Buy a Foreclosure, Renovate, Re-List: 2-Bedroom Townhouse in Lincoln Park at 1814 N. Bissell
This 2-bedroom townhouse at 1814 N. Bissell in Lincoln Park recently came on the market.
It was bank owned in June 2010 and sold for $19,720 under the 1999 sales price.
5 months later, it has come on the market as a gut rehab with a new kitchen and baths.
The kitchen now has white appliances, granite counter tops and stainless steel appliances.
The listing describes the bathrooms as having a modern “clean” look.
There is a small outdoor space on the first floor (leading to a shared garage) along with a back deck off the master bedroom.
The two bedrooms are not on the same floor. The master bedroom is on the top floor and the second bedroom one floor down, on the third level.
Yes, that’s the El brown/purple line running directly behind the townhouse.
Will this renovator get close to this asking price?
Brian Grossman at @Properties has the listing. See the pictures here.
1814 N. Bissell: 2 bedrooms, 2 baths, 1 car parking, no square footage listed
- Sold in April 1989 for $182,500
- Sold in December 1999 for $239,720
- Lis pendens filed in April 2006
- Bank owned in May 2009
- Sold in June 2010 for $220,000
- Currently listed for $449,900
- Assessments of $100 a month
- Taxes of $4405
- Central Air
- Washer/Dryer in the unit
- Bedroom #1: 15×13 (fourth floor)
- Bedroom #2: 16×10 (third floor)
- Family room: 16×16 (lower level)
Well, it is pretty but no kitchen/bath is worth 200K appreciation in a few months.
I think 300K is fair, let the flipper get out with a few bucks
In situations like this it might behoove the seller to provide some before shots to give potential buyers some indication of the added value (?) here.
I don’t like the look of these townhouses, and they never looked that well constructed, but the renovation here looks nice & the location is very good. Even though this is not a “high end” townhouse, if it gets down to the high $300’s it looks like a nicer option than buying a condo with equivalent space and should sell.
The “flipper” will do pretty well on this. Even with a new, very nice kitchen, some new windows (note the pella sticker) and some work on the baths, painting, maybe some carpet, it’s unlikely they put more than $60 or $70 K into this, so even if they sell in high $300’s, they’ll still make a very healthy profit.
May want to play some loud music well you have the shots so you don’t hear the train in your back yard..
How much, ball park, for that kitchen? I like it.
Bummer of a location, but the reno looks to be very nicely done, it has a garage, some outdoor space, central ac, wd and tiny assessments. Looks like both the flipper and a buyer could be happy.
“In situations like this it might behoove the seller to provide some before shots to give potential buyers some indication of the added value (?) here”
Once again, it shouldn’t matter what the buyer paid for the property. The value is what people are willing to pay for it now. If the buyer paid 1 million for it a couple of years ago, does it mean that it is worth 1.1 million now? Ridiculous method of determining/justifying prices.
I disagree, this looks like a gut rehab to me. I believe those are entirely new walls/new drywall. I bet the electrical was rerun/updated, those can lights in the kitchen look brand new. The windows and doors look brand new. Even the wood floor looks new, not just stained espresso. If the walls and ceiling are new, they probably put in new HVAC too.
PS the shower glass door in the small bath would make it difficult for any buyer with small kids wanting to use the tub.
Still, this is a multi-level one bedroom with a den in the basement.
I know people who live in units similar to these. They were paying $499,000 at the height of the boom but not today.
Mid-$300’s.
What would possibly make the flipper think they can get this for a song, drop a sum like 60k into it, then re-list and have it appraise out for over 100% what they got it for?
The appraisal will likely deep six this speculative strategy.
This is a perfect example of someone making money in real estate. Good job!!! These kinds of properties are going to start popping up in 2012-2013 when all of the foreclosure resales hit the market. This investor will be rewarded for this flip- and he/she will probably be there, cash in hand to snap up other foreclosures. This is yet another reason that buyers on the sidelines should NOT be expecting/holding out for the foreclosures to come on the market – for every one of you out there, there are probably a handful of investors with 100% cash on hand to “steal” the great deals away from you. Once again, the poor/little man loses.
“What would possibly make the flipper think they can get this for a song, drop a sum like 60k into it, then re-list and have it appraise out for over 100% what they got it for”
uhhhh….. basically because there is a demand and market for this type of renovated unit. Even if he sells in the upper 300s, he and the buyer will likely both be happy. This, Bob, is why real estate STILL can be extremely lucrative.
Clio is ready to make some buys. Watch out!
I bet they spent $100K on the rehab.
Looking at the cabinets, counter, and appliances I would say they spent around 35-40K on the kitchen. If they redid the electrical and mechanicals then they spent a lot more than 100K on this.
“Still, this is a multi-level one bedroom with a den in the basement.”
Well, to be fair, it’s a multi-level TWO bedroom with a den-like room in the basement. But more importantly, it’s that on the train tracks. I can’t see paying over 400k to live on the train tracks. Layout seems a bit awkward, too. You have to walk two stories to get to the kitchen from the bedroom…kinda inconvenient?
But I do like the finishes. And love how they framed the picture of the balcony off the master to completely hide the train tracks behind that tree.
this is a nice reno, but it sits ON the el.
SO: what do you think they spent? I believe it’s all new walls, doors, windows, floors/ceilings, electrical, plus the obvious kitchens and baths…..maybe HVAC too, probably not plumbing (or only minor tweaks).
Dan – does it really matter what they spent? I can show you novice flippers who could have spent 200k plus to achieve this look. Then, there are people who do this for a living who could have achieved this look for less than 100k. There is a HUGE variation in the costs of renovating.
For sure this cost more than $100k to rehab. The kitchen alone is easily 40k, and the floors and cleaned up drywall with paint another 30k. If there is a new roof and windows easily over 100k.
Flipping isnt as easy as it sounds. He still has a bit of risk and the asking price is no guarantee. Keep in mind he has carried this property for 6 months and if he has any kind of mortgage he may be another 15k out of pocket.
“The kitchen alone is easily 40k,”
not quite sure about this – you would be surprised at how inexpensive cabinets (even high quality cabinets) can be. There is a HUGE mark up (even at Home Depot, etc.). I could reproduce this kitchen for 25k (of course labor is the huge variable – but I have my own people).
Again, I love the finishes on this place, especially the sweeet kitchen, and the place has a lot going for it (garage, etc.). But even if the tracks weren’t there, the place is still practically on Clybourn/at the river.
I know I’m always droning on about ELP’s proximity to the park and lakefront, but another upshot of living (well) east of Halsted is that it’s a ways from this particular industrial/retail stretch (while still having ready access to it). If I’m not going to be within a few blocks of the park, I’d rather live in Lakeview (i.e., RV), or even RW/Aville, instead of west LP.
And there were just 2 and 3 bed places listed at or below this price point in ELP, for the same approx sq ft (on Webster, Grant, etc.), not to mention the 3 bed townhomes scattered throughout LP.
I think it will sell around $400K. El in the back SUCKS, but its a nice place in an overall great area.
Dan – assuming that they did good quality work (which I would hope) then my guess is more like 140-160k. You can achieve the look cheaper, but buyers will see lower quality. The drywall, painting, floors, electrical can add up quickly. If they get 435K for it they still made a nice return.
Annony, please post links of 3 BR townhomes scattered throughout LP… and I’m not talking about the deals that are in the far northwest “LP” near Clybourn.
This guy anonny is so in love with ELP it makes me want to puke.
SO – you are sadly mistaken on the costs of renovating. If you have your own crew (as most renovators do) you would be surprised at how inexpensive renovating actually is. Buying direct from suppliers is a HUGE eye-opener – the mark ups at retail centers is amazing. Also, there is very cheap labor out there (as long as you have a great contractor).
Clio – I was trying to convey that when looking at all the information the seller might do well to deomnstrate how much effort was put in. The buyer could then understand why the price went up relative to the market going down and fight buyers remorse. It isn’t going to sway the spothisticated buyer to be sure but isn’t the main thrust of your assertations that buyers are not sophisticated. If you can’t beat em – at least market effectively to them.
JP$-
Have you never actually been to Lincoln Park? It’s hard to spend any amount of time around Oz Park or up and down Webster, Larrabee and the surrounding streets without seeing the multiple townhouses scattered about.
Or is there a particular kind of townhome you’re thinking of?
I don’t know, RV – although it is interesting to see the transformation, most buyers don’t want to see how terrible the house looked before. I think you want to avoid anything negative about the property when marketing it. Also, if you show before and after pictures, potential buyers might start feeling “stupid” and think that they should have just bought it before and done the work themselves. All told, it is a better strategy to stick to the most positive aspects of a property when selling. Believe me, I have been down this road many times.
Clio I’m thinking of redoing my kitchen myself, you mentioned that places like Home Depot, have huge mark ups. Where do you recommend purchasing from?
Gescob, there is a great supplier in Burr Ridge (right off of I55). Good selection of cabinets and great selection of granite/marble. I will get back to you with their name/phone number when I get home tonight.
Gescob, we got great deals on tile and granite at Tile Outlet on Fullerton (just west of the expressway). ]
Now that we’re on the subject, we’re thinking of cabinet re-facing in our small kitchen. Any recommendations?
Life goes by pretty quickly, Bob. And a large portion of that life that isn’t spent working or sleeping can, if one is so inclined, be spent outdoors. Accordingly, to the extent possible (as dictated by financial and/or family circumstances), shouldn’t one live in the nicest possible areas?
On a larger scale, at least in this country, such areas might include various spots along either ocean coast, or certain mountain towns out west, depending on one’s interests and temperature preferences. But if Chicago – the city, not the burbs – is where one chooses to (or must) make a life, it seems hard to deny the benefits of living in a few particular (and most expensive) parts of the city, all of which are within a pleasurable walking distance to the park/lakefront.
And if the park/lakefront is not one of the leading, if not THE paramount upside, to living in Chicago, then what is? The weather? The government? The crime? The taxes? The public schools? Those are all aspects of life in Chicago that this guy Bob routinely rails against.
anonny, you are absolutely right – life is short – way too short to be waiting out the market and putting your life “on hold”. I always tell the younger people I work with to keep looking and, if they see something they like and can afford, jump on it and don’t look back. If you are going to live there for a long period (over 10 years) you WILL almost certainly do OK. More importantly, you will have peace of mind…
Clio et al, I also echo Gescob’s question..??
Fair enough Clio – I’m an info/data junkie – I’d probably ask out of curiosity.
RV – for what it’s worth – I am too. I love seeing the before and after pictures but once, when I was living in an “after” house, I couldn’t help but think about the “before” pictures and it really creeped me out knowing that I was eating in a kitchen that had been infested with mice/roaches just months before.
“peace of mind…”
really dude? you’re a doctor?
clio – if they did this for under 100K it will show up in the quality of the work and fixtures. I do know the prices at distributors and just finished a rehab. Yes, people can hire cheap labor but I would hope that someone doing a “nice” rehab wouldn’t.
“And if the park/lakefront is not one of the leading, if not THE paramount upside, to living in Chicago, then what is?”
1) Employment prospects.
2) Excellent male-female ratio (for guys at least)
3) Bob’s basket of goods & services is relatively low here (housing aside).
4) Architecture.
#2 might hold true for gals too dunno. I see your preoccupation with living right near the park (and the attendant crowds), however it sounds like a broken record to those of us who don’t value the same things. I’d rather have a place a couple miles inward in any case.
Illegals, people who can’t speak English…..it’s called selling out your country for a buck, but it’s the only way to compete. Just like Americans have outsourced their knowledge and technology to Chinese manufacturers, the American here at home gives away all his skilled tradesmenship knowledge to the illegal, thereby cutting off his future offspring’s nose to spite his face.
“Also, there is very cheap labor out there”
PS SO: I am in agreement with your total rehab cost number, I only threw out the original $100K because it’s always easier to err (on a blog) on the better side of the issue.
““peace of mind…”
really dude? you’re a doctor?”
sonies, I don’t get the point you are trying to make.
Gescob on November 30th, 2010 at 1:29 pm
Clio I’m thinking of redoing my kitchen myself, you mentioned that places like Home Depot, have huge mark ups. Where do you recommend purchasing from?
+1, I’m also in the market.
http://finance.yahoo.com/news/Eight-million-consumers-stop-cnnm-475088648.html?x=0&sec=topStories&pos=6&asset=&ccode=
bottom is in?
lol
I just want to second Bob about this:
“#2 might hold true for gals too dunno. I see your preoccupation with living right near the park (and the attendant crowds), however it sounds like a broken record to those of us who don’t value the same things. I’d rather have a place a couple miles inward in any case.”
I won’t start up an entire debate about it but I don’t value those things either. Everyone values something different. Not everyone wants to be near the lake.
There are days when the park and lakefront are packed (for good reason), but I must say that, more often than not, I find myself wondering why the park and lakefront are so sparsely populated. Perhaps I’m frequenting the less popular areas.
If the park and lakefront are not valued, what is it about life farther inland that is so attractive (aside from the obvious appeal of having a nicer, bigger home)?
“If the park and lakefront are not valued, what is it about life farther inland that is so attractive (aside from the obvious appeal of having a nicer, bigger home)?”
Proximity to Kennedy. And grocery stores and retailers such as Target, the “super” Jewel (e.g., on Ashland) or Costco. And metra, for those further south.
Believe it or not there are far better parks for kids in the north side that aren’t immediately on the lake.
I find that people who aren’t originally from Chicago tend to be overly obsessed with the lake for some reason. Few, if any, of these people actually have boats or spend any actual time on the lake, mind you.
annony said “…but I must say that, more often than not, I find myself wondering why the park and lakefront are so sparsely populated. Perhaps I’m frequenting the less popular areas.”
Are you hanging out in the Montrose bird sanctuary at all hours of the night?
I think people are forgetting the overarching theme of Chicago’s current real estate market – fringe locations are getting destroyed as nobody needs to buy in anything but a prime location. A place like this, with the el running right behind it all day and night, will languish.
The flipper should and will get crushed.
I find that being a few blocks away from the lake gives you greater access to nightlife, restaurants, and shorter commutes to the el, which are things I value.
I also value views, so I’m not doing myself any favors with the above strategy.
The lake, especially the southern near north side part, is for new transplants and tourists. Anonny’s fascination with this section basically outs them as one of those.
Right up there with Garrett’s popcorn.
I think that proximity to the lake is great even though When I used to live on pine grove i rarely took advantage of the access. The downside is that in the winter ill take that mile inland almost any day. Burrrrrr…..it can be extra cold there in January!
“I think that proximity to the lake is great even though When I used to live on pine grove i rarely took advantage of the access. The downside is that in the winter ill take that mile inland almost any day. Burrrrrr…..it can be extra cold there in January!”
I don’t miss living on the east side of Sheridan in Rogers Park for that very reason alone. It felt like forever waiting for the car to warm up in January. I swore never again to buy a V4 engine.
I don’t understand why it feels so much colder by the lake – you guys realize that it is supposed to be WARMER by the lake (because the lake is 32degrees while the air temp is usually lower than this) – but I agree it FEELS colder near the lake.
Its called the wind chill effect clio as there are no ground objects to buffer the winds at ground level. Wind chill affects are actually a very well understood and documented weather phenomenon.
Additionally surfaces of water change temperature faster than surfaces of ground, causing what are called lake effect winds, clio. This is also a well documented and understood weather phenomena.
Well, with all the hot air you blow, we should encourage YOU to move to the lakefront to counter the effects!!
Yes, yes, you guys have it figured out, you Chicago natives you. It’s far, far better to live a mile or two west of the park and lakefront. All those stupid idiots, building their mansions and grand buildings in ELV, ELP and the GC, they were just a bunch of transplants. Gosh, transplants have been so stupid for at least a century now, and they STILL don’t get it, do they, as they continue to pay top dollar to live so close to the park and lakefront…when the REALLY, REALLY good living is to be had a mile or two west. Haven’t those morons, from a century ago through today, SEEN HOW NICE the expressway is? Who were the dolts who decided to put Latin and Parker along the park, when there are far better parks on the northside that aren’t along the lake. It was one thing for the elite of Chicago to develop their neighborhoods in ELP and the GC a long time ago, but now, with all the splendor to be had at the likes of COSTCO, and SUPER TARGETS, times have changed. Plus, it’s practically like Maui out by the expressway in the winter.
wait, and I am Eric Cartman? please see above rant…..
“It was one thing for the elite of Chicago to develop their neighborhoods in ELP and the GC a long time ago.”
Neighborhoods change (and will continue to change). Remember, the rich chose to first settle on the south side in the Prairie Avenue district (the Pullmans and Marshall Fields lived down there) and that neighborhood went into disrepair.
Have you ever driven the Boulevard system? Most of it is not located anywhere near the lake- yet that is where the rich also chose to build their lavish houses. They were built on and around some of the cities grand parks that were part of the grand plan. Many of the greystones still stand today- even in neighborhoods you would not want to live in like Douglas Park and East Garfield Park.
What about the mansions around Wicker Park? That’s nowhere near the lake- yet they built them there over 100 years ago.
You can’t assume that the locations the wealthy live today- is always where they have wanted to live (or always where the “best” neighborhoods have been.)
I luv, luv, luv, the lake and sail out of Montrose harbor. In the summer months, I’ll often ride my bike or take the bus from North Center to the lake to avoid parking/congestion. That is generally why I prefer to live inland and commute to the lake — it’s a cluster F of people and vehicles. Also, I prefer to bike the N branch river path if I’m riding. The lake path is unusable except far off hours. Briefly considered high-rise LSD living once, but, meh…
Not to mention that areas like the Gold Coast and Lincoln Park were pretty seedy in recent times.
“Proximity to Kennedy. And grocery stores and retailers such as Target, the “super” Jewel (e.g., on Ashland) or Costco.”
I guess if I had the choice to live near big box stores or the beach, zoo, conservatory, nature boardwalk, and 17 miles of continuous biking/running paths, I’ll choose the latter every time, but I know people are all different.
“You can’t assume that the locations the wealthy live today- is always where they have wanted to live (or always where the “best” neighborhoods have been.)”
You can ABSOLUTELY assume that East Lake Shore Drive, Astor St, Bellevue, E. Elm, Gold Coast, East L.P. are ALWAYS going to be attractive to wealthy people (just as Hinsdale, Oak Brook, Winnetka, Kenilworth, LF in the suburbs). In fact, these areas are becoming more attractive to people because people are nervous about buying in other, less well established enclaves. They are now willing to buy the smaller house/apt in a better area in order to ensure that their property values will keep up.
Addendum; the further South (Northside) the worse it gets. I mean, North Ave is Schaumbago. Back in the ’80s in high school, we used to hide by the horseshoe after hours, drink, party, build campfires in garbage cans, hide from the cops on the rocks (much rougher hood back then). Nowadays, it’s a great harbor to day-sail from. Fishing and the bait shop are cool, and the bird sanctuary is cool. Miss the old breakwall though — Montrose Rocks, as it were 🙂
1816 N Bissel closed for $440K early this month (and was under contract in less than 20 days). It had a renovated kitchen in 2007 and was in good shape, but not near as nice as this renovation at 1814 N Bissel. If comps mean anything, this “flipper” will be fine.
Another far less renovated unit at 1818 Bissel sold for $418,500 earlier in the year.
Serious buyers looking for a basically brand new home won’t be deterred by the fact this person paid $220K and renovated. The market is the market, and if this is the best under $450K in Lincoln Park, than it will sell within 5% of list price. If people are worried about giving a “flipper” money because he/she won the lottery on buying this place for $220K and then had the know-how to renovate, than they should buy their own home and renovate.
“You can ABSOLUTELY assume that East Lake Shore Drive, Astor St, Bellevue, E. Elm, Gold Coast, East L.P. are ALWAYS going to be attractive to wealthy people (just as Hinsdale, Oak Brook, Winnetka, Kenilworth, LF in the suburbs).”
You are so wrong clio. You know nothing about history. You cannot assume these neighborhoods will look anything like they do now even 20 years from now. As has been said many times on this site- in the 1970s people were scared to send their kids to DePaul because the area was NOT good. It was rough and downtrodden. That was just 30 years ago.
Also- you cannot assume certain suburbs will maintain their cache. Olympia Fields was one of the most prestigious suburbs in the Chicago area (ditto with the Homewood/Floosmoor area.) Why do you think they built one of the country’s most famous golf courses there? But is has not held up as a haven for the rich (and neither have property values.)
There are tons of neighborhoods like this. Again- drive the Boulevard system and look at the mansions that line the streets- many of them now boarded up. This is where the rich once lived.
“Serious buyers looking for a basically brand new home won’t be deterred by the fact this person paid $220K and renovated.”
Eric- I agree with you. Buyers want brand new. They don’t care how much the renovator paid. If it has the shiny new kitchen and baths they will buy it.
sorry for misspell of Bissell, I like my Bissell’s with one “L”.
“You cannot assume these neighborhoods will look anything like they do now even 20 years from now. ”
You can ABSOLUTELY 100% assume that Kenilworth, Winnetka, Hinsdale, Oak Brook, East LSD, Astor St as well as other wonderfully located areas/buildings will still be the premier areas in 20 years. Absolutely, positively – I would wager any amount on that. There are billions of dollars in chicago and many many many people have MILLIONS AND MILLIONS of dollars invested in these areas – believe me, nothing is going to happen to them. In fact, I am telling you, these areas are going to get more and more expensive to live in (especially as OTHER areas continue to decline). It happened all over Europe and Asia – the separation of classes. Bucktown, Wicker park, WLP, Lake View, S. Loop ARE probably going to decline – which, again will make those other areas MUCH more desireable.
In the suburbs, while people were previously looking at Downers Grove, Elmhurst, Willowbrook to buy 1 million dollar houses (because they could get a little more for their money) now are looking at Oak Brook and Hinsdale because they know that the value has held in those towns. It is crazy and very interesting to see how this all plays out in 5-10 years.
“Serious buyers looking for a basically brand new home won’t be deterred by the fact this person paid $220K and renovated.”
Yes, yes they would. I’m sitting on a substantial reserve of cash with the intention of purchasing. I also have a close friend (I’m sure everyone does these days) who is/was a successful custom home builder since the early 90’s whose business line hasn’t rung in 24 months. Since, clearly, raw inventory in desirable locations is available for %50 of the finished asking price, why wouldn’t you buy raw and custom spec the rehab, thereby avoiding the speculative vig inflating the price and getting exactly what you want?
This is what I am planning to do in fact. It’s not a lottery if you don’t have buyers fever and can afford to wait. But, maybe you have unlimited resources and don’t care? Or have to move *right now*. There is *plenty* of inventory.
I would prefer to have a custom home for the same or, likely, lower price.
You know what I get a kick out of? The thought that buying living quarters, whether they be SFH or condos, are some sort of “investment.” It’s only with the bubble did a home turn into an equity asset that will never depreciate.
Keep on keeping on Clio. All it takes is for enough of the wealthy to get tired of maintaining their properties, sell out for less than what they paid (or their heirs will) and things will change again.
It’ll be interesting to see what happens once the old biddies that make up SOAR are gone.
Forgot the tags on my last sentence in the first paragraph.
I live near Depaul just east of Clyborn and south of fullerton and while it would be nice to be further east because of the train, I don’t think it is worth paying the same rent ~2k for a place with only one bath or no parking when the lake is an easy bike ride away.
I wouldn’t buy over here unless I had the coin for a McMansion on Jannsen and generally prefer east lakeview to anywhere in LP. But again, too many sacrifices to be made on amenities. My wife and are transplants from the east coast and prefer a more active street life. Sometimes wonder if we should have checked out Rivernorth.
If anyone has MLS access for rentals or any good ideas let me know! I want to move in May.
“There are billions of dollars in chicago and many many many people have MILLIONS AND MILLIONS of dollars invested in these areas – believe me, nothing is going to happen to them.”
Clio- when Marshall Field and Pullman built their mansions on Prairie Street, Chicago was what Shanghai is now- a place where fortunes were being built. Why did “they” allow Prairie Street to evolve into a slum only a few decades later? Because no neighborhood stays the same.
“My wife and are transplants from the east coast and prefer a more active street life.”
Joe- so you’re willing to consider East Lakeview then? That is much more dense/urban than where you are now. If you’re looking for streetlife (and 10 asian restaurants within like 2 blocks)- that’s where you need to be.
“There are billions of dollars in chicago and many many many people have MILLIONS AND MILLIONS of dollars invested in these areas – believe me, nothing is going to happen to them.”
I totally agree. There were some BEAUTIFUL and desirable neighborhood of very wealthy, very insulated wealthy folks in Havana. So wealthy and desirable that the social contract changed without notice. TG for Miami!
nelaq, I encourage you to BUY the next LP townhome that is available for $220K and renovate it for yourself. Is that what we are talking about? Otherwise I’m not sure I know what the Hell you are referring too. Are you going to build in a desired Lincoln Park location? I’d love to find you a lot then because I’ll make a ton of money.
I happen to be talking about this townhome in this Lincoln Park location. The new buyer of this home is going to get a basically new townhome for less than most people paid for comparable units this year in this location.
To answer your question, there are a lot of “rehab experts” here, but in my world there are very few people that want to (or even can) gut a single bathroom let alone renovate an entire home for their own residence or for speculation as this professional did. You should have seen the look on my friends’ and family’s faces when they saw home I bought… they were completely overwhelmed by the thought… to me, it’s fun!
Trust me, I preach to my clients value, buy low and fix up using my resources… but the majority of the buying market (and I’m talking about the market, not a single one’s own desire) will not do it. They will wait for relatively new and most don’t get their location or square footage because of it. Or, they sacrafice size, budget and any thought of adding value and appreciation to get their desired location.
$220k was the lottery for this ready, willing and able professional. A buyer for their primary residence could have been all in on this place for $320K less their down payment. That is really affordable relative to the neighborhood. But alas, this was the one that got away for many.
Eric,
Right, there is no way I would put on a tool-belt or even try to GC a job like this without creating a expensive disaster. On the other hand, I’m definitely interested in retaining a professional to manage the process.
Sounds like that’s the business you’re in and the advice to buy-low and fix-up is exactly on the mark I think. Since the raw stock is out there, why not buy the location and contract the heavy lifting? It’s certainly not free and you can’t have the cake until it’s done baking, but, you get the opportunity to participate in the design of the end product.
You also negotiate with the builder up-front. With this finished property you have to tease out what you think the value is and get involved in a bidding dance.
Oh, and all-in for $320ish, or more depending on how much you contract for, instead of working down from $449.9. I guess that’s the real trick. I do really believe there are more raw properties like this out there and am willing to risk it.
If it weren’t for the Lake, I would flee the midwest for one of the coasts. There is nothing else in the world quite like the Chicago lakefront, and its associated parks and bike path. I always give a nod to Montgomery Ward and the other civic leaders who fought to preserve the Lakefront for the public.
I regularly bike, swim, kayak, and x-country ski. I eagerly await lake effect snow and full-moon rises. Back on October 26, when we had that freak storm, I saw a few water spouts funnel up from the lake.
danny – wow, I’ve lived here for much too long to not know about water spouts in the lake. I just did a few searches for images; that would have been cool to see.
With regard to neighborhoods changing – what everyone here fails to realize are 3 things:
1. Chicago wasn’t anywhere nearly as developed as it is today – that is not going to change. They are not making anymore land and they are not tearing down any skyscrapers. This, in itself, will insulate and protect many of the most desireable areas. The infrastructure of Chicago is already set – not the case in the past.
2. Lifestyles have changed immensely – in the past, there were nowhere near the number of expensive restaurants/bars/entertaininment/shops, etc. In the past, people entertained at home, and there were few shops their servants would go to. Do you honestly think that the condos/coops of ELSD/Ewalton are going to turn into slums? Give me a frickin break!!
3. The population keeps growing – demand for these nicer areas will always be there.
It is really quite basic and simple = the fact that you don’t realize this really surprising.
If you want more support of this theory – look at the older cities of Europe and Asia. Even through the recessions and class wars, the expensive parts of the city always stay “untouchable” – even if beggars are outside your window.
In the 1920s did anyone really think that the gorgeous luxury high rises they were building along East Lake Shore Drive and Lake Shore Drive would go into foreclosure and many of them simply become lowly apartment rentals? (with no “maids” or “butlers” living anywhere near there?) Because that’s what happened to most of those “luxury” buildings.
In fact, the Drake Tower was the first of the high rises to go into foreclosure.
“Trust me, I preach to my clients value, buy low and fix up using my resources… but the majority of the buying market (and I’m talking about the market, not a single one’s own desire) will not do it.”
95% of the buyers want move in ready. Put in a “new” kitchen (even just new appliances) and they will want to buy it. Don’t you watch any of the HGTV home shopping shows? If the kitchen has granite counter tops, they want to buy it.
I agree with Sabrina!!!
“In the 1920s did anyone really think that the gorgeous luxury high rises they were building along East Lake Shore Drive and Lake Shore Drive would go into foreclosure and many of them simply become lowly apartment rentals?”
Yeah – and in the 1800s they used leeches to cure many ailments. It doesn’t mean we are going to start doing that again!! Sabrina, I actually really understand why you may think the way that you do, but things have really changed and certain areas are absolutely positively insulated from a major downturn. This is not to say that prices in these areas will never go down, but we are not going to see the mansions of the Gold Coast or coops of ELSD turn into public housing/crack houses. It just isn’t going to happen – look at my reasons above.
clio you forgot reasons 4 and 5
4) People don’t mind the “diversity” of the inner city as much anymore
5) The suburbs suck.
Sabrina, Clio is much closer to being right then you are. You are not assessing history and the history of urban development correctly.
The most important points Clio made are that 1) this city is very young – really barely more then a century old and 2) we are not making cities like Chicago anymore. The examples you cite are only relevant to emerging urban development.
Failing to realize this only generates unnecessary fear and lost opportunities.
I think the areas most susceptible to significant downturns in valuations are either those areas that recently gentrified (think last 10 years, like Bridgeport) or those areas where a significant amount of development took place over the past 10 years (like much of River North, South Loop, West Loop).
Areas like the GC and ELP didn’t see a development boom and thus there is no huge supply coming online that there isn’t demand for. For them to experience a drop in valuations there would have to be a change in consumer preferences to different neighborhoods & I don’t see that happening.
Clio: “1….They are not making anymore land and they are not tearing down any skyscrapers….”
There is a considerable amount of vacant land in the City — most notably the 570+ acres of Lakefront property at the former U.S. Steel South Works site. There are many more multi-acre plots of empty land throughout the city, including ones adjacent to very desirable neighborhoods.
And skyscrapers most certainly have a defined lifespan, and will some day need to be torn down.
Clio: “3. The population keeps growing…”
Here are the historical population numbers for Chicago:
1930 – 3,376,438
1940 – 3,396,808
1950 – 3,620,962
1960 – 3,550,404
1970 – 3,366,957
1980 – 3,005,072
1990 – 2,783,726
2000 – 2,896,016
2010 – 2,746,590 (estimated)
The Prairie Avenue district had a very relatively brief heyday of about 25 years, from the 1870s to the mid-1890s. By then, the wealthy residents got annoyed by all the railroad tracks being put down close to their mansions, so they decamped to what is now the Gold Coast.
The GC has remained a stable and affluent area ever since, going on 120 years. That stability even spanned the 1960’s and 70’s, when nearby Cabrini Green was built, neighboring Lincoln Park and Old Town were pretty sketchy, and the city in general was losing affluence and cache. Although it’s true that no neighborhood is guaranteed a rosy future, the GC’s proximity to the Loop, the lake and LP make it a strong contender for remaining decent for the next decade or so.
danny – not true at all. your numbers are completely wrong. I need to do more research to find the true population of the city and chicagoland. Don’t be idiotic – do you really think that people are moving away from chicago and that the population is decreasing?!! Come on – give me a break!!
Clio… take up your beef with the U.S. Census Bureau.
The population numbers danny posted are from the US Census. The Census is completely wrong? Where else would someone find the “true” population of the city?
sorry danny – I didn’t mean that you were quoting wrong numbers – I just mean that the US census Bureau, like most other government agencies are completely inaccurate. God – some women in chicago probably don’t even know how many kids they have!! I wouldn’t be surprised if the margin of error was +/- 25-30%.
“the GC’s proximity to the Loop, the lake and LP make it a strong contender for remaining decent for the next decade or so.”
And in 2020, what then? All the rich folks in the GC, along with all the merely affluent folks in prime LP areas, are they just going to disappear?
Let me share an insight that a very successful guy expressed to me a couple of years ago, when things were really starting to go off the economic cliff (the guy is a doctor, but made his millions investing in real estate and other business ventures). His view in a nutshell: Either things will improve, or they won’t. If they improve, people from the upper-middle class and above will end up even better off. If things get worse, everybody is screwed, including the well-off, only they will feel it a little less.
So, doom-and-gloomers and CC, if things get better, what will areas like the GC and LP look like in a decade? And if things don’t improve, or they get even worse, what will life look like everywhere besides the currently prime areas?
I agree that the numbers danny quoted are from the census bureau, but you guys really have to ask yourself: if the population was decreasing so much from 1970-2010, who were all of these people that bought the tens of thousands of NEW construction units built during this time period? Believe me, they were not all investor units or in-towns. The census bureau has a HUGE task and many people (especially renters) NEVER fill out those forms. God – does everyone believe everything they hear and read?!! Good Lord – maybe we should get back on the education/school topic – I never realized a good education was so important!
It does seem counter-intuitive that the population decreases while new housing keeps getting constructed. Back in the day, many more people (multiple generations) lived in a single housing unit. Nowadays, each kid get’s his/her own room.
Clio – taking aim at renters for being a group of slackers is getting old. It’s obvious you prefer to take a bourgeois attitude to all that can’t or won’t buy homes, so that means we all must be a bunch of knuckle dragging morons who can’t be arsed to do a simple thing as count ourselves into a census. Get real.
Oh, and don’t start trying to make excuses for yourself by saying you’re a landlord. So what? You’re still the property owner, and not the tenant.
No no anonemoose – please don’t think I am taking aim at renters. I am just stating that many of them will not fill out census forms (maybe they don’t plan on staying for a long period of time – maybe they don’t understand that they, too should be filling out the forms). Believe me, a lot of homeowners are also delinquent about filling out the census forms. Most of my friends don’t want ANY of their information out there and many of them don’t want to take the time out to fill out the form if there is nothing in it for them. I really wonder what is the percentage of people that actually fill out these forms. I would guess that it has to be near 50%.
” really wonder what is the percentage of people that actually fill out these forms. I would guess that it has to be near 50%.”
clio, let me help convince you that you are smarter than everyone else by posting the actual facts that to all other eyes appear to contradict you:
http://2010.census.gov/2010census/take10map/
G- Are you kidding me?!!! Do you actually believe everything you read and hear?!! I thought you were smarter than that. As a “numbers” person, you should know that while numbers don’t lie, people DO. The government HAS to make it seem like the census was a success to justify the enormous amount of money they spent on it. How the fuck would they come up with the number like 74% of people participated?!! That would mean they have to know the population beforehand – come on – use your common sense.
Hah! My neighbors are a bunch of tools I can’t believe 70-some odd percent returned that.
I bet if the government went around telling everyone to report to a re-education camp 70% of my sheeple neighbors would show up as well.
“I thought you were smarter than that.”
Just another bad call on your part.
Ok – G – at least you are funny (and a good sport).
Clio,
Did you ever provide the name/location of your supplier in Burr Ridge. Inquiring minds want to know. Thanks!
shopalot- sorry, totally forgot. The name and address are:
JPD Kitchen Depot, Inc.
15W650 S. Frontage Rd, Suite B
Burr Ridge, IL 60537
630-734-9899
It is a warehouse and you can pick out your granite/marble piece as well as look at the supply of cabinets they have.
They are very professional and reliable
Greatly appreciated Clio!!!
“It is a warehouse and you can pick out your granite/marble piece as well as look at the supply of cabinets they have.
They are very professional and reliable”
Should a developer/contractor ever be buying stuff from home depot? Is it a really bad sign if they are, or are there reasonable circumstances for doing so?
Given that the neighboring townhome at 1816 N. Bissell sold less than a month ago for $440,000, I would say that this place is pretty fairly priced.
http://www.redfin.com/IL/Chicago/1816-N-Bissell-St-60614/home/28630267
1816 has a different feel to it, renovated in 2007. That said, you can’t get a much better comp than the neighboring, mirror image property.
“Should a developer/contractor ever be buying stuff from home depot? Is it a really bad sign if they are, or are there reasonable circumstances for doing so?”
Absolutely – Home depot is a great place for many reasons:
1. Return policy – awesome
2. credit line – huge
3. hours – great
4. accessibility – wonderful (many locations)
5. selection – OK – but for standard items pretty good and worth the convenience!
All told, I think it would surprising if any contractor/developer DIDN’T use Home Depot for a few things.
Interestingly, they have a GREAT policy on perennials. I bought 640 + 6ft arbovitaes there a few years ago to line my property. My landscaper was going to charge me 100/plant. HD had them for 50. In addition, there is a 1 year guarantee so even though I have to replace 20-25/year, the cost is REALLY low because of this guarantee.
“In addition, there is a 1 year guarantee so even though I have to replace 20-25/year, the cost is REALLY low because of this guarantee.”
Sounds like you need a new gardener! Unless you enjoy being laughed at by the Home Depot employees when you pull up with your 20-25 dead trees…
No Jon, that is the price of home ownership in the suburbs… and actually 20/650 (3%) isn’t that bad for year-to-year survival.
Also, I’m sure the HD employees are not laughing at me – they actually are always very curious and actually have driven by the house to see what 650 arbs look like on one property!!
clio: You are taking a very simplistic view of the census numbers based on your own personal experience (kind of a trend with you, eh?). While I generally agree that the census undercounts urban areas (and specifically certain demographics like minorities and illegals), your conclusions based off of new construction and home purchases is way off base.
Consider that the average family size is way down in the US compared to 50s-70s. So even if we had the exact same number and size of units, the number of people populating them–on average–is down. Or that unit density is much lower today than it was in the past. When a new condo building or mcmansion goes up, it is generally replacing older housing stock. On average, the new construction is built for more square feet per person than the older housing stock. Or consider that immigrants are increasingly moving to suburbs, not the city.
Now there are a number of data points that will contradict my above analysis. Especially in “hot” areas of town where vacant lots or short, low-density buildings were being replaced by high rises. But you need to understand that those data points are outliers, not the average case. On average the city is getting more singles and smaller families, is getting built with roomier units and is getting less dense. Thems the facts. And no amount of “OMG, don’t trust the government!!” is going to change that.
Bob: “Hah! My neighbors are a bunch of tools I can’t believe 70-some odd percent returned that. I bet if the government went around telling everyone to report to a re-education camp 70% of my sheeple neighbors would show up as well.”
It must be exhausting to live in constant fear of the government and in a constant state of smug superiority to your fellow man. I know it exhausts me…
I am a property manager Lincoln Park. Our company manages about 1,000 rental units. I would estimate that about 90-95% of our tenants filled out their census forms. We provided the census workers the missing data by proxy for those who did not complete the forms.
“Are you going to build in a desired Lincoln Park location? I’d love to find you a lot then because I’ll make a ton of money.”
Hi Eric –
I am interested. Can you please provide the current rock bottom price for empty lots or teardowns in the following areas:
Lincoln Park
Lakeview
Uptown
Edgewater
North Center
Logan Square
Wicker Park
Albany Park
Avondale
Jefferson Park
TftinChi –
I agree with you – but then you have to go back to the initial argument of (?) who stated that because the population is decreasing, demand will also go down. Thank you for proving that population change and demand/real estate prices don’t necessarily correlate 1:1
For all those CCers who constantly question where the money is and how are people going to afford this and that – just look at the stock market. Billions were made in the past 4 hours. Several individuals made 6 figure plus in just hours. There is CRAZY fast money to be made if you know what you are doing (and are a bit lucky). THIS is where money is made and where it comes from. Real estate is where you spend it.
“Also, I’m sure the HD employees are not laughing at me – they actually are always very curious and actually have driven by the house to see what 650 arbs look like on one property!!”
Wait! You left out the best part about how they then return to work and talk with all their co-workers about how cool it looks and what a lucky, lucky guy you are. Then they sit in eager anticipation of a return visit from you so that they can see just what it is you will do next!!
“Also, I’m sure the HD employees are not laughing at me – they actually are always very curious and actually have driven by the house to see what 650 arbs look like on one property!!”
You should make some of them valets for you: (a) they don’t laugh at you and (b) they can drive.
“You left out the best part about how they then return to work and talk with all their co-workers about how cool it looks and what a lucky, lucky guy you are.”
Incorrect, they are the lucky ones, and so happy. But, enough already, this is not all about clio…
Clio: “Thank you for proving that population change and demand/real estate prices don’t necessarily correlate 1:1”
I definitely don’t think they correlate 1:1, though there is a relationship. I think demand and prices have a lot more to do with “desirability” (an extremely difficult thing to quantify), scarcity of land and/or units, and overall confidence in housing prices. There are a number of areas in Chicago with the first two, but I think the third is dragging all markets down right now.
And on your points about desirable neighborhoods remaining desirable I largely agree with you. I don’t know for certain how the future of Chicago will play out, but I think it will be a lot different than the changes it experienced between its founding and the 1990’s.
Jon – actually, they probably do that! You guys on this site forget that success is mostly psychology (with, of course brains/intelligence and hard work accounting for lesser amounts). If you make the employees at HD (or wherever) feel appreciated and respected, they are going to reward you many times over. It especially is easier if you have a lot of money/fame/popularity/good looks because most of those people hardly ever give the employees the respect that they need/deserve (so if someone in that situation gives the employee respect/recognition it is that much more special.
70% of all stock trades are done by computers running algorithms that don’t care about fundamentals, boards, P/E ratios. They buy when the price is going up, they buy when going down. It’s rigged, it’s a casino. The stock market is a casino. Retail investors have been steadily withdrawing money from the stock market since 2008. It’s a joke. How can GS, Chase, etc, make money EVERY DAY they trade in a quarter? EVERYDAY – they don’t lose money. It’s a rigged casino.
“#clio on December 1st, 2010 at 12:25 pm
For all those CCers who constantly question where the money is and how are people going to afford this and that – just look at the stock market. Billions were made in the past 4 hours. Several individuals made 6 figure plus in just hours. There is CRAZY fast money to be made if you know what you are doing (and are a bit lucky). THIS is where money is made and where it comes from. Real estate is where you spend it.”
Just when I think you’ve outdone yourself, you do it again. Amazing.
“#clio on December 1st, 2010 at 12:40 pm
Jon – actually, they probably do that! You guys on this site forget that success is mostly psychology (with, of course brains/intelligence and hard work accounting for lesser amounts). If you make the employees at HD (or wherever) feel appreciated and respected, they are going to reward you many times over. It especially is easier if you have a lot of money/fame/popularity/good looks because most of those people hardly ever give the employees the respect that they need/deserve (so if someone in that situation gives the employee respect/recognition it is that much more special.”
true, HD – but that IS where the money is made. That money will be used to pay traders/brokers/investors and so on – that money then will be used to buy real estate. It all comes around. The huge gain in the stock market is good news for everyone!!! (oh… except the bottomfeeders and negative neds who are still waiting for the sky to fall).
The sky has already fallen clio, you just haven’t gotten the memo yet.
“It all comes around. The huge gain in the stock market is good news for everyone!!!”
The “market” is currently serving to concentrate money in fewer and fewer hands. That is most definitely not good news for everyone.
“The sky has already fallen clio, you just haven’t gotten the memo yet.”
He’ll get another chance to witness it. Sep – Nov sales are falling similarly to historic lows as in 2008. The decline in CS for the period of Sep 08 to Mar 09 was from 145.57 to 124.77 (-14% drop.)
Whistle past the graveyard, folks.
“He’ll get another chance to witness it. Sep – Nov sales are falling similarly to historic lows as in 2008.”
Seriously, though – who cares? Are these numbers PERSONALLY affecting you? They certainly are not affecting me in any negative way. I know that I sound very flip and callous, but when it comes down to it, you have to personalize the numbers and really ask yourself do they have any bearing on your life. Well, they don’t in mine (despite being HEAVILY invested in real estate). I seriously have not seen any drops in rent/purchase prices in any of MY places (and of course I know that there is a downturn in all areas – I am not questioning that) – again my point is that each person reading these threads should ask them how these numbers personally affect them. I think you will be surprised at how many people do not really care about these numbers and do not base their decision to buy on these numbers/data. The majority don’t – period- they buy when they feel they can afford it and when they see something come on the market that they like.
G- I actually would LOVE to see the bottom fall out of real estate. I would sell all my places at a loss (take the tax deduction) and buy even nicer places at a very low price. There is opportunity in every down turn. I just don’t see this big downturn happening. Real estate prices are definitely going to go up in some areas by next spring (sure, in some places they will go down) – but, by 2012-2013, you will see a positive turn in almost all areas.
Alright, well if anything at least the banter on here serves to enlighten current market sentiment, glad there’s some diversity of thought.
I guess I’ve got my investment objectives sorted (suppose i should probably come up w/ a plan B invade the market doesn’t come to me as much as I am expecting – hoping – it will). I’ve got a few questions re: timing of the whole process given my market expectations, weighing carrying costs (really, just the value lack of value of assessments) vs investment objective, etc. Anyone recommend a resources for further insight?
Sabrina, have you ever had – or contemplated having – sort of an ‘open mic’ question and answer/open ended discussion session? It is just my initial observation that often the best value added by CC comes in the comment section. The comment section is uasually relevant to the original post for approx 25 comments before the conversation gets on another, equally interesting topic. Seems like you’ve got a community that would be perfectly suited for a well moderated message board for organized, focused discussion. Just my .02
Milkster,
I will be happy to set up an appointment for you in my office. My contact info is readily available at the link.
Milkster,
Do you have a lot of cash saved up to fund the construction? Construction loans for individuals are Very difficult to obtain these days.
Hd- the market is not a casino… there is no house to take all your money, its either there or its not
if you aren’t a dumbass and follow the herd mentality or try to be some pro day trader (aka perpetual ass loser) you will do fine in the stock market
Think about how many people have you known to become “rich” from gambling? Then think about how many people have you known to get “rich” from investing in the stock market?
Sonies: “Hd- the market is not a casino… there is no house to take all your money, its either there or its not”
Bernard Madoff was a Chairman of NASDAQ, and his firm was the largest “market maker” at NASDAQ. Goldman Sachs has a proprietary electronic trading algorithm which gives them an unfair advantage over everyday schmucks like you and me.
I vote with my feet, and I’m staying the hell out of the casino.
“I vote with my feet, and I’m staying the hell out of the casino.”
not smart, danny. the stock market is where money is made – also it does not require manual labor/maint/ongoing expenses like real estate does. you need to be diversified. seriously, pick a few standard stocks and see how you do (you don’t have to invest your life savings). Schwab is a cheap brokerage account – merrill lynch is more expensive but they claim to have better brokers/advice givers – I have lost more with them than by doing my own transactions w/ Schwab – so I would go with schwab.
http://www.youtube.com/watch?v=WstJM_aNSj8
60 minutes high frequency trading story.
I’m cool with other people making gains on the stock market. It’s just not for me. My risk tolerance is different than most people. I accept the fact that I’ll probably be a working stiff my entire life.
” I accept the fact that I’ll probably be a working stiff my entire life.”
so will I – but it isn’t a question about working or not – it is a question of preserving your wealth. I know that it can be stressful at first – but try it with a few stocks (even a few hundred dollars). If you don’t like it or lose money after a year, then quit – but if you like it, are earning money/gains, then you can slowly build it up.
“Do you have a lot of cash saved up to fund the construction? Construction loans for individuals are Very difficult to obtain these days.”
Hi David –
I have a contact at Wells Fargo who can do lot loans and construction loans. If anyone wants the info, contact me at oakstbeachgrrl@yahoo.com. I’m looking into other options since the short sale I’ve been trying to buy has been in contract limbo for 5 months now.
The only hurdle to clear is that you have to have cash to buy the lot if there is a house on it which is in teardown condition. There is NO way around this that I could find. However, if it’s an empty lot, it’s no problem obtaining financing. And once you are ready to build new, it’s no problem obtaining financing. Also, if the house is in liveable condition with no violations, you can obtain a conventional mortgage.
It’s just a catch-22 if there is an existing house on the lot in uninhabitable condition. The reason it’s so cheap is because it’s crappy. Anyone who buys it is buying for the sole purpose of tearing it down. However, you cannot get a loan until the house is made liveable.
Under contract at $449,900 12/28/2010. Booyah, homerun, et. al, etc, etc…
Thanks for the update Eric. We’ll have to see what it closes at.
I have no doubt, given what I’ve seen over the last 12 months, that new appliances and having the place look shiny and new can go a LONG way to selling a property- even if it was a complete wreck previously.
Many people underestimate this renovation game that is going on. Buyers want “new” and they’re willing to pay top dollar for it- even if it’s directly on the El line and there is no way you would ever sit out on your deck or patio or open up your windows if you lived in this location.
It’s new!
I saw the interior and it was very well done. More up to date than probably 75% of the other townhouses currently on the market.
I still maintain that this was a gut rehab and not cheaply done. The builder still made a profit though.
So was there a $24,000 credit at closing due to the inspection results or did it not really sell at $425? Or was the initial “under contract” post a different buyer, which failed to close and this was the next offer that ended up closing?