Looking for an East Lincoln Park 2/2 with A/C, W/D, and Garage Parking? 2006 N. Howe
This 2-bedroom at 2006 N. Howe in East Lincoln Park just came on the market. (It is actually on the far right end of this building above which shows 2002 N. Howe.)
Built in 1905, it is a top floor unit with some exposed brick walls and an open layout for the living/dining and kitchen areas.
The kitchen has maple cabinets, granite counter tops and white appliances along with a skylight for extra light.
It has all the amenities buyers are looking for, including washer/dryer in the unit, central air, and garage parking.
It’s listed $59,000 above the 2004 purchase price.
Does it make sense to buy this instead of rent?
Mary MacDiarmid at Prudential Rubloff has the listing. See the pictures here.
Unit #3N: 2 bedrooms, 2 baths, 1200 square feet
- Sold in August 1991 for $180,000
- Sold in April 1996 for $210,000
- Sold in July 2001 for $311,500
- Sold in April 2004 for $415,000
- Currently listed at $474,000
- Assessments of $210 a month
- Taxes of $8081
- Central Air
- Washer/Dryer in the unit
- Garage parking included
- Bedroom #1: 13×12
- Bedroom #2: 10×9
is the 2nd bedroom the room with the treadmill? I hope it sells for this price as I am renting my condo out for a year…up up and away and I will sell next year
You monthly carrying cost and cash flows would be as follows:
Interest $843 (7/1 arm at 2.75%)
Dues $210
Taxes $666
Total $ 1,720 before tax savings
I the cash out flows for a fully amortizing 30 year would be $2,378 monthly, with $535 going to principal. This place will rent for $2,800 with parking. I would take the difference in the purchase vs the rental rate savings of $422 and apply to my payment each month. In July of 2020 when the ARM expires, your mortgage balance would be $282,000 leaving you the option to refi or sell with a real nice chunk of equity. Lots of tax savings not calculated into this as well.
Thank you for playing the “how to make a intelligent economic decision” game.
The above was at a $460k purchase price.
“before tax savings … Lots of tax savings not calculated into this as well.”
If you are renting it out 12 months a year, what, exactly, are the tax savings? You maxing out the depreciation?
The question Sabrina asked was, “does it make sense to buy this rather than rent?” I was answering that question.
“If you are renting it out 12 months a year, what, exactly, are the tax savings? You maxing out the depreciation?”
I’d like to know too. Presumably, if you are buying this to rent, you make enough in a different job to not be able to deduct the rental losses from wage income.
“The question Sabrina asked was, “does it make sense to buy this rather than rent?” I was answering that question.”
Ah, you were implying you would pay yourself $2800 in rent… The original statement didn’t flow very well.
“Lots of tax savings not calculated into this as well. ”
For the likely single buyer, about $5,100; for a likely married couple buyer with same HHI as the single, about $3600 (more if higher income).
“is the 2nd bedroom the room with the treadmill? I hope it sells for this price as I am renting my condo out for a year…up up and away and I will sell next year”
c if you would’ve bought with the intention of living there for at least eight years, I don’t understand why you’d need to go through the hassle of renting out your unit. What happened??
“This place will rent for $2,800 with parking.”
Very insightful breakdown with the 7/1 ARM, but I dont see this place sniffing 2800 in rent, even with the parking. I think the seller’s ask is way too high, but in this market, why not try. However, with this being the 4th straight week seeing a decrease in mortgage apps and the biggest plunge since June ’09, I dont think they’ll get it as reality starts to set in.
““Lots of tax savings not calculated into this as well. ”
My opinion, it’s the same as any other property.
What about the oppurtunity cost from the down payment? 20% is $92k and at 7% annum, thats $55k after 7 years. Assuming this bull market continues…..
Off topic, but I was just in the Bay Area, Palo Alto to be exact. ~35 homes currently on the maket and only 7 or 8 under $2M dollars. Most mortgages on transcations are $1M or less. The bull market is definitely fueling prices over there along with foreign money and dot com folks.
“This place will rent for $2,800 with parking.”
As a landlord in this range, I would put my money on $2800 based on the pics….
“Palo Alto to be exact. ~35 homes currently on the maket and only 7 or 8 under $2M dollars. Most mortgages on transcations are $1M or less. The bull market is definitely fueling prices over there along with foreign money and dot com folks.”
LOTS of FB, other tech and VC money there. The fact that mortgage amounts are only ~50% in PA is not at all representative of CA pricing overall, where mortgage sizes are usually 90%+.
Palo Alto has the most expensive office rental rates in the country, making the Loop look cheap by comparison.
http://www.businessinsider.com/most-expensive-places-for-office-space-america-2011-9?op=1
“I dont see this place sniffing 2800 in rent, even with the parking”
For what price, then, do you see it being rented? I’ll of course be the first to say that this location is not what I think of when I hear the admittedly insufferable “ELP,” but I’d be curious to see any rental listings you’d care to share that are in acomparable area LP, with w/d and central air, and a garage space, for a materially lower amount than $2,800.
“Off topic, but I was just in the Bay Area, Palo Alto to be exact. ~35 homes currently on the maket and only 7 or 8 under $2M dollars. Most mortgages on transcations are $1M or less. The bull market is definitely fueling prices over there along with foreign money and dot com folks.”
Well- if there are only 35 houses for sale then yeah- it’s going to be the rich buying them. In California in April, 34% of ALL transactions were all cash. That’s double the historic norm since data began being kept in 1988.
Does that sound “normal” to you? None of this is.
I pity those in the Bay Area (at least the southern Bay Area. Areas to the north haven’t bounced back yet.) I have lawyer friends who make $250,000 a year that live in Silicon Valley. They are completely priced out. I ask them, “why the hell live there?” It’s just SUCH a treadmill. Imagine the poor legal secretaries? What do they do? Or the people who work in that Wal-Mart on El Camino Real? It’s no way to live.
Sabrina, those poor priced out people move to the suburbs where they belong. Capitalism is not supposed to be fair…
“Ah, you were implying you would pay yourself $2800 in rent… The original statement didn’t flow very well.”
Yes, I was suggesting applying the implied saving if you would have rented the same property as well. I have a hard time proofreading my posts prior to posting.
“Sabrina, those poor priced out people move to the suburbs where they belong.”
Palo Alto IS the suburbs. Ever been there? Strip mall heaven. All of Silicon Valley (excluding San Jose) is one big suburb. Downtown Palo Alto is like downtown Naperville (with Stanford instead of North Central College.)
During the last housing boom, legal secretaries were buying 2 hours away (one way commute) in the interior. They would drive 4 hours a day for a job that paid them $60k to $70k. I don’t get it. You can be a legal secretary ANYWHERE.
It’s really brutal for the 90% that are the middle class (and I include those who are upper middle class.) Life is too short to live like that. You’re in your car the whole time commuting so it’s not like you’re out hiking or actually enjoying being in California. It’s just one big grind.
But I seriously wonder where they will get the workers for the “regular” jobs at the rate of home appreciation again on the peninsula. Cisco was building housing for teachers during the boom because some were living in their cars. Even the hospitals couldn’t attract doctors (let alone nurses) because their income wasn’t high enough to buy anything (same problem I referenced with the lawyers.) $250,000 doesn’t get you the $2 million 3-bedroom 1950s ranch house.
Sabrina, Being a FED hater and presumably a strong republican, I would say you are getting what you voted for. If you would like income distribution to more equal, perhaps your should support your local democrat and their views on taxing the rich more and taxing the middle class less. I am on board so maybe we can agree on this point.
Free market capitalism, without income redistribution, creates the huge divide where rich folks have everything and “the rest” get screwed.
http://en.wikipedia.org/wiki/Income_inequality_in_the_United_States
“I pity those in the Bay Area (at least the southern Bay Area. Areas to the north haven’t bounced back yet.) I have lawyer friends who make $250,000 a year that live in Silicon Valley. They are completely priced out. I ask them, “why the hell live there?” It’s just SUCH a treadmill. Imagine the poor legal secretaries? What do they do? Or the people who work in that Wal-Mart on El Camino Real? It’s no way to live.”
I completely agree. It’s obviously a nice area, but it is not worth the price to live there. My sister in law is looking for a home there. It’s crazy.
what happened? I got married and had a kid. Nobody who lives in the city in a condo lives there for 8yrs. None of my friends ever made it past 5.
As for rent, $2800 doesn’t sound off base. Maybe 2700 or so, but that is the going rate. We rented around that much for a 2/2 in less then 4 days
That’s why the Santa Clara Valley has so many nice mobile home parks. (They are mostly newish prerabricated houses set on small lots.) It’s a way to live near work that is mostly affordable for the middle class. And really, how is that different than living in a condo? They own the unit, pay rent on the land (much like assessments), share no common walls, have a small amount of space to garden with, have shared amenities like pools and clubhouses. I would certainly chose that over a lot of condos I’ve seen.)
I have relatives in Pleasanton, CA – they’ve been there a long time. People regularly knock on their door and offer to buy their house. They’ve told me most of their friends who have recently moved to the area can’t afford to buy furniture after they buy their houses.
shut the fuck up steve, we already have a ridiculous amount of income redistribution going on, and its not doing SHIT to help people at the bottom
Oh Sonies, if there is enough already than why are the top 1% getting so much more of the income? The carry trade and capital gains should be taxed at regular income levels. Why do the 1% get tax breaks on their income from investments? Does the lower class have much of investment gains to benefit form these low rates? Explain please…
“The carry trade and capital gains should be taxed at regular income levels. Why do the 1% get tax breaks on their income from investments?”
Would you support full deductions on losses?
Let’s say you tax at 40% then you have a bet that looks -1/+.6, at what point does this cause money to no longer be invested and henceforth businesses no longer being able to capitalize growth opportunities through equity investors?
Ignore all the crap about how you finance and down payment and just look at CAP rate. Rent @ $2800 = $33,600 / yr. Assessments + taxes = $10,601 / yr. Net cash = $22,999 / yr (not including any lost rent while you look for renters, costs to update, special assessments, insurance costs, etc.). So CAP rate = 23/469 = 4.9%. BLAH. I think CAP rate of 7-9% is where you want to be in this market. 30yr Treasuries are 3.2% – so only earning an extra 1.5% to take the real estate market risk, illiquidity of a home and have to deal w/ renting out your place. No thanks.
“So CAP rate = 23/469 = 4.9%. BLAH. I think CAP rate of 7-9% is where you want to be in this market.”
Someone will come along and point out that, even on a properly doc’d investment property, you aren’t putting in more than 40% cash, and the rates are so low, etc etc, so the cap is much higher than that.
But I agree with you. As an investment prop, want to pay less than $350, and prob less than $300, assuming the $2800 rent and the A+T aren’t comgin down.
Ze is absolutely correct. Raising taxes on investment income without making it deductible will only cause that $$ to sit in bank accounts doing nothing to advance the economy. I think we should lower income tax but apply it to investments and as Ze said make realized losses tax deductible w/ no time limit. As for the sorry state of our budget – it more a mess of spending than taxes. To give you a sense – the huge fiscal cliff debate that resulted in raising taxes on high income earners is expected to generate $62 BN / year in additional revenue. The government spent $50.7 BN on Sandy relief.
Yeah I loved how the politicians were multiplying things by 10 years… like “President wants to slash 500 billion from budget” they mention right after that isn’t per year, but over 10 years… You get the same on the revenue side as well… to be fair its mere bullshit and nothing more than attention whoring before their next campaign which for some is every other fricking year which is also stupid.
Steve, you need to give rich people the incentive to invest, otherwise capital won’t get invested, opportunities and ingenuity will be lost and well, you’ll turn into Great Britian where almost everyone has an equally sucky quality of life
” anon (tfo) (June 6, 2013, 1:14 pm) …Someone will come along and point out that, even on a properly doc’d investment property, you aren’t putting in more than 40% cash, and the rates are so low, etc etc, so the cap is much higher than that.”
Yeah – someone always does. But CAP rate won’t be higher – CAP rate doesn’t care about how you finance it. It is used as a benchmark so you are always comparing apples to apples. There is a reason RE funds focus CAP rate and not anything else that tries to incorporate tax savings / costs and financing rates. With the yield curve the way it is any ARM financing will make an investment look better on a cash flow basis. And of course leverage (putting down only X%) will make any investment look better on the way up (and worse on the way down). But an investment decision should be based on VALUE not how its FINANCED. In general people don’t understand (or care to understand) the difference.
“at what point does this cause money to no longer be invested and henceforth businesses no longer being able to capitalize growth opportunities through equity investors?”
At a point much higher than 20%. What are you going to do with your money? Spend it?
“Would you support full deductions on losses?”
Is that not already the case, with pretty generous carry forward and carry back allowances?
“Is that not already the case, with pretty generous carry forward and carry back allowances?”
No, because you have to match investment income to investment loss.
The correct answer is: if all ‘Income’ is taxed as OI, then all investment losses should be deductible against all Income. You have some transition period, where losses from old investments made under old “Income” defintions would not be fully deductible, but the end result should be full loss deductibility–possibly with a carveout of some sort for “speculative” (or, non-investment, or ‘short term’) activity, to limit gamed losses.
“Nonchatterer (June 6, 2013, 1:36 pm)
Is that not already the case, with pretty generous carry forward and carry back allowance?”
No. Capital loss is only deductible vs a capital gain. There is a small amount ($3k I think) that is taken against regular income. Basically a loss and a gain need to be treated in a symmetric manner and be deductible against income (assuming they are taxed at the same rate). No limit on time for loss carry forward – but again only against a gain.
Ah, I see. Thanks for explanation. How significant is this loss deduction issue to the question of raising cap gain rate or treating cap gains as OI?
I agree completely w/ what anon said. We would need a “flatter” tax structure to make it work or else people would start realizing capital losses during high income years (when they are in the highest tax bracket) and take their gains in lower income years (when they are in the lower tax bracket). However – this would be the most streamlined approach and would help get rid of any distortions (like carried interest and tax shelters to maximize tax losses).
The question was, “Does it make more sense to buy this property or to rent this property?” I stated that it makes sense to buy than to rent this property at $2,800 per month. Do you see it differently?
“steve heitman (June 6, 2013, 2:00 pm)
The question was, “Does it make more sense to buy this property or to rent this property?” I stated that it makes sense to buy than to rent this property at $2,800 per month. Do you see it differently?”
“Thank you for playing the “how to make a intelligent economic decision” game.”
You make it sound like this is an obvious decision. It is not. An investor wouldn’t buy this place to rent out (because of the low CAP rate). You are ignoring the upkeep costs of the home in your cash flow calculations and the transaction costs (5% on the way out). You are ignoring the fact that very few people will live in a 2/2 for 7yr. And even using a $2,800 as equivalent rent (which I would argue is stretching it given the very small second bedroom and its a walk up) only nets you a small savings vs renting (which would likely be eaten up by maintaining the property).
And lets just ignore all the math and consider this is a 3rd floor walk-up 2/2 with a small kitchen and a miniscule 2nd BR (barely fits an exercise bike and putting a full size bed in there would block the door to the balcony) that lacks SS appliances.
I know someone in the east Bay. They have a very nice home and the natural scenery and weather are very nice, but it’s not for me. The commute is really long to the city, the town itself has a lot of good amenities (restaurants, for instance), but looks like Naperville and there doesn’t seem to be much sense of community.
Another problem living east of the bay is that to get into SF, you’re basically stuck going across the bridge. It’s the only way in if you’re driving (the other option is the train). But if you drive, traffic can be really bad on that bridge. It’s not like living in the burbs of Chicago and heading into the city, where you can get off the Edens and head over to LSD if the highway is bad.
I agree with Sonies on investment income taxes. Some say there should be no capital gains taxes at all, and I disagree, but the current rate seems high enough to me. There needs to be a balance between incentive to invest and making sure the rich pay their fair share on income from investments.
I do believe the people making billions by running hedge funds need to have that money taxed as ordinary income. It’s a huge scandal that they can pay the investment income rate on that money. And I’d like to see the cap raised on income eligible for Social Security taxes, which is currently around $105,000. I’d double it.
“It’s not like living in the burbs of Chicago and heading into the city, where you can get off the Edens and head over to LSD if the highway is bad.”
Is that really the best alternative from any point on the Edens? That’s a genuine, albeit slightly skeptical, Q.
I typically find it to be the best, but Elston is another alternative.
If things look bad as I’m heading in, I’ll get off at Touhy or Peterson and head to LSD. Sometimes it takes just as long, but at least I’m moving.
I’ve always liked Peterson to LSD.
Among those I know in the bay area: some live and work right in SF, and others live and work in other bay area communities. None seem to have much of a commute (many bike to work). All struggle with the sky high housing costs, but it’s not so different than living in Manhattan, including education challenges (another thing that Chicago has going for it compared to SF and NY). The biggest difference I see relates to free time: in NY, a weekend (though many New Yorkers I know practically brag about putting in work hours over the weekend) might allow for popping into a couple of the best museums, etc., and maybe the occassional trip out to the NY/NJ shore or CT whatever. In the bay area, the recreational options within a 30 minute to 4 hour drive are simpy some of the best in the entire world. If it weren’t so far from aging family in the east and in Chicago, we’d seriously consider a move to either the bay area or SoCal, despite the high housing costs, car dependency, crazy school situation, earthquakes and lack of bar reciprocity. (When I first started meeting native Californians (in CO and elsewhere), I often got the unpleasant sense that they considered themselves to be super awesome. Once I finally went to CA and spent a month or so exploring, I realized where the whole awesomeness thing comes from.)
“In the bay area, the recreational options within a 30 minute to 4 hour drive are simpy some of the best in the entire world.”
To be able to afford it- like any of the big cities- you’re working your ass off. No offense anonny, but most people who are big firm lawyers etc. aren’t even able to enjoy anything on the weekends because all they’re doing is working. I can’t tell you how little my ex-boyfriend and I did outside (he was biglaw) in all the years I lived there.
But yes- on the one Saturday when he didn’t have to work, we would go hiking in wine country or out to eat in Princeton-by-the-Sea. But, like anywhere, you are simply LIVING. But the grind got too much for me. You’re on the treadmill and you’re running and running. You can never catch up with the Facebook, Google people. Again, depending on what part of the Bay Area you’re able to live in- some parts of it housing prices aren’t so high price anymore (i.e. the further away you are from Silicon Valley, the lower your housing price.)
If you’re single, you can make by in the rental apartment. Once you have kids- that’s when the nightmare begins. We complain about our schools but suffice it to say, their schools suck. And the public ones that ARE decent come with $1 million+ housing cost price tag. And even THEN you have to do extra “fundraisers” to raise money to pay for the school computers. Remember, every grade school in California is allocated the same amount of money. So if you want anything extra- you, the parents, pay for it.
I think CA is a great place to go right out of college. At that age, you don’t care about costs. You don’t even care that you don’t make much money. So you live in the crappy apartment in the Outer Sunset fog zone in SF- but you’re having fun just hanging out and riding your bike across the Golden Gate Bridge etc. You don’t tend to worry about much. It’s only later, once you have kids and want a house and/or want to save for retirement that a place like California (at least along the coast) becomes more of a burden than anything.
California in the 1950s and 1960s- that was truly paradise. I have some friends who are natives who grew up in that era. But it is nothing like that today. There are simply too many people.
Oh- one other thing- when the Bay Area DOES get the next big earthquake (which is inevitable. I used to own an earthquake supply kit) it’s going to be very, very nasty. They have done nothing to fix the infrastructure since the 1906 quake. I pray that it’s the rainy season or else the fires will certainly destroy San Francisco again. They will not have water (as the pipeline from the mountains will have been severed) and two thirds of the firefighters now live outside of San Francisco. In a big quake, they will not be able to get back into the city. In 1906, most of the firefighters lived in the city so they could mobilize more quickly.
SF also only has 10,000 sleeping bags (or maybe it is 30,000, I can’t remember now which one) but they estimate 300,000 people will not be able to live in their homes immediately after the quake (that is in SF only- not even including Oakland or other areas.) In 1906, thousands lived in Golden Gate Park. That will likely happen again (depending on how bad the fires are.) But how will they get water to all of those people (especially with the pipeline severed?)
The SF landlords have fought ordinances that would make them reinforce their buildings which have parking garages underneath. These are the most structurally unsound in a quake. They claim it would cost too much. But the geologists estimate about 10,000 of these structures will collapse in a major quake. When I lived there, I refused to live in a building that was built like that and tried to only live on the true rock areas (which you can locate from government mapping.) That would be living on one of the hills- like Russian Hill or Telegraph Hill.
I was once in a high rise in the Financial District when a 4.3 hit across the bay in West Oakland. It was shallow and that was landfill over there so the shockwave was felt more strongly than a normal 4.3 would feel on rock. The Financial District is also landfill. Wow- did my chair and the building ever move in that one. Again, I can’t imagine what a 7.5 will feel and do in the landfill areas.
I could go on and on about how bad it will be. But it’s been so long since a major one (1989 now) and memories fade, that most people who live there don’t even have extra water in their garages or canned food or batteries. They honestly think it’s not going to happen.
“No offense anonny, but most people who are big firm lawyers etc. aren’t even able to enjoy anything on the weekends because all they’re doing is working.”
Hmm. Sounds more demanding than Chicago. That’s directly contrary to my understanding of things there vs. here, but who knows, maybe I just know a lot of slackers. I do agree with you though re: earthquakes. I can’t believe how little it’s discussed there, and even on a national level.
It’s the same billable hour requirements anonny. Still doing 2000 hours or whatever it is. My ex-boyfriend had a work colleague that worked every single weekend for 4 months- Saturdays and Sundays (she was a 6th year at that point) and finally she was so exhausted she went into the partners office and said she was quitting. He claimed he had “no idea” she was working that hard and immediately moved to cut her work load. But it was too late. Who wants to live like that? (in any city?)
She took a 35% pay cut to go in-house and work 9 to 5.
The earthquake situation will be a national disaster when it happens. I pray that my friends are okay when it finally hits.
It’s just because memories fade so people think it’s never going to actually happen. In the 1990s, the 89 quake wasn’t that far removed so people moving there were warned not to live over the bridges because in a big quake they go out and you can’t commute etc. But I doubt anyone is warning anyone about the same thing today. It’s been nearly 25 years since that quake. It’s a whole new generation which hasn’t experienced it.
My cousin lived in SF during the 89 quake. (She was born and raised in Illinois.) She was working in a store on Market street when it hit. She saw the street lights literally swaying all the way down to the ground. She managed to make it to her apartment in Tiburon on a ferry even though the bridges were out. But the aftershocks were so bad for the next week that she freaked out. She couldn’t sleep at night because the apartment would be shaking. She moved back to the Midwest and never went back to CA. LOL.
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