Flipper Alert: Investors in Distress at 550 N. St. Clair
550 N. St. Clair, the new high rise a block east of Michigan Avenue in Streeterville, is set to begin closings in January/February (according to the developer’s ad in the weekend Tribune.)
Yet, there are already several flips on the market including one trying to sell a one bedroom for $469,900, which includes the parking, at what the flipper is calling “pre-construction prices”. From Craigslist:
Spectacular one-bedroom unit in the heart of Streterville. Floor to ceiling windows. Hardwood floors throughout. Beautiful terrace overlooking Michigan Avenue. Stainless steel appliances. Deeded parking included.
Pre construction prices right now! Current price for the same unit in lower level at $518K. This is a great opportunity! You are saving at least $48K!
Another flipper who is a bit more desperate has also appeared on Craigslist:
I am an investor and I need to sell a few units I bought at 550 n. st clair. This is a beautiful building in Streeterville, close to Michigan Ave where there is an array of shopping and wonderful restaurants. My intention was to live in one and manage the others as high end rentals; however, I have decided not to move forward. I can either lose my earnest money, or sell my units at the price I contracted them at 3 years ago, which in some cases are up to 10% less than what the Developer is asking for now.
I interpret this to mean:
1. I cannot close on these units because I cannot afford to pay the mortgages
2. I also cannot close and then rent them out because I cannot cover my monthly mortgage payments
3. Therefore, I will sell the contracts at my cost before closing begins next month or I will simply walk away from my deposits
550 N. St. Clair has been a successful building. It is not completely sold out, but is about 95% sold.
It’s a pretty boring building–condo box with big parking pod. Not clear why someone would prefer this one to 600 N. Fairbanks, unless the price was vastly better… Yes, preconstruction pricing is better than what the developer is currently asking, but it’s not clear to me in this market that it’s even worth that. I suspect that investor is going to lose all her earnest money–and it’s probably the better move for her to make. Let the developer take the bigger losses on the units. (What was the earnest money, anyway? Anyone know?)
I am pretty certain that the earnest money started out at 5K, to reserve, 10K for contract, and then 10%.
Yes, it is smarter for her to just walk away if she can’t sell the contracts at cost.
It will be interesting to see the interiors of these when they start closings. They are in the modern style, like 600 N. Fairbanks, which isn’t for everyone.