Flip This Luxury Condo: The Elysian at 11 E. Walton
We’ve chattered about a bunch of flippers recently who have been buying foreclosed condos and single family homes on the cheap and then attempting to flip them (sometimes without any renovations.)
Some have been successful, some have not yet sold.
But now there is apparently a new breed of flipper: the luxury condo flipper.
Crain’s is reporting on a buyer at the Elysian, at 11 E. Walton, in the Gold Coast:
An options trader is taking a gamble on the Elysian Hotel & Private Residences, paying more than $7.25 million for a condominium in the Gold Coast skyscraper that he hopes to flip for more than $10 million.
Igor Chernomzav, a co-founder of Hard Eight Futures LLC, bought a 12,000-square-foot unit on the 56th and 57th floors of the 60-story tower at 11 E. Walton St., which also features a 188-room hotel, according to property records.
Mr. Chernomzav, 33, who paid cash for the five-bedroom, two-level condo, plans to remodel the unit and put it back on the market, according to Tricia Fox of residential real estate firm Keller Williams, which brokered the sale.
The asking price will be between $10 million and $11 million, Ms. Fox says.
This is the second unit Mr. Chernomzav has purchased in the Elysian, after paying a reported $8.18 million in March for a 52nd-floor unit, which he is also remodeling. Whether he also plans to flip that condo could not be determined.
These are prices rarely seen in Chicago real estate.
According to the MLS, no condo units, other than these two purchases, have sold for over $7 million in the last 2 years in the North Side/Gold Coast/Streeterville neighborhoods.
Even if you go down to $5 million, it’s still a rare sale which includes another property in the Elysian which closed in March and a sale in the Palmolive for just over $5 million.
Mr. Chernomzav has paid the highest prices for units in the Elysian, surpassing the $6.88 million that James McNulty, former CEO of the Chicago Mercantile Exchange, paid in January for a 7,400-square-foot condo on the project’s 37th floor, according to property records. Mr. McNulty didn’t return a call seeking comment.
Buyers have closed on 31 of the 51 residential condo units in the building, says developer David Pisor, who in November was forced to abandon a plan to also sell the 188 hotel units in the building.
Was this a good investment with the luxury market starting to show some life in Chicago?
Trader pays over $7.25 million for Elysian condo, plans to flip it [Crain’s Chicago Business, Andrew Schroedter, May 17, 2010]
If you have $15 mil in cash, and are clearly very successful trading options, why risk it trying to become Donald Trump? When do you have enough? Or is he just bored and likes being in the headlines? Making millions in options is too boring? I don’t get it
I guess you could be looking at it as a deep out of the money call option that never expires (well almost never).
Yeah, these options traders are major risk takers. I don’t get it. Is this the best use of his money? If it is then he must have lost confidence in his trading strategies.
http://www.paed.uscourts.gov/documents/opinions/07D0206P.pdf
He sure has an interesting idea with this project. Just how small is the market for a 10 to 11 million dollar condo? Is it possible that he is working with the developer? Was this property used as a way to infuse some cash in exchange for some equity in the entire project?
What a really stupid idea… buy an insanely overpriced place, then reduce the number of potential buyers that would be interested in such place by customizing it with your own tastes.
But props to a guy who has been so successful trading options… every time I do that I go crazy and obsess over them and well its just not as fun for me
It only takes one buyer, right?
instead of earning and spending his money, he should sit on blogs all day and comment about how other people spend their money.
I’m guessing Mr. Chernomzav already has a buyer or two in mind. (maybe he has ties to the Russian billionaire who bought the NJ nets or some other mega wealthy family that is looking for super deluxe chicago accommodations)
or even better brad, he should comment on the commenters.
Pretty awesome that he’s putting down cash, he probably fully knows it’s a big gamble… Obviously a risk taker, even his company has dice for their logo. It’s probably more about the thrill of investing that much money in one condo unit than it is about getting rich of this.
I fully endorse this kinda behavior, nothing wrong with rich crazy bastards…
This is a gamble but maybe Mr. Chernomzav knows something we do not. Could he potentially convert these condos into an office? As stated, he already bought one other unit on the 52nd floor so he must knows something about the potential of the building before purchasing more units. I’d be interested to see what happens next.
Sometimes traders go big and just get it totally wrong.
He should buy the Castle overlooking the 90/94 highway.
I heard he bought this place for LeBron James.
Just a rumor…
“I heard he bought this place for LeBron James.”
The King should live in a castle. I know just the place…
I don’t get it. Why would he buy a place for Lebron James?
if he bought it with somebody in mind, lebron works for me. still I think he stays in ohio.
This is an spillover into Chicago of what has been happening in NY over the last few months. Wall Street types have started buying drastically chopped units, putting plans in place for renovations then listing them for some outrageous prices.
There is something these uber rich dudes are in on that we have yet to discover?
The issue that raises my suspicions about investing in such high dollar buildings is that the targets of these investors are not the newly constructed/in planning highly technologically advanced, chock full of amenities buildings. Instead they are the already established complexes that are a few years old and can take minor renovations.
While the cost of high end building materials has skyrocketed over the past few years, I don’t understand how or why they need such astronomical markups. Further, why such high listing prices for a market that is supposedly now non-existant?
It will be interesting to follow both markets closely over the next 6 mo – 1 year to see if their risks are paying off.
westloop- One fund manager thought he was going to flip a penthouse at 15 Broad St for 7M profit and it’s been on the market since Spring 08. I don’t know any person silly enough to buy a place and not check the public records to see how much less the original buyer paid for it a year ago. Even if someone is “Lebron-rich”, I would hope they aren’t wreckless enough to throw 7 figures out the window like that.
Anyone got any info on the supposed 8.5 million dollar purchase recently in the gold coast? I’d like to read morea bout that
“The King should live in a castle. I know just the place…”
Bahahahahahaha
Sounds like he’s hurriedly stuffing cash into high-end residential real estate, and doesn’t have the time or inclination to understand the Chicago real estate market. Perhaps he knows the stock market will have another steep decline near term. Nothing about this building suggests it’s a solid investment for a high-flier. Nothing about Chicago market conditions suggest that extremely expensive new-construction condos are a good short-term or long-term investment.
If he was smart, he’d put that money into a well-managed fund cherry-picking Class A office buildings, but these hedge fund guys always think they’re smarter than everyone else. Commercial loans are imploding everywhere, and for deep-pocket investor groups the pickings are good.
Construction costs have declined dramatically since Fall 2008. Contractor pricing is much lower for large projects. Nonetheless, construction activity has slowed significantly without signs of recovery.
“Construction costs have declined dramatically since Fall 2008. Contractor pricing is much lower for large projects. Nonetheless, construction activity has slowed significantly without signs of recovery.”
I strongly disagree with this statement. Having just completed that huge, ‘top of the line everything’ place NY, and drawing up plans for a similar project at the same price point, I can assure you quality material prices have NOT decreased at all over the past few years.
The logic behind escalating material prices, esp high end materials, is the realization that the wealthy cannnot be bothered with attempting to sell their current residences and do not want to buy in a questionable market at this time. Since the majority of buyers at this price level are constantly on the prowl for something new, the only alternative for them is to update their existing units with top of the line products and custom work.
So no, the construction prices for this level have not decreased.
The entry level properties are a different story however.
Westloop: I’m not referring to residential high-end appliances and residential kitchen/bath finish items. Chicago contractors’ and subcontractors’ bids have dropped dramatically since 2008 in reference to high-rise construction projects, institutional work, infrastructure projects, commercial/office tenant work, etc. Some work has been priced at cost to keep trades busy enough to remain employed. Clients’ budgets are purchasing far more construction value than before 2008 recession start.
Anyone care to speculate why this is a “trend” amongst the wall street crowd?
I can’t imagine what they could possibly know that would make this the best way to exploit it. Aren’t there maybe a dozen sales in this range per year in Chicago? There are surely better ways to bet on the high end real estate market than by doing this.
I really don’t see why he is doing this, if he wants to speculate on realestate why doesn’t he look at foreclosure/ short sales at the high end. This building sucks and there are better locations.
This is a high end building with great finishes. Have you been inside Valasko? Very limited residences in the building – I think around 50, and there’s a cool courtyard out front. Must be nice to have millions to buy such a place.
meh, this building looks like it belongs in atlanta. or museum park. the courtyard outside is kind of interesting. I got some shoes fixed at the cobbler across from the courtyard. he seems to do good work.
“Aren’t there maybe a dozen sales in this range per year in Chicago?”
Tay- I answered this question in the post. There haven’t been ANY sales in this price range (in condos) within Chicago in the last 2 years other than these actual sales. If you drop down to $5 to $6 million you get only like 2 sales.
The most expensive condo unit that I’ve heard of selling is the penthouse at the Palmolive which allegedly sold to Vince Vaughn for around $10 million.
If you even get a sale at $5 million in Chicago- that is big news. We are not NY or LA (or even SF) in terms of high priced properties.
Jamie Dimon, the CEO of JPMorgan, has been trying to sell his gold coast mansion which is listed around $10 million for several years.
you forgot Ty Warner buying the Chicago Spire penthouse for 40 million 🙂
Dave M,
The building design is terrible, the top in ill-proportioned and was valued engineered to the point that it looks terrible. Big deal about the finishes….. other buildings in better locations offer similar finishes. And yes I visited the building, toured it with the architect. Was not impressed….
“you forgot Ty Warner buying the Chicago Spire penthouse for 40 million”
Yeah, well, The Donald supposedly bought a $20+ million in his own building a few years back but we haven’t heard anything about that either.
I only count the properties that have actually “sold” (buying pre-construction is not the same thing.)
Other than these units in the Elysian, nothing has sold at this price point in a condo in years. Not even in Trump Tower (that I have seen.)
so it seems this trader knows something or has done too much coke. which scenario is more likely..
I know him personally, he is a very humble person, does not show off and does not like to be in the public eye either. He is very well to do and that real estate move will not effect his bottom line at all.
Also CH, he does not use drugs of any sort, and is a very good hearted practicing Jewish man. People are too quick to judge others.
-FK
Are these risks in investing in high-rise condos? Any affect to homeowners if the 188 room hotel goes under or on strike?