Is it Still a Good Investment to Buy a 2-Flat? 3815 N. Pine Grove in Lakeview
This vintage 2-flat at 3815 N. Pine Grove in Lakeview came on the market in March 2017.
Built in 1901 on a larger than normal 30 x 140 lot, it has a backyard garden and 1-car parking.
Both units are 3-bedrooms and have family rooms.
They have original woodwork as well as coffered and beamed ceilings in the living and dining rooms.
The property has lead and stained glass windows as well as an ornate fireplace.
The first floor unit’s kitchen has stainless steel appliances and granite counter tops.
The second floor unit has an alcove off the living room that leads to a private balcony.
It has a full sized basement with laundry.
There’s no central air, only window units.
Here’s the details of both units:
- Unit #1 (owners unit): 1500 square feet, window a/c, parking space
- Unit #2: 1500 square feet, tenant pays electric and gas, rent of $2120 a month, on a month to month lease
15 to 20 years ago, many young people could buy a 2-flat and live in one unit while renting out the other one which then paid for the mortgage.
This 2-flat has been reduced $290,000 to $990,000 since March.
Is buying a 2-flat still the path to real estate riches?
Rachel Cade Cunningham at Coldwell Banker has the listing. See the pictures here.
3815 N. Pine Grove: 6 bedrooms, 2.5 baths, 2-flat
- Sold in July 1991 for $205,000
- Originally listed in March 2017 for $1.28 million
- Reduced several times
- Currently listed at $990,000
- Includes one parking space
- Unit #1: owner’s unit
- Unit #2: $2120 a month
- Net operating income: $26,500
- Taxes of $10,001
- No central air
- Laundry in the basement
“15 to 20 years ago, many young people could buy a 2-flat and live in one unit while renting out the other one which then paid for the mortgage.”
Paid the mortgage? where? Would help pay the mortgage, yes.
Place still seems substantially over priced, tho the rent seems low for a 3Br.
Looks like there’s an old folks home next door, not sure how much ambulance traffic/noise one has to deal with here
They have the original woodwork? Really? Under a bunch of paint doesn’t count.
Nobody wants to pay a million dollars for this landlocked building without parking except perhaps to rent it out and it still seems a bit too high to appeal to anyone for that purpose.
THIRDS FOR JAN TERRI. RHYMES WITH TURDS LOLZ!!!!!!!!!
THIS PLACE IS SERIOUS OLD STYLE!.
MAYBE $775K
GO VIKINGS LOLZ!!!!!!!!
This place is so close to the lake that I understand the asking price. It’s too far north for me, but someone will probably snatch it up and turn it into a single family home.
I think two flats work best in lower middle class neighborhoods and that you can make some decent money in neighborhoods like Belmont Craigin or Berwyn. My friends have made money in those areas at least.
gee i wonder if a gay couple lives there
“sonies on November 29th, 2017 at 9:29 am
gee i wonder if a gay couple lives there”
What a senseless comment made only because of internet anonymity. That said, I don’t even understand the inane comment (or the need to post it).
Picture #25 has me sold.
fuck off, Jon
how’s that for senseless and anonymous
Sabrina did you recently implement a comment-length restriction? I had a medium-length post typed up about owner-occupying multifamilys but it’s not posting.
Price isn’t right; but this place is lovely and it makes me even sadder about yesterday’s property.
My wife and I debated going this route. Buying a multifamily building, living in one unit and renting out the other(s) to effectively bring down monthly ownership costs and take advantage of tax benefits (partial mortgage interest deduction + depreciation for units you rent out). One under-appreciated aspect I found of owner-occupying a multifamily is that your tenants are not protected by the Chicago Landlord Tenant Ordinance (excluding tenant lockout clause). You also get a homeowners exemption on property taxes which is nice.
We ultimately decided that living a life with considerably less stress was worth the loss of that income/potential ROI. Right now I don’t think it’s a good investment to owner-occupy a multifamily unless you can:
Accept a lower standard of living (most are not freshly rehabbed)
Hold it long term – like 15+ years – for some (potential) appreciation.
emotionally handle the duties and pitfalls of landlording.
Bring 30% down for your property of choice (20% for loan, 10% extra cash on hand to handle maintenance and legal issues that come up).
The numbers just don’t work out in most of these properties; especially after the appreciation we’ve seen the last few years. Even without owner occupying, cash-flowing is virtually impossible now in 2-flats in decent locations, (assuming you don’t rent out the illegal in-law apartment many of these properties have). 3 and 4 unit buildings are ideal but come with steeper prices and more competition. Add in the never-ending (and increasing) property tax drain and it’s pretty easy to see that the conditions are less than ripe for making this sort of investment.
so someone has held onto this for 26 years, presumably living in it some of the time and then renting one and possible both units over the years.
With all the costs associated with home ownership and being a landlord, I do wonder if whatever they get for this place is worth it or if they should have sold years sooner (one of the earlier booms)?
Tough to say Icarus but I think selling in the frenzy of ’05-’07 would’ve been the most profitable outcome.
I looked at buying a two flat a couple of years ago. As Elliot stated “the numbers just don’t work out”.
Two flats are almost universally over-taxed in Chicago. Also, the cost of following the “commercial” building codes makes rehabbing cost soar. A two flat converted to a single family home saves thousands of dollars in rehab code compliance costs.
“Also, the cost of following the “commercial” building codes makes rehabbing cost soar.”
What are some examples of this when renovating a two flat?
“Two flats are almost universally over-taxed in Chicago. Also, the cost of following the “commercial” building codes makes rehabbing cost soar. A two flat converted to a single family home saves thousands of dollars in rehab code compliance costs.”
Except for this property. It’s taxed as though it’s worth $600k.
Quick example: a single family homes have no requirements for fire rated components, while a multifamily residential structure may require a two hour rating at all exit stairs and a one hour rating between each unit.
Also, all plumbing work has to be by permit and done by a licensed plumber. In a single family home, the homeowner can do most any plumbing work*. I recall that plastic drain pipes were not allowed in commercial buildings as they are in a single family home.
*I personally know a small commercial building owner who was hauled to housing court for, among other petty things, changing a faucet by himself. Was something like 10 violations at $250 per violation.
“a multifamily residential structure may require a two hour rating at all exit stairs and a one hour rating between each unit.”
But o-o 2, 3 & 4 flats are at least partly exempt from that, aren’t they?
gthooi, it looks like the life safety rules apply only when there is more than one tenant per floor, which really exempts 99.9% of 2 and 3 flats, and many 4 flats, even if *not* o-o.
“Sabrina did you recently implement a comment-length restriction? I had a medium-length post typed up about owner-occupying multifamilys but it’s not posting.”
Nope. No limit. I don’t know why it was delayed in posting.
“I personally know a small commercial building owner who was hauled to housing court for, among other petty things, changing a faucet by himself. Was something like 10 violations at $250 per violation.”
So the city has a camera in his house?
“But o-o 2, 3 & 4 flats are at least partly exempt from that, aren’t they?
gthooi, it looks like the life safety rules apply only when there is more than one tenant per floor, which really exempts 99.9% of 2 and 3 flats, and many 4 flats, even if *not* o-o.”
Correct. I thought anything over 4 units was considered commercial. As an owner, you may want to institute more “commercial” construction means from a safety standpoint but it’s likely not required by the city.
“In a single family home, the homeowner can do most any plumbing work”
Sure, a homeowner can swap out a toilet, faucet, etc., but if you need to do more detailed work such as opening up walls and rerouting some plumbing, you technically need to get a permit.
This would normally trade based upon cap rate. You don’t have good market rates on this one so you have to assume what you can get. Problem is also that the property taxes are too low. You have to assume that taxes will ultimately be 2% of purchase price. Nice neighborhood so the cap rate is going to be low – i.e. higher price. If you can get $5600/ month this could easily go in the 900s.
However, it should have more value as a teardown and in fact is also listed as vacant land. Surprised a developer hasn’t already snatched this up. It’s on a much oversized lot with RM-6 zoning. 8 months ago we got over $1 MM a bit north and west of here for a 30 x 120 teardown (smaller than this). Have developers backed off that much since?
“Surprised a developer hasn’t already snatched this up.”
No alley, so no parking unless the neighbor to the north would grant an easement, which might not even work, given the grade change to their parking area.
“Two flats are almost universally over-taxed in Chicago.”
No they aren’t.
Your Mileage May Vary. But in the neighborhood I was looking at, at the edge of the green zone, the two flats were all taxed over 2% of market value. The single family home were all taxed at less than 2% of market value.
” life safety rules apply only when there is more than one tenant per floor”
This is true for smoke detection, fire suppression, and emergency communications systems. It has nothing to do with fire rated walls and egress requirements – which most certainly apply to two flats.
“So the city has a camera in his house?” – yes. The cameras are called “tenants”. If a tenant has a beef with the landlord they do things like complain to the city. The city views such complaints as an opportunity for extra revenue.
“But in the neighborhood I was looking at, at the edge of the green zone, the two flats were all taxed over 2% of market value. The single family home were all taxed at less than 2% of market value.”
There are prob properties that are taxed as two flats but lived in as sfh and that bring up the averaged ass value of the two flat category, no? So that a “true” two flat is being over assed? And the fake 2 flat that is really an sfh is underassed.
“It has nothing to do with fire rated walls and egress requirements – which most certainly apply to two flats.”
So, where Section 13-160-330 of the Chicago Building Code sez:
“Stairs, other than those in single-family and two- family dwellings or serving only one dwelling unit in a multiple dwelling, shall comply with the following construction requirements: [fire resistant construction]”
That is NOT an exception for 2-flats?
“the two flats were all taxed over 2% of market value.”
That’s just a set of facts that make that neighborhood ripe for a large scale assessment appeal. If the true market values (as evidenced by actual sales) are really that far below the assessed values, should eb a lot of appeals happening.
“No alley, so no parking unless the neighbor to the north would grant an easement, which might not even work, given the grade change to their parking area.”
then where is the 1 car parking that Sabrina references?
“then where is the 1 car parking that Sabrina references?”
Dunno. Gotta be off site somewhere.
“Dunno. Gotta be off site somewhere.”
How many blocks (regular blocks and @fo blocks)?
“the two flats were all taxed over 2% of market value. The single family home were all taxed at less than 2% of market value.”
That’s just anecdotal. This one, before exemptions, is roughly taxed at 2% of assessed value. Anon is right. It would only be true if the assessed values were too high and there is nothing in the Cook County process that would make all 2 flats assessed too high.
“This one, before exemptions, is roughly taxed at 2% of assessed value.”
And something less than 1.5% of market value. Since it would sell in a day at $700k.
“Stairs, other than those in single-family and two- family dwellings or serving only one dwelling unit in a multiple dwelling, shall comply with the following construction requirements: [fire resistant construction]”
So all 2 flats have non-com lumber?
JohnnyU asked: “So all 2 flats have non-com lumber?” after re-posting anon(tfo)’s cite from Chgo bldg code:
“Stairs, other than those in single-family and two- family dwellings or serving only one dwelling unit in a multiple dwelling, shall comply with the following construction requirements: [fire resistant construction]”
Not getting what he doesn’t comprehend about “..other than those in..two-family dwellings…”?
“Not getting what he doesn’t comprehend”
Either (i) sarcasm, or (ii) read my comment too fast.
Blended the duplex, triplex & 4plexconvos into one.
I’ll add I don’t recall being in any 4plexes that tore out their stairwells to install non-com
Might be a grandfather clause
sold for $950k, Feb-18