems like a waste of a listing fee if you ask me.
“WALL THERMOSTATS.”
Is this something special that warrants mention in the listing?
Icarus, the point of renovating, in the old pre-bubble days,was to ENJOY your dwelling and make it look and behave the way you please. Otherwise, why not just stay in a rental and let the ownership worry about taxes, hoa, failing mechanicals, and the rest, and take the price risk… which can be substantial as we have seen.
You see, once upon a time, people did not buy dwellings as “investments” or to “make money”. They bought them to own their dwellings and have control over them, and to eventually pay for the place and actually OWN it and control it. They made improvements to make it a better dwelling… and I can’t imagine improving a place for someone else’s benefit and not my own. They did not expect to do much more than recover their money, at best, on improvements and they didn’t expect their houses to do more than keep up with inflation. They did not expect their places to generate appreciation equal to a year’s earnings in the job market.
We are probably returning to the old paradigm, but is there ever really such a thing as a “new paradigm”? The only reason we have seen the housing inflation we have seen, relative to the rest of the economy, for the past 30 years, is because our leadership turned to financialization and the blowing of bubbles about that time, in order to keep the “prosperity” that we were quickly losing as our manufacturing fled our shores in the late 70s and forward. There is a lot of historical precedent for this that shows that when an economy moves from manufacturing and commerce, the true drivers of prosperity, to debt creation and asset inflation, that it fails, as ours is.
I’ll be glad to never see a bit of appreciation on the dwelling I buy, if only I can keep my expense level and not have to worry about escalating property taxes, which are another way of doing an owner out of his equity. No one has really benefitted from the immense appreciation since the 70s- it only means that long-term owners have to pay a hefty gain tax, which really means that they are worse off than if their places had stayed level in value.
“Is this something special that warrants mention in the listing?”
LOL. A $75 upgrade.
Thinking of real estate as an “investment” NEVER made sense for most people. Anyone who put a huge fraction of their assets into only one or two stocks would be considered a foolish, inadequately diversified investor — more of a speculator — but having the majority (if not all) of one’s net worth tied up in one or at most two properties was somehow OK. Amazing how the “RE only goes up” meme caused people to toss prudence out the window.