Flip this Condo: 40 E. Cedar in the Gold Coast
There are several older condo buildings in the Gold Coast that were built in the 1960s and 1970s on Elm, Cedar and Astor.
Some of the units are quite large but they have the shorter ceiling heights and many don’t have in-unit laundry.
40 E. Cedar is one of those buildings. Built in 1968, the building has rental parking but no washer/dryers.
This unit has seen a complete renovation ala those television shows like “Flip this House” or “Property Ladder.” Unfortunately, this unit isn’t selling. The price has been reduced by $24,000.
The listing says the second bedroom “opens to LR w/french doors”.
Unit #4D: 2 bedrooms, 2 baths
- Sold in June 2006 for $250,000
- Originally listed for $389,900
- Reduced
- Currently listed for $365,900
- Monthly parking is $198 a month
- Assessments are $602 a month
- Central Air
- Prudential Preferred has the listing
What’s with the post? Is that a drain line? Or is it structural?
And doesn’t a br that opens to the lr qualify as either a “jr br” or a den? Shouldn’t this be a “junior 2 bedroom”? Or “one bedroom plus den”?
What’s this worth as a rental? $2000 at the bleeding edge, right? So, with that assessment, and assuming rental replacement (as one should for a smaller condo like this), it’s “worth”, what, $275-290k, maybe?
And they’ll have something close to $50k into interest and assessments when they hit the 2 year mark (which they almost certainly will at this point). Do you think they got the renovations done for $25k? So they’re looking at $325 as break-even, with almost $20k in realtor fees to pay?
Does anyone think it would have sold quickly for $330k last July? They’d have a much better annual return at that much lower price if they could have made it happen a year faster (not unreasonable, in my view). One more flipper Hog.
“What’s with the post? Is that a drain line? Or is it structural?”
We saw this unit at an open house yesterday. According to the realtor, the post is cabling (phone, at least) for the units above, and is not structural. There used to be a wall there, until the remodeling, and there wasn’t enough slack in the wires to re-route behind the refrigerator.
Gold Coast assessments are always a killer. That’s got to be a sore point for this unit. The flipper will be taking a well-deserved bath on this one. Its not as easy as it looks on TV.
I think it’s kind of cool–making the best out of a bad situation. Very disco.
Funny, circa 2005 I actually looked at this unit pre-renovation. The renovations are nice.
in re: anon’s first comment,
1. His basic analytical framework is right, in that they should have priced more aggressively (on the low side) earlier to move the unit and improve their return rather than blow it on interest.
2. I don’t think first-year rental replacement is usually priced in for investment condos; e.g. it’s probably “worth” closer to $315-320K, on the assumption that rental income will grow faster than expenses (e.g. assessments) will rise, so in the longer term (10 years out, say) the ROI gets quite pleasant.
In re: Gold Coast assessments, I assume this is largely just a function of the vintage of the buildings, with older buildigns generally having higher assessments. What this of course suggests is that these buildings have collective experience in dealing with maintenance costs; new construction buildings usually have their assessments set much too low as a teaser by the developer, and are thus subject to getting utterly creamed as the association gradually realizes the various ongoing and periodic expenses of high-rise maintenance.
I don’t know about that assessment forecast, Dan. There was a post on here about a Hyde Park co-op that was listed for something like $30k because the building is old and the assessments are like $1k/month if memory serves right so I think they depend on the building more than the neighborhood.
I looked at the county records on this. The outstanding mortage is $310,500 recorded in 12/06. So interest at 5.0% IO/ARM is $1293 per month plus assesment of $602 is $1,895 carrying cost per month for 16 months running. I assume the mortgage was purchase price plus rehab/cool disco pole. Owner is into it for $310,500 plus carrying cost of $30,332 or $340,832 and one cool pole with flecked glass in the middle of the kitchen island counter! I used to own across the street. Nice location but this one will not work out as rehab/flip.