Flipper Alert: How Long Can Flippers Hang On? 340 On the Park
340 On the Park, at 340 E. Randolph, in Lakeshore East, has been one of the more successful new construction high rises for flippers in the last year.
Unlike many other highrises, some flippers have actually flipped their units for decent profit in 340 OTP.
But not all have successfully sold. Many investors opted to rent out their units and wait for the market to recover.
And even in the mighty 340 OTP, the stresses start to show when the market times mount.
Closings began in the building in July 2007. That means some owners will have been holding onto the unit, and paying mortgage and assessments, for nearly a year.
Unit #406, a north facing unit on one of the lowest floors in the building, has been for sale off and on for months.
It originally closed in July 2007.
It has now been reduced nearly 30% and is the cheapest unit for sale in the building.
Unit #406: 1 bedroom, 1.5 baths, 1081 square feet
- Sold in July 2007 for $314,000 (I believe this includes the parking spot)
- Originally listed in October 2007 for $620,000
- Reduced several times over the winter
- Finally listed at $499,000
- Listing withdrawn in January 2008
- (Spent several months not on the market)
- Re-listed in May 2008 at $499,000 (not sure if parking was included in this price)
- Reduced
- Now listed at $449,000 (parking $50k extra)
- Assessments of $285 a month
- Re/Max Exclusive Properties has the listing
Current stats on the building:
- 15 for sale
- 12 for rent (on the MLS)
Some units may be both for sale AND for rent.
The activitiy in the building is very healthy for a new construction building. Does it really make sense to highlight a unit that has not sold simply because the asking price was unrealistic? 100% return on a flip is pretty greedy. Heck, they are still asking for a 50% return.
If you would like me to send you some other properties that have sat on the market (not because it is a bad market) because they are OVER PRICED i will.
Steven Heitman,
Do you have actual MLS listings that show properties that flipped successfully in this building? I would love to know what realtors they used whom helped them flip! You can ask for my email address from Sabrina.
Sabrina – Please share my email address with Steven if he asks you for it.
Listings like this show that the bottom is still far far away…
“What people are most scared of is looking like a schmuck,” Toll Brothers Holdings Inc. Chief Executive Officer Robert Toll said at a conference in New York last week. “What do I want to buy a home for and next year be looking at 10 percent less asset?”
Originally sold for 315k? Its buildings like this and 600nf that I hope have some foreclosures in the low end..I could afford this in a couple years at 280k! Beautiful building and unit–tastefully done.
On this unit it appears the flippers only ‘strategy’ is to separate out parking to try to look cheaper.
I completely agree with homedelete. One thing I keep telling myself is that the bottom is at least below the 2006 levels if not lower. 40% higher than 1 year ago is “NOT living the high life.” Even forgetting supply and demand for a minute and ignoring the condos coming online in the next few years, the cost of financing makes a price this much higher than last year unrealistic.
Who are the people biting at these prices? Everyone commenting on this site seems to agree that the condo market is massively overpriced.
Steven:
That’s the point. There are hundreds (thousands?) of units ALL sitting on the market because they are overpriced.
Why else has there been no successful flips in buildings like Avenue East and 550 N. St. Clair given those locations?
It’s all about the price.
I can show you examples in every new high rise building where units are sitting on the market (now for a year- in the example of this unit) because the price is simply too high.
Some units in this building HAVE flipped. It is among the most successful new construction buildings we’ve seen. But that’s a rarity in this market.
Steven,
Sabrina posted this building because it is a crowd pleaser. You will be hard pressed to find a person who does not think this is a cool building. It has location, views, amenities, and some insane prices.
Most people who visit cribchatter.com are most likely more well read on the subject on home prices, the national market, and the local market. People still do not do their home and buy on emotion. I have noticed that most posting on this site speak to factual pros and cons rather than the emotional element.
I do have one slightly rhetorical question that confuses me with 340 on the Park and other new buildings. Why would someone want an 1,100 sqft 1 bedroom when you can get a 2 bedroom with 1,200 in another building for a similar price. The typical 1 bedroom buyer is someone in their 20’s and 30’s. Most people this age cannot afford an 1,100 1 bedroom unit at the current prices per sqft in Chicago. People in their 50’s and 60’s will tell you they want a two bedroom so that people can come to visit or use the 2nd bedroom as an office. Hence, I strongly believe that the purchase of a 1 bedroom over 800 sqft is a high risk proposition. People will only pay so much to rent a 1 bedroom and an extra 50-100 sqft means little to a renter, but a lot to the landlord.
I see your point but most 2 br w. 1100 sq. ft don’t have great flr plans.. You get an extra br but then the kitchen or living room is tiny. I have a one br at 600 N. w. 926 sq. ft. The kitchen and living room and bathrooms are huge.. Makes for great entertaining.
Fairbanks,
The key with any one bedroom is storage. If you have closet systems built in to maximize storage, buyers will take notice. 926 sqft is more affordable to a 1 bedroom buyer than 1,244 sqft (06 unit at 340).
One additional note to consider with 340 on the Park is that the Children’s Museum could adversely impact the tranquility of the New East Side by dumping a lot of traffic onto E Randolph, which has no outlet. You have to think about what the next buyer of your unit will think about and the museum should be taken into consideration when buying.
Gamma said: “Who are the people biting at these prices? Everyone commenting on this site seems to agree that the condo market is massively overpriced.”
Answer: No one. No one is buying at these prices. Sales have literally fallen off a cliff. Sales in most neighborhoods are down about 1/3rd YOY from ’07 to ’08 and sales were down about a 1/3rd from ’06 – ’07 before that. The problem isn’t just that condos are overpriced, there are also too many of them, and financing is difficult to come by for those without good credit and a minimal downpayment. The real estate market is in a depression according to Bob Toll the CEO of Toll Brothers. It’s messed up out there and flippers are just as crazy as the market. I don’t know why he even bothered wasting his time listing at $620,000. If this guy were even the slightest bit rational he would cut his losses and price this unit as low as he could just to break even, which I think is doubtful he could do that, after factoring in his carrying costs for all this time. But until whackjobs and amateur flippers like this losses their collective asses, the great real estate depression of the ’00s will continue unabated…..
Sabrina said:
“That’s the point. There are hundreds (thousands?) of units ALL sitting on the market because they are overpriced.”
Not only are they overpriced but IMHO there are too many condos regardless of the price. The market does not have enough buyers. Even if tomorrow prices were reduced across the board by 1/3 or 1/2 on every condo in the city – you couldn’t find enough people to fill them. That doesn’t mean that prices will be reduced to zero or anything, it means that not every condo is going flip/sell, and many of them will eventually sell for less money than was paid. There is a built in floor on prices; I don’t know what that is but I know that we’re nowhere near that point.
what is the latest on children’s hospital by 600NF
They broke ground. What impact would that have?
a good one for 600NF:)
i think its a fact that most people who visit this site have very similar points of view on the real estate market and its current downward trend, however i’d like to point out that the market as a whole is comprised of many little markets, with is comprised of smaller markets within them.
this being said, while some posters have stated that the seller of this unit is insane (which i think he/she might be. 50%?), i do not think that this particular building will be affected like the majority of the available properties in chicagoland where prices will bottom out at around 2004 – 2006 pricing.
this building is a very niche building with many things going for it (which i know a lot of people on this board agree with), and will be one of those rare buildings where prices will hold up.
i genuinely think that this particular unit can be sold for a “profit”. i’m shooting at ~375k – 400k. *shrug*
Now that 100% financing for jumbo mortgages is a thing of the past, units in this price range will only be selling to those who can put down a lot of cash (ie the Smart Money). Sure, there will be some for whom price is no object and they don’t care if it goes down in value, but most rich people aren’t stupid about financial affairs. They won’t find this unit to be a bargain at all for nearly $500,000. If these asking prices can’t or won’t be reduced, this place could very well become foreclosure-central, despite its great views.
Was any work done to this over the July 2007 price? It looks like a new building so I’m assuming no work was done beyond original construction. Did they just purchase it for 314k and expect it to raise in value? Because we all knew last July that values werent going to go up anytime soon.
A on – Looks to me that the unit is exactly as when the developer sold it…no additional upgrades.
400/sqft. That seems about right.
If this doesn’t sell for another few months, then things are worse than I expected earlier than I expected.
I don’t think this unit is a good example of where the market currently is/isn’t. I’m not sure they could have flipped a building like this for a 95% profit even back in 2005, the owner is an idiot.
This building is really sweet overall though, and I think it will hold up. I think it’s a mistake to think that all people who can afford to buy given the new lending standards are the “smart money.” I know someone who recently bought a $1.3m unit in this building and he couldn’t care less about whether he could wait a year and maybe save 10%. He wanted to live in the building, could afford it, and if it drops in value on paper over the next year or so he doesn’t care because he’s not planning on selling it for many years. The kinds of people who buy the expensive units in buildings like this are more concerned with their lifestyle’s then whether they miss out on a chance to make $100k over 10 years.
D
Let’s assume for a moment that DB is correct. Then the only question to ask about market direction is whether the demand from those “kinds of people” is in balance with the supply of “expensive units in buildings like this.”
Simple, really.
The Children’s Museum move to Grant Park has been approved…what a waste of money.
I don’t think there are many “buildings like this,” I think that this and a few others in this class are going to be OK.
D