Is It Now Cheaper To Buy Than To Rent This 2-Bedroom? 1245 W. George in Lakeview
We’ve been chattering a lot lately about the price differences between renting and owning.
This 2-bedroom at 1245 W. George in Lakeview recently came on the market.
It is 1100 square feet with high ceilings, exposed brick and hardwood floors.
The kitchen has granite counter tops, stainless steel appliances and 42″ maple cabinets.
It has the features buyers (and renters) look for including central air and washer/dryer in the unit.
The unit also has a highly coveted garage parking space (a plus in the winter.)
It is listed at just $275,000, which is the lowest priced 2-bedroom currently on the market in the building. The other units are listed at:
- Unit #303: $299,900
- Unit #403: $298,000
This unit has been available to rent for $2000 a month (according to an old rental listing.)
Is it a better deal to simply buy now instead of renting?
John Vossoughi at @Properties has the listing. See more pictures here.
Unit #302: 2 bedrooms, 1 bath, 1100 square feet
- Sold in December 1998 for $222,000
- Sold in September 2001 for $286,000
- Sold in September 2006 for $355,000
- Currently listed for $275,000 (garage parking included)
- (It has been available to rent for $2000 a month)
- Assessments of $295 a month
- Taxes of $5265
- Central Air
- Washer/Dryer in the unit
- Bedroom #1: 12×12
- Bedroom #2: 11×9
I love the exposed brick and nicely sized windows. The one bathroom though kills it though – gotta have a poopin bathroom.
This apartment reminds me of that movie The Big Lebowski? (Do you guys know it? It was a cult hit in the 90s.) Anyway, reminds me of that line “That rug really tied the room together.” Great rug. Wonder if you can get this place furnished!
Agree, Elliot. Also both bedrooms with french doors that open to the living area kind of sucks. Seriously puts a damper on privacy.
Seriously, where can I get that rug? My parents ruined there’s and I went looking for one at the Room Place and couldn’t find one. Anyone have good suggestions for a place to buy a rug?
Matt – At least find that thing that sucks the most about the listing, like the computer-generated skies in the windows.
+1. that is just freaking bizarre for an existing (and old) building.
“At least find that thing that sucks the most about the listing, like the computer-generated skies in the windows.”
“the computer-generated skies in the windows.”
At least they didn’t add it to windows that have obstructed views.
“+1. that is just freaking bizarre for an existing (and old) building.”
LOL. It actually overlooks a rooftop parking garage and they were trying to hide it.
Honestly, though, from looking at street view, they probably a nice view from the front windows. Maybe they wanted the sky to be a perfect shade of blue and took pictures on a cloudy day? Whoever thought that even a casual observer wouldn’t notice is a real genius.
Not sure I understand the comments about computer generated skies. From Google Streetview this unit has a reatively unobstructed view of the north horizon, above the 2 story home seen across the way. This unit, being on the 3rd floor, would have blue sky views on a sunny day. Would a realtor pay a designer to add clouds? I think not.
Southern view down Lincoln Ave. from building rear looks acurate too. I can see my old buliding at Diversey and Lincoln in the back left corner. I had an awesome city view like that from my fire escape.
So you’re saying you think those views out the windows and from the roof in the listing are real?
Never been in the unit or building. But it seems real based on my knowledge of the area. 3 stories up at this location would have pretty unobstructed view north and south, barring any new tall buildings I don’t know of.
“So you’re saying you think those views out the windows and from the roof in the listing are real?”
Enhanced version of photo of actual view, no? In the way that jenny ames’ photos always seem over enhanced to me.
I don’t doubt that the views are unobstructed. It’d be incredibly dumb to represent it that had unobstructed views if it looked into a wall. I’m saying the pictures themselves look like a video game background or something. I have no idea why a realtor would do something like that.
I was thinking that ALL the photos were computer renderings… something is just off with all of them – but then you go into the virtual tour and it says all photos were taken with NIKON D3S, f/5 @ 24 mm, 1/400, ISO 200…. very strange. Not sure what to believe. They all look fake IMO.
Have to agree that one bathroom kills this place – at least give a double vanity. Is there a second entrance to the bathroom or does everyone have to walk through the master bedroom to access it?
Also don’t really like the french doors for both bedrooms – and the 2nd being directly off of the living room kinda sucks.
I guess it is a nice place for a single person that makes enough dough to cover expenses and plans to stay put for 5+ years – and not get married and have children anytime soon.
Shamalamadingdong –
Either the photographer went crazy with the “Shadow/Highlight” control filter in Photoshop, or they used a processing technique called “HDR” (High dynamic range) that gives it that ethereal (fake) look by taking the same shot at a different exposures and blending them all together to give you a wide tonal range. A few realtor sites (like Dreamtown for example) consistently abuse this technique to the point where I can actually tell when a listing is theirs on redfin searches just by looking at the property photos.
Photo nerd stuff aside, it seems like such a better idea to spend a little extra and get a 2bd/2bth instead of a 2bd/1bth. I know that “little extra” can be as much as 40k-100k depending on a myriad of variables, but in terms of resale value and living-enjoyment, a second full bath is key.
Definitely fake clouds. Check the cloud formation on the last two photos of the roof deck — different skylines and directions, but exactly the same clouds in both (although one appears to be stretched a little). And totally agree about HDR — everything just looks weird. REALTORS(TM) should really step away from the Photoshop.
I like the space and it would be a great price if it had that second bathroom. The only purpose a one bathroom condo serves is for windows/widowers who don’t want to get remarried. …and I don’t think older people would want to buy a walk up.
” I know that “little extra” can be as much as 40k-100k depending on a myriad of variables, but in terms of resale value and living-enjoyment, a second full bath is key.”
Substitute bedroom for bathroom and that was the warcry during the boom
need to close your html, me thinks.
I would rather have a 1 bedroom/2 bath, than a 2/1. With 1100 square feet, you could easily carve out a second bedroom if necessary, but that second bath would be very difficult, if not impossible.
If you have good credit and 55k to put down, you save over $100 renting vs buying, that includes $1200/yr on property insurance (using 30yr @ 4%). I would guess the monthly equity more than offsets maintenance costs, but I would ask the association if there’s been a reserve study. BTW, mortgage rates are sick right now.
If this unit has been rented, other units are probably being rented too. Once a building like this allows renters, you have to be careful. Fannie and Freddie have f*cked up the market with 50% guidelines.
Mmm… French Doors paired with random Greek columns. So elegant.
And add me to the “stop with the photoshopped pictures!” brigade.
Why are u guys so concerned with the photos? It’s just marketing! If they used stage lighting would that bother you too? I imagine most photos are enhanced in some way. And when their not, everyone on this message board complains! Geez, make up ur minds!
lesko – when you’re marketing a property, there’s a fine ethical line between using basic image enhancement techniques+on-set lighting to make the place look brighter versus completely manipulating the outdoor views, which can significantly affect the price and desirability of a unit. The realtor and/or photographer definitely crossed that line in this listing.
why buy when you can rent?
Whoops. Switched renting and buying around. It’s cheaper to buy this than to rent it for 2k. All-in buying costs, assuming 30yr mortgage, including insurance is around $1900. It will take a couple of years to make up closing costs though. I’m assuming equity built makes up for maintenance and opportunity costs of down payment money. It’s right there.
Hey everyone
Im the listing agent here…We took photos on a cloudy day. This unit faces north on George so this is the actual view but the blue sky is fake, guilty there. It does not face a parking garage as someone mentioned. It faces a single family home. Thanks
John
Ps i dont take the pics but they seem to help sell my listings compared to the other dark and unflattering photos you see out there. These pics dont really misrepresent the unit at all..
“Whoops. Switched renting and buying around. It’s cheaper to buy this than to rent it for 2k. All-in buying costs, assuming 30yr mortgage, including insurance is around $1900. It will take a couple of years to make up closing costs though. I’m assuming equity built makes up for maintenance and opportunity costs of down payment money. It’s right there.”
It isn’t when you consider that as a renter you get the lovely luxury of going “wah it’s broke you fix it and do it now!!!!1”
It’s always a better bet to rent something like this. People are catching on. It’s why the rental market is getting hot while the condo market languishes. Gen Y is, as a whole, incredibly lazy and because of helicopter parenting and the era of “customer service,” owning something is a huge burden.
Crunch the numbers and it’s slightly cheaper to own in the long term? Yeah, ok. Just rent the thing.
I could go on for days, really.
@Wojo
Wow, that’s out of line. Shit. Thumbs down.
The first thing that struck me about this unit was the computer generated clouds/sky as well out of that window. I had this impression earlier today before reading any comments on this thread.
@Bob
Me too. It’s laughable. I’ve seen VHT (along with their hilariously photoshopped-in furniture) do it often as well.
At least the listing agent copped to the reason why. Still looks ridiculous, but silver linings and all that.
John – I doubt the doctored photo’s help you sell anything. It looks cool on the listing but I can’t imagine it adds any real value to get deals done.
“Wow, that’s out of line. Shit. Thumbs down.”
Yep Wojo- out of line. I deleted the comment. We’re not here to attack the realtors who are simply trying to do their jobs in a tough housing market.
I appreciate John actually answering questions about the listing here.
“why buy when you can rent?”
Because rentals suck. They are low quality and don’t have the same amenities as “for sale” properties.
And you can’t paint the walls. (or so I’ve heard.)
“The realtor and/or photographer definitely crossed that line in this listing.”
Wrong. He put some blue sky in the windows. That is ALL. The unit looks out on the street at some houses.
It’s funny- because they change the color of the sky all the time in San Francisco real estate listings (due to the fog.) It would be too depressing otherwise and no one would want to go look at properties all fogged in. So they photoshop bright blue skies over the houses there.
Fakeloft
“It’s funny- because they change the color of the sky all the time in San Francisco real estate listings (due to the fog.) It would be too depressing otherwise and no one would want to go look at properties all fogged in. So they photoshop bright blue skies over the houses there.”
Why not just photoshop in the full cast of Full House while they’re at it?
Sabrina,
Are you now advocating buying? For so long, you thought renting was a better deal . . . have you changed your mind?
“Are you now advocating buying? For so long, you thought renting was a better deal . . . have you changed your mind?”
I’ve advocated buying if you’re going to be there 10 years or more. There definitely are deals out there- especially in the inner suburbs. Heck, you can get a house in River Forest that last sold for $650k for around $400k (maybe lower.) Buy it, live there and enjoy life.
The people who are going to have problems are those buying 1 and 2 bedroom condos with the plan to live there only 2 or 3 years (if that.) If you think you’re going to get married and have a couple of kids in the next 5 years- don’t buy the smallish top floor 2/2 in Wicker Park with the crappy elementary school.
Buyers have to be smarter and think long term.
Is the only bathroom in the unit attached to the master bedroom?
That might be a minor inconvenience.
“It isn’t when you consider that as a renter you get the lovely luxury of going “wah it’s broke you fix it and do it now!!!!1?’
Boiztown- I think you’re wrong. I’ll show my math if you show me yours.
Purchase Price $275,000
x.80
Financed $220,000
Closing Costs $3,000
———————————————-
Monthly Payment
(30yr @ 4%) $1,065
Taxes $439
Assessments $295
Insurance $80
———————————————–
Total Payment $1,879
VS
RENT $2000
Opp Cost of 55k ($229)
(using 5% return)
—————————————————
Total Rent $1771
HOWEVER: You’re building $3927 in equity the first year.
That means you get $2631 the first year to cover all “Wah” fix me costs
Take that out 10 years and buying this crushes renting. IF the association’s reverses are clean.
I still wouldn’t buy the place as an investment, but if someone loves it and wants to stay 5-6 years and then rent it out (assuming building has no caps in place by then), I wouldn’t slam them for it.
That assumes both housing and rents have stabilized, does it not? If, in fact, there is a huge shadow inventory of future rentals,that could change things considerably.
“Take that out 10 years and buying this crushes renting. IF the association’s reverses are clean.”
Do you honestly think this will sell for less than 270k in 10 years? I assume rents will increase with inflation and taxes will probably rise slightly more, still works out.
That was sound advice in 1982, 1992, 2002, and now 2012. People should not be buying property as if it was like leasing a car, being a homeowner comes with a lot of commitment and responsibilities.
“The people who are going to have problems are those buying 1 and 2 bedroom condos with the plan to live there only 2 or 3 years (if that.) If you think you’re going to get married and have a couple of kids in the next 5 years- don’t buy the smallish top floor 2/2 in Wicker Park with the crappy elementary school.”
Actually, yes, I do think there will be no appreciation here in 10 years. I also assume rents will not increase with inflation because I think the supply of rentals will increase by much more than demand and rents will, if anything, remain flat. jmho
“Do you honestly think this will sell for less than 270k in 10 years? I assume rents will increase with inflation and taxes will probably rise slightly more, still works out.’
That’s an opinion. Juliana, go open a futures account. May ’12 Chicago spot is bid 103.6. Go out to Nov 16 (last date) and sell a future for 117 bid. It’s not an exact hedge as it tracks single family homes in the area, but if you’re right you will still clean up.
SFHs are holding up better than condos, so I wouldn’t put any short term bets there. Still, if I was ready to sell my SFH, I would list it today. Corzine has left a stink on futures for me, in any case. Futures trading is too risky for me, though for a time it was everything. Its risk off for me now. Who knows what the fed will do next and what the markets will have to do to make it happen?
I think that SFH owner in Montclare would disagree with you, but fair enough. At least we can have a legit rent vs buy conversation now. Not sure that was possible the last 10 years.
Calc Risk on apt landlording outlook for future:
http://www.calculatedriskblog.com/2012/05/some-thoughts-on-apartments-and-rents.html
Not Chicago specific, but worth considering.
“Do you honestly think this will sell for less than 270k in 10 years?”
In real dollars or tiny post-hyperinflation** dollars? .
And, either way, need to consider the ~6% sales load to exit the investment. So, ~$290k is the real marker.
**note: not predicting hyperinflation, just being dramatic.
I doubt supply of rentals is going up in this immediate area any time soon. Downtown diff. story but theres no place to put rentals in LP & LV.
“I doubt supply of rentals is going up in this immediate area any time soon. Downtown diff. story but theres no place to put rentals in LP & LV.”
Bob is right. There can probably be some small one off 20 unit rental buildings here and there in LP and LV, but that’s not going to change the market. Personally, I would never spend $1700 for a studio downtown or whatever they are going for, but I guess people do.
I assume we’re talking about nominal. I’m not saying you have to sell in 10 years. If it’s trading 270k in real dollars, you’d be fine though.
Then I guess one factor would be whether the difference in rents between luxury downtown & LP/LV becomes large enough to influence renters. Would it be a legit substitute for a substantial number of renters if the oversupply finally resulted in significantly lower rents?
“Bob is right. There can probably be some small one off 20 unit rental buildings here and there in LP and LV, but that’s not going to change the market. Personally, I would never spend $1700 for a studio downtown or whatever they are going for, but I guess people do.”
“If it’s trading 270k in real dollars, you’d be fine though.”
You’d be “fine”, yes, but if you assume (for simplicity’s sake) that EQ-rent goes up with inflation (so, is flat in real $$–perhaps a bad assumption) and that taxes & assessments are also real $ flat (definitely a bad assumption) then your $2631/year in “excess” over rent only crosses over your exit costs of $16,200 after 6 years and 2 months.
So, no, you won’t be selling short, even in real dollars, but it’s not exactly a no-brainer, unless you KNOW you have a 7+ year time horizon AND that there will be no special assessments or major in-unit repair/replacement costs. Since you can’t know the latter, it’s really a 10+ year horizon to be reasonably break even, unless you expect real dollar asset appreciation.
Kinda expect the opposite, looking at this chart I would expect to see a dip below the trend line. jmho
http://www.ritholtz.com/blog/wp-content/uploads/2011/03/RealHousingPrices_1890_2010_log.png
“unless you expect real dollar asset appreciation.”
It’s actually sooner than 6 yrs 2 mons if you look at an amortization schedule, but yes, not a no-brainer. Is it cheaper to buy this or rent though? If you can be assured that you can rent it if you have to move (bad assumption too) and there’s been a legit reserve study done, I think a buyer wins.
Sorry I didn’t provide a more current data set. Think I’d have to mess with excel for that.
“It’s actually sooner than 6 yrs 2 mons if you look at an amortization schedule”
I’m not talking about break even with your mortgage, I’m talking break even on your total investement. You only get to the $2631/year by couting the equity as a non-cost; if you then just look to pay off the mortgage, and not recoup your equity, you are effectively double-counting it.
Note: I like to think of the tax benefits as offsetting minor maintenance stuff–anything short of replacing HVAC/major appliances/windows.
“Do you honestly think this will sell for less than 270k in 10 years?”
shouldn’t the question be: In 10 years will you have paid it down enough to sell it at market value such that you either a) make something, b) have something for a down payment or c) not have to bring money to the table?
A is awesome but shouldn’t be expected, B is acceptable even if it’s not true profit and C is mandatory.
Anon- realized that as soon as I sent. There’s a host of other costs not considered that I just assumed canceled out (could be bad assumption too). I’m also dubious this can get 2k rent, but I’m playing along. I still think a buyer comes out ahead of a renter, albeit slightly. I give the sellers some credit, at least they have unit priced aggressively (compared to the rest of the building).
Certainly possible, but potentially offsetting this is the reality that property taxes will continue to rise, and owners will (at least try to) pass those increases on to tenants – that’s as close to “The Truth” as we’ll ever get in Chicago.
“I also assume rents will not increase with inflation because I think the supply of rentals will increase by much more than demand and rents will, if anything, remain flat. jmho”
Sabrina (May 16, 2012, 11:09 pm)
“The realtor and/or photographer definitely crossed that line in this listing.”
Wrong.
Well then, argument settled! Pardon me for thinking the realtor profession had a shred of integrity to begin with. The view has been modified, whether or not you think it crosses an ethical line, it’s still a sleazy marketing tactic; proliferation of similar digital manipulation in other listings doesn’t make it any less wrong.
*at least try*, but imo they will fail due to supply and demand.
“and owners will (at least try to) pass those increases on to tenants”
“The realtor and/or photographer definitely crossed that line in this listing.”
Oh please put on your big girl pants and get over it. On the altime list of Stupid Realtor Tricks this doesn’t even make the top 100.
Icarus – Well at least we can agree that it was a trick, and a stupid one, at that.
“Well at least we can agree that it was a trick, and a stupid one, at that.”
Would you call using a fisheye lens a “stupid trick” too? Is bringing in professional lighting for the photographs a “stupid trick”?
I’d say all three are on about the same level of trickery.
Anon – most (good) real estate photographers don’t use fisheye lenses to photograph spaces, they use rectilinear wide angle lenses, and then use software to reverse engineer the inherent distortion in the lens optics so it doesn’t scream “photographic trickery” – manipulation to hide manipulation is an interesting debate from which I’ll spare cribchatter. Yes, photography in general is all manipulative but enhancing what’s actually there isn’t on the same level as enhancement via adding objects to the scene digitally. Where do you draw the line in doing that versus generating an entire perfectly glamorized computer generated scene, with all of the blue skies and puffy clouds the realtor desires? Maybe realtors should look into that, or maybe I should! 🙂
I’m glad the realtor stepped in with his thoughts, even though I disagree with his choice of aesthetic for marketing techniques.
Context matters. Changing the sky outside the window from cloudy grey to sunny blue isn’t cheating as long as there’s a 1 in 365 chance you could see that sky out that window some day. Adding a view of mountains, lakes or swimsuit models would be cheating.
Showing pictures of a furnished staged room that is no longer furnished because the owners finally packed up and moved is fine. Showing pictures of stainless steal gourmet/cook/jenny kitchen when the kitchen really has Olive colored appliances from the 50s would be crossing the line.
“enhancing what’s actually there isn’t on the same level as enhancement via adding objects to the scene digitally. Where do you draw the line in doing that versus generating an entire perfectly glamorized computer generated scene, with all of the blue skies and puffy clouds the realtor desires? “
Icarus
Before I feel like b*tching about the photos next time, I’ll be sure to check your list first lol.
“Because rentals suck. They are low quality and don’t have the same amenities as “for sale” properties.
And you can’t paint the walls. (or so I’ve heard.)”
Wha? How are rentals, in toto, “low quality?” And what “amenities” does this listing offer that several other rentals do not?
If you’re talking granite/ss as “amenities” and “quality” (gotta love that thin min-grade granite in this exclusive listing!) then you’re looking in the wrong place. This is why buyers are underwater — overpaying for chintzy gloss when there are larger issues to consider. Rentals, in general, do not “over-invest” in cosmetics because they need the money to invest in capital improvements while STILL being in a target market.
There ARE buildings in LP/LV (and other neighborhoods) that have W/D, rooftops, central air, parking, et cet and plenty of condos that do not. A rental building is simply less likely to go and dump money into kitchen/bath fixtures because 1. tastes change (meaning you have to do this all over again) and 2. it doesn’t necessarily translate into a higher rental rate.
There are many rentals that let you paint, too. Certain management companies do not allow it. Some companies also offer new renters to select accent wall or an overall paint color prior to move-in.
And rentals sure don’t suck when it comes down to two words: “special assessment.”
Again, I could go on all day.
Boiz – I think you missed Sabrina’s sarcasm.
“I think you missed Sabrina’s sarcasm”
What? A cc reader missing sarcasm? Never!
“Adding a view of mountains, lakes or swimsuit models would be cheating.”
During the pride parade there are bikini clad libtards all over LV. The normal rules of societal decency go out the window when celebrating this “segment”, and 1300 W george isn’t that far from it. So in theory swimsuit models wouldn’t be cheating either per _your definition_.
“Anonemoose (May 17, 2012, 8:04 pm)
Boiz – I think you missed Sabrina’s sarcasm.”
Mah bad. I get a little defensey on caffeine.
This just went under contract. Less than a week!
The price was right, apparently.