Live in “Real” Wicker Park: 2029 W. Pierce
This 2-bedroom unit at 2029 W. Pierce is just a half block away from Wicker Park and equally as close to the Damen blue line stop and all of the shops/restaurants of the neighborhood.
Is there any better location in all of Wicker Park?
The vintage unit has a wood burning fireplace.
The listing says the kitchen was “recently rehabbed” and now has stainless steel appliances and granite countertops.
It has all the other bells and whistles that buyers look for including central air, deeded parking and in-unit washer/dryer (the coverted side by side).
It is also listed just $5,000 over the 2005 purchase price.
Nancy Weber at @Properties has the listing. See the pictures here.
Unit #2W: 2 bedrooms, 2 baths, no square footage listed
- Sold in May 2002 for $316,000
- Sold in June 2005 for $370,000
- Originally listed in April 2010 for $400,000
- Reduced
- Currently listed for $375,000
- Assessments of $190 a month
- Taxes of $4123
- Central Air
- In-unit washer/dryer
- Bedroom #1: 10×13
- Bedroom #2: 9×13
- Sunroom: 7×10
The “re-organization” of the space was poorly thought out leaving awkward spaces- now quite un-vintaged. The Master Bedroom appears to be a former sunporch/sunroom. The pillars and irregular ceiling give you some clues as to how the rooms were before the befuddling. Seems to be priced a bit high by 60K
I like the CTA shower curtain.
Do you guys think that buyers would be more interested if the sellers did 100% owner financing or a contract sale? This may be a way out for most sellers. For example, if you did 100% interest only financing at 4.5% on 375K, the monthly expenses would be:
1406.25 – interest
343.58 = taxes
190 = assessments
The total for the buyer would be 1939.83 – but WAIT, that’s not all. The buyer could deduct the mortgage interest and taxes from their income tax. Assuming that someone looking in this price range is in a 25% tax bracket – they could deduct 20,997.96 per year which would save them 5249.49/year in taxes.
If you deduct the 5249.49 from the amount they are paying, their EFFECTIVE monthly payment comes to $1502.37 – which is cheaper than paying rent for a place like this!!!!
For the seller, the risk is low (since they are getting monthly income – and if, in 3-5 years the buyer is unable to secure a conventional mortgage, the seller takes the property back. The good thing is that, by that time, the market will likely be better than it is now. EVERYONE IS A WINNER!!!!!!!!!!!!
and if the buyer doesn’t maintain the property in the meantime? and it gets wrecked? as in massively wrecked…
If you deduct the 5249.49 from the amount they are paying, their EFFECTIVE monthly payment comes to $1502.37 – which is cheaper than paying rent for a place like this!!!!
hmm maybe, but after recently accompanying some friends on a rental expedition you can find plenty of new places renting for around $1200 – $1400 / month in WP, Lincoln Square, lakeview ect. these places started out charging more but its pretty much been a race to the bottom, why? becasue most rental units today have things they didnt have when I moved here in 97. I was amazed how many places had dishwashers, abundant laundry in unit or in the basement and updated bathrooms
I would rather save the money and not worry about the paperwork
Of all the crap I’ve read on here, the comment about 4.5% financing w/ no downstoke takes the cake. Why would ANYONE do that? First, I want 7% min for my risk. And I want 10% down, since a traditional lender wants 20%. And, 3 years only on the balloon-if they can’t afford mit in 3, they won’t get it in 5. That’s why you are a psuedoprofessional, whoring yourself for 2.5% commish on a dump.
Yeah no money down in this price range is asking for trouble. See: 2003-2006. I’m actually trying to think of a scenario where this would make sense and im having a hard time doing it. Anyone that is worthy of getting this type of financing would be ready and able to put down 10-20%+.
I guess if rich family wanted to buy an expensive place but had an insanely great investment opportunity so they wanted to free up as much capital as possible I might do something like this as long as 1) i agreed with their assessment on the opportunity and 2) they had something reasonable to put up as collateral in case of default.
This is a nice location in wicker park. I prefer the division street area for restaurants/shops, but this is super close to the train and bucktown is a short walk too. All in all a great location.
Hard to know what was recently done to the place, it looks nice enough but i gotta think this is still too much for the area.
“Of all the crap I’ve read on here, the comment about 4.5% financing w/ no downstoke takes the cake. Why would ANYONE do that? First, I want 7% min for my risk”
OK – take a deep breath and look at the alternatives. First of all, there is nothing in this economic climate that is paying anywhere near a 7% return (savings/CDs are 1% max, stock market is down and plummeting). A 4.5% return is actually very good at this time.
“mm maybe, but after recently accompanying some friends on a rental expedition you can find plenty of new places renting for around $1200 – $1400 / month in WP….”
The intangible benefits home ownership (decorating/renovating to your liking, peace of mind about not having to move, not having to rely on a landlord for repairs, etc.) over renting are TREMENDOUS!!!
“and if the buyer doesn’t maintain the property in the meantime? and it gets wrecked? as in massively wrecked…”
It’s a risk – but if you screen the people – chances are they are going to take BETTER care of the property because they have ownership in it (and they know that it could be worth 400-450 in 3-5 years).
if this place allowed dogs it might be rental equivalent if you did that funny math there clio… but since its a no dogs building, yeah no
Clio,
your effective payment assumes that the buyer doesn’t take the standard deduction on their tax return already. This would increase the monthly effective payment, unless it’s someone who already lives in a property they own that has a mortgage, and is selling it. if they are married, it makes it even less of a tax savings if they take the std deduction.
Why mask the truth here?
Seller financing has a lot more risks. I hope realtors aren’t touting this just to drive up volume, and enhance their own incomes.
I would buy this place just for the cta shower curtain.
the furniture layout is all wrong here and to me wont “show” well because of it. i know, i know they new owner can do as he wishes on the placement.
also ed points out the master bedroom is the enclosed back porch which may actually be a positive to get a good breeze through your window but the sound insulation on a conversion like that might be bad.
No need to buy the place just for the shower curtain…
http://www.bedbathandbeyond.com/product.asp?sku=13128120
Note to self. Check CTA site to see if they have any other cool stuff.
“your effective payment assumes that the buyer doesn’t take the standard deduction on their tax return already…..Why mask the truth here?”
not masking the truth – the truth is that this is a “starter home” and most buyers are not going to be selling their place to move into this one – they are probably going to be renters as the comparison was being made b/w renting and buying (therefore I AM assuming that the buyer doesn’t already own a place).
That was my point on the tax savings – it is lower if you already take the standard deduction – you can’t take the std deduction and the mortgage interest deduction.
dave – i guess it is different for each buyer. i was just trying to suggest another approach that may work for some (i have done this w/ several of my properties and it has worked out EXTREMELY well for both parties).
1) The seller is prohibited contractually from transferring the property without first paying off the mortgages; the bank could call the entire note due;
2) secondly, if the buyers decide to default, well, you still have to pay for the mortgage; and you can’t evict them, you have to foreclose on them;
3) thirdly, there are various alternatives to the inability to sell: the first being foreclosure, then short sale, the paying off the loan, being stuck, to parents bailing out the sellers, etc.
“Note to self. Check CTA site to see if they have any other cool stuff.”
CK no need, i have many CTA stuff the umm lets say it magically appeard in my hands.
I got a buss window, yes a full bus window, that i would practice my “Tags” on. I have a Train Western ohare stop sign, addison ravenswood sign, a 90’s train station bench, a “Six Key”, a 80/90 cta drivers uniform, and various other smaller stuff in storage.
my hopes is when i get a big house i will have a man cave (or office) with the CTA theme.
homedelete –
actually, i have done a fair number of contract sales. there is a thing called an “effective title” which you can transfer to the buyer (you still hold true title). of course, you are right when you say that you are still responsibile for payments, etc. and will have to forclose on them if they default and do not move out, etc. however, going through a foreclosure/short sale, etc. is a much worse and more irresponsible alternative. There should be much stricter guidelines and penalties.
‘equitable title’ clio, equitable title.
And sort of off topic, it’s called a ‘quitclaim’ deed, not a ‘quick claim’ deed.
sorry – typing too fast – and i take the “quick claim” thing is a joke, right?
Interesting that there aren’t many comments on the price.
The 2002 through 2005 appreciation was 17%, around 5% annually. While that was above the rate of inflation, I don’t think that was crazy appreciation.
Clio, intitially it sounds like any seller who follows clios advice is basically wearing their Bad Idea Jeans. Isn’t success predicated on extremely careful screening and a lot of luck?
Can you tell a newbie like me how a seller even does 100% finanacing for a buyer in the first place?
“Can you tell a newbie like me how a seller even does 100% finanacing for a buyer in the first place?”
Not sure what you don’t understand. Basically, the seller is the bank. Although I have only done this on properties that have no mortgage, this is not the case w/ many people (many people still have mortgages on their houses). Even so, my attorney told me that you could do a “contract sale” – look it up for all of the details. There is a little more risk – but it may be worth it for both the buyer and seller (especially if you examine the alternatives which include short sale, foreclosure and a place languishing on the market for months/years).
and now I feel bad that I went out and dropped $100 on a shower door when I could have just had that curtain for $30
“Basically, the seller is the bank” That’s what i don’t get. I googled it but there are too many hits to narrow down. Would you mind walking us through it at a high level.
Let’s take this property. Say the current seller has a mortgage of $350K and a buyer comes along agreeing to pay that on the terms your mentioned. What happens next?
“Say the current seller has a mortgage of $350K and a buyer comes along agreeing to pay that on the terms your mentioned. What happens next?”
A real estate attorney will draft the “articles of agreement” which is basically a contract which spells out everything. The monthly payment from the buyer goes directly to the seller who uses it to pay the mortgage company, condo association and taxes. If the agreed amount doesn’t quite cover the expenses, the seller pays the excess – but this is all pre-determined and likely will not amount to that much (maybe a couple of hundred dollars/month).
The seller couldn’t legally do owner financing unless they paid off the mortgage with their own cash. The seller would essentially have to be in a situation where they don’t have a mortgage and then would do what Clio mentions…. Of course, you could do a contract and just not tell the existing bank and not title the property… kind of like a rent to own situation.
The other option which we are seeing more of these days since the second mortgage market has dried up considerably is seller second mortgages or even private party second mortgages.
Many mortgages used to be ASSUMABLE which means that a new buyer could come along and take over the existing note. Some FHA and VA loans still have that option as well as some ARMs. The way this would work is if you bought today and got a 4.25% 30 year, you could conceivable just turn the loan over to a new buyer say 10 years from now when rates would be much higher. This would put you at a competitive advantage since buyers could get cheaper financing instead of current market would be higher in the future.
“The other option which we are seeing more of these days since the second mortgage market has dried up considerably is seller second mortgages or even private party second mortgages.”
Who, in their right mind, would ever do a second mortgage?!! These are ridiculously dangerous because you will always be in a 2nd position if the property goes into foreclosure. Also, you give up title (ie, control). Let me know what morons are doing this – because i have a lot of things I could sell them!!!
Didn’t say it was the best idea, but there are some very low risk deals that some investors may take on.
If you don’t put 20% down, you have to pay PMI. Say you have a “power couple” who can swing a 10% or 15% down payment. You offer them a second at like 8 or 9% because the first and second together would be a lot cheaper than them paying PMI typically. You could do a 5 year balloon, etc.
“The intangible benefits home ownership (decorating/renovating to your liking, peace of mind about not having to move, not having to rely on a landlord for repairs, etc.) over renting are TREMENDOUS!!!”
hmmmm if I was financing someone who might / might not potentially make it I dont know if I would want them doing some jacked up renovation of my place….as the buyer my piece of mind only lasts for as long as I have until I need to refinance and that real estate goes up
“The seller couldn’t legally do owner financing unless they paid off the mortgage with their own cash. ”
It’s legal, it’s just a breach of the contract. Perfectly “legal” to violate contract terms, just invites financial liability.
“It’s legal, it’s just a breach of the contract. Perfectly “legal” to violate contract terms, just invites financial liability”
…. as if the sellers didn’t have any financial liability to begin with. come on, just trying to find solutions to get people out of the messes they are in.
Anon (tfo)… yeah, that is what I meant. Every mortgage has a clause in it that says you can’t sell the home without paying off the mortgage (unless it is assumable which most mortgages are not).
The bank would call the note due if they found out.
very much related, though not entirely thread-appropriate (hasn’t been a “Market Conditions” post in the last few)…
HD’s favorite topic, viz.: the possibility of deflation:
http://www.nytimes.com/roomfordebate/2010/8/11/should-we-brace-for-deflation-now
debated by economists
“Anon (tfo)… yeah, that is what I meant. Every mortgage has a clause in it that says you can’t sell the home without paying off the mortgage (unless it is assumable which most mortgages are not).
The bank would call the note due if they found out.”
Yeah, just like to be precise in these sorts of discussions–not everyone is clear on the distinction.
Clio, I understand every situation is gonna be unique but I guess what sets this aside from simply renting your place out is a portion of the tennants payment — spelled out in the contract — is earmarked toward purchase of the home?
I mean otherwise, what’ the difference or incentive for not just renting it until 3-5 years and then buying it at whatever rate and market value are?
“I mean otherwise, what’ the difference or incentive for not just renting it until 3-5 years and then buying it at whatever rate and market value are?”
For the seller, it gives them some comfort knowing that the house is “semi-sold”. For the buyer, it gives them comfort knowing that they have a place to call their own at a set price (don’t ever underestimate the psychological importance that home ownership has on people – not saying that it SHOULD be this way, but that is the way it is).
The people who have contract sales w/ me are extremely happy because they feel a sense of pride that they own a home and also they are making improvements to the house to make it “their own” (all improvements need my authorization, though).
“The Master Bedroom appears to be a former sunporch/sunroom. ”
The interior walls were moved/adjusted in the late 80’s conversion, but the back bedroom was never a sunroom.
“after recently accompanying some friends on a rental expedition you can find plenty of new places renting for around $1200 – $1400 / month in WP, Lincoln Square, lakeview ect.”
Can you please tell me where in Wicker Park or Lakeview to find the 2br+/2ba gut-rehabbed rentals with in-unit laundry and 2 parking spaces included for $1400? I do a fair amount of rentals, and I know about 50,000 people who would want one of those. Lincoln Square, I believe you.
For $1400, you won’t get the 2 parking spaces, for sure (tho Haywood didn’t say they had that).
I miss the olden days on this site when we mostly talked about the property itself….
Don’t know whether to file the CC born belief
“…that buyers would be more interested if the sellers did 100% owner financing or a contract sale?…”
under simply ridiculous ideas or a reason for us to have clio placed on a 5150 hold.
The problem is that “Contract Sales” have a rather unsavory history in Chicago (and probably elsewhere). In the mid-20th century they were a common way for a flighting-white family to unload their house on a minority-group buyer without the hassle of waiting for the potentially “unworthy” buyers to qualify for a mortgage. The contracts were heavily weighted towards the seller’s side (of course) and if the buyers missed even one payment they’d be in deep trouble.
When equal-opportunity-lending laws took effect some 40 years ago, contract sales lost their appeal and have left a bad taste in many peoples’ minds.
About the property in question: seems too pricey. agree with Sabrina on dog issue. you could spend this amount in a better neighborhood and get a bit better place.
“About the property in question: seems too pricey. agree with Sabrina on dog issue. you could spend this amount in a better neighborhood and get a bit better place.”
What better neighborhood are you going to find a 2 bed 2 bath with a updated kitchen, parking spot and this much space for that much less? I guess its depends on what you consider a better neighborhood – but if you take the train to work downtown, the commute doesn’t get much easier, and this location is close to all kinds of restaurants, shopping and the park.
Good point, ChiTownGirl.
Anyone who is serious about understanding Chicago, housing history, racial discrimination and politics, or credit/lending, and hasn’t read Baryl Satter’s Family Properties is, obviously, playing themselves.