Lowest Ever 2-Bedroom Sale in The Sterling? 345 N. LaSalle in River North
We last chattered about this 2-bedroom bank owned unit in The Sterling at 345 N. LaSalle in River North in November 2010 and wondered if prices were double dipping
See our prior chatter here.
At that time, the bank had recently lowered the price $22,500 because there were no takers.
The unit recently sold for $215,000 which is, I believe, among the lowest prices paid for a 2/2 in the building.
Just last June, two other same tier units sold for much more.
- Unit #2001: sold in June 2010 for $255,000
- Unit #2201: sold in June 2010 for $250,000
There were no interior pictures with this listing, so we don’t know if the kitchen/baths were intact.
Does this sale set a new comp in the building?
Timothy Blomquist at The Lake Shore Drive Group had the listing.
Unit #1401: 2 bedrooms, 2 baths, 1160 square feet
- Sold in April 2003 for $424,000
- Lis pendens filed in March 2008
- Bank owned in October 2009
- Originally listed in September 2010 for $237,500
- Reduced
- Was listed in November 2010 for $215,000
- Sold in January 2010 for $215,000
- Assessments of $524 a month
- Taxes of $5055
- Central Air
- There are washer/dryer hook-ups in the unit
- Parking is rental in the building
- Bedroom #1: 12×10
- Bedroom #2: 16×11
50% decrease over 7 years, and the base sale prices was not even at the peak of the boom. American Invsco, how I hate thee, let me count the ways.
But to answer Sabrina’s question, “probably.” A single sale can be for an abnormally high or low price, for reasons particular to the seller (for a low price) or to a buyer (for a high price). But given the general expectation that RE prices are continuing to trend downward, most future buyers more likely will see this sale as one more step on the trend down, rather than an anomaly.
The purchase of this unit makes no financial sense at all (if the buyer is buying it to live in – he could have found a better rental for the same amount of money; if the buyer is buying for investment, his return – because of the assm. and taxes is going to be really low).
This, therefore, serves as GREAT example of how many buyers are NOT just looking at the financial aspect when purchasing (as this buyer obviously didn’t purchase for finacial reasons).
No, this serves as a GREAT example that there’s still dumb money chasing RE and the bubble ain’t over.
I don’t understand why this building has had such extreme price drops, its in a great location and i understand the finishes are crap, but still these places have good bones and really nice views for the most part
Of course this is the new comp. Why wouldn’t it be? If these bank sales were unusual maybe you could make an argument otherwise, but they are happening every day all over the city.
“No, this serves as a GREAT example that there’s still dumb money chasing RE and the bubble ain’t over.”
Well dumb money or not, it still is money and still factors in to the real estate market.
they overpaid….big time.
http://www.redfin.com/IL/Chicago/345-N-La-Salle-Dr-60654/unit-601/home/28638986
Are the prices so low since the % rental is so high, thus making most of these deals cash only? In other words, is it impossible to get a conventional loan, or even an FHA loan due to the % of renters? If so, then these really don’t represent true “comps” in the area since only investors with cash on hand can buy these (thus locking out owners who want to live in and obtain mortgage financing). This would be similar to what is happening at 2625 N Clark and why the building does NOT represent a proper comp.
DVD, Technically speaking, in bldgs this size the only proper comps are within the bldg.
“I don’t understand why this building has had such extreme price drops, its in a great location and i understand the finishes are crap, but still these places have good bones and really nice views for the most part.”
It’s all about overleveraging by investors. More investor units and bigger negative equity mean a quicker and harder fall. The scale is just ramped way up in Invsco bldgs, but it is underway at a lesser scale in all condo bldgs built/converted in the bubble.
“The scale is just ramped way up in Invsco bldgs,”
not all of them and not all units.
Good point G. I dodged a bullet back in ’01 when I was looking at buying a one-bedroom (with very average finshes) in the Sterling from Invsco. I couldn’t believe that they were asking $240K (plus parking for $30K) for a crappy 700 sf condo. But of course they tried to sell the 2/2/2 deal which sounded way to slick even back then. It was unbelievable how packed the sales center was though…
Clio,
Which buildings are decent Invesco ones? I know 111 W Maple is OK…converted a long time ago-prices seem stable
33 Ontario has issues as does 200 N Dearborn, 345 Lasalle…
Some of the Loft buildings from back in the early 2000’s in the W Loop are stable
Yes, my cousin rents in this building. He thought about buying the unit he rents, but can’t because lenders won’t loan in the building. Too many renters and he can’t get an FHA/conventional loan. I’m so glad he did not buy in this building.
“Sonies on January 14th, 2011 at 9:54 am
I don’t understand why this building has had such extreme price drops, its in a great location and i understand the finishes are crap, but still these places have good bones and really nice views for the most part”
I’d imagine a lot of people said/are saying the same thing about River City in 2008, 2009, 2010 and right now.
You are correct g. The reason the price is so low is because deveolopers built a billion of these units in the last ten years. Many of them were bought by people who thoght they could flip them for a quick buck. Now they are all chasing the market lower.
David,
111 E chestnut is still doing pretty well. 33 w ontario is “on edge” but will survive because of its newer construction and location.
thanks and I agree with you on 33 Ontario. Good location, nicely constructed building, decent finishes, in unit laundry, parking, nice views, it will be fine!
didnt we just see a 33 ontario unit sell for 400 that sold for 700 near the peak? is that considered fine? using cleos math from yesterday it’s 75% OFF!
@clio
can you explain why this is a bad purchase if the buyer plans to live there?
I am looking to buy a place in the river north streeterville area now and was thinking this is a great buy. I was looking for a 1 bedroom 1.5 bath with den and parking but a 2 bedroom at this price seems like a bargain. (i admit i know nothing about american investco except they r from saudi and everyone here hates them)
“american investco except they r from saudi”
Nope. Chicago originals.
well, I mean long term will be fine. Of course there will be more foreclosures but over 10-20 yrs, good building/location/views/ etc
@G
ohh for some reason I thought they were backed/founded by Saudi maybe that’s a different group, my bad. I did find out they were incorporated on my birthday.
The Sterling never had parking for sale. It is rental only in the adjoining garage.
David, not as fine as it will be when you buy for less tomorrow.
spence = you can rent something nicer for less money right now. If you want to buy, and can afford 2000k+/month payment – look around and I think you may be able to find a better unit in a more stable building.
Would any of the CC bearish regulars accept a condo in the Sterling as a gift?
“If you want to buy, and can afford 2000k+/month payment ”
1. It’s a cash building, and per your own calcs, a cash yield of 4% is pretty good, so …
2. How are you figuring “over $2k/mo” for this unit, at $215k?
Also, I don’t think that:
6th = 190
14th= 215
22d = 250
is terribly out of whack as a view premium. Yeah, I know, not much of a view from any of ’em, and $4k per floor is a *bit* high, but non-totally-absurd.
“Would any of the CC bearish regulars accept a condo in the Sterling as a gift?”
Anyone who wouldn’t is a fool, because they all *would* sell at some price in the 10s of thousands. Are there any strings with the gift, or could I *immediately* list it for sale?
“Would any of the CC bearish regulars accept a condo in the Sterling as a gift?”
If not – I’ll take it!!
I forsee a day when 2/2’s in the sterling will be less than $130,000. And when you buy one at that price you’re basically locked in for life.
anon – I didn’t realize it was a “cash” building. Actually, I don’t think that is true. I could definitely find a lender for this building.
“I could definitely find a lender for this building.”
You could find a lender for a Damien Hirsch animal-in-formaldehyde, so that’s not a reasonable comparison to someone who’s considering living in it, who is likely going to want/need a conforming (of FHA) loan, which, as I understand it, are NOT available for this building, due to the high % of renters.
I may well be wrong, as I am not a mtg-availability expert.
Yes I would take it as a gift. It could easily be rented out for more than ass and taxes. Wrap them up and send me three or four units on higher floors Danny.
The place has unfortunately become a joke of a building and the epicenter of foreclosure units in Chicago. That is the FAULT of the original buyers. If I recall correctly rather than taking the hit on the sales price and selling them at true market rate A.I. had set up some really weird deals. They had a guaranteed rent for XX months to investors and or paid up assesments for XX months for owner occupiers.
It was unclear to me how the buyers of the units could not understand that all of those extras were coming out of the inflated sales price of their units. Without those dollars the prices would have continued to crumble. Those buyers could only focus on the here and now and did not stop and think what would happen once those “extra dollars” would disappear.
“I forsee a day when 2/2’s in the sterling will be less than $130,000”
do you also forsee a day where unicorns roam freely through the streets made of gold – a time when everyone gets along and world peace has been achieved….. – again, snap out of it and grow up!!!
“Those buyers could only focus on the here and now and did not stop and think what would happen once those “extra dollars” would disappear.”
They were told that their units would be worth so much more that they could do a cash-out refi or sell.
“If I recall correctly rather than taking the hit on the sales price and selling them at true market rate A.I. had set up some really weird deals.”
This one was early in the mini-trump portion of the boom and sold pretty easily, in my recollection. Good AI-pimping “article” here: http://www.thesterlingcondos.com/News/sterling_address.htm
“They had a guaranteed rent for XX months to investors and or paid up assesments for XX months for owner occupiers.”
The 2/2/2 scam, which was (often? usually?) paid as a lump sum at closing, so, really, a kickback. Don’t have *any* idea how the lenders allowed this, and, were I a holder of RMBS with defaulted loans used to pay those kickbacks, I’d name everyone involved (lender, banker, broker, AI, the Gouletas’ personally, buyer’s agent and buyer) in the suit, just out of spite.
“I don’t understand why this building has had such extreme price drops, its in a great location and i understand the finishes are crap, but still these places have good bones and really nice views for the most part”
I’d imagine a lot of people said/are saying the same thing about River City in 2008, 2009, 2010 and right now.”
I don’t think *ANYONE* ever said that River City is (1) in a great location, (2) has good bones, or (3) has really nice views.
But your point about people saying that the finishes in River City are crap is sound.
if a 2/2 here sells for $190k, is $150k this year or next year really THAT crazy? is $130k?? if the association gets in really bad shape and all those units that originally sold for 500-700k go into forclosure, why can the price of these units drop another 20-30%?
“do you also forsee a day where unicorns roam freely through the streets made of gold – a time when everyone gets along and world peace has been achieved….. – again, snap out of it and grow up!!!”
Clio–you went big on real estate. And now you’re going to go home.
jfmii – are you thinking of buying in this building? has your landlord “wised” up and not accepting your demands for lower rent?
River city was a disaster. Even back in 1989 when I worked on Jackson I would never have moved in there. Weird spaceship design. The only upside I could imagine was if you owned a boat and it was stored there during the summer. For that idea I’d still highly favor Marina City. Much more stable building in a far superior location.
“Clio–you went big on real estate. And now you’re going to go home.”
Great – and I have 2 great homes to go to!!!!
“It was unclear to me how the buyers of the units could not understand that all of those extras were coming out of the inflated sales price of their units. Without those dollars the prices would have continued to crumble. Those buyers could only focus on the here and now and did not stop and think what would happen once those “extra dollars” would disappear.”
No down payment and cash paid to buyer at closing? That was better than a free call option. They just didn’t end up in the money. Considering that the 100% loans were even available to those with bad (or no) credit, what were they risking?
I would be very surprised to see a 2/2 go for $130,000 here.
In my opinion, this building is one of (if not the only one) that is going through the needed cleansing process. Banks aren’t sitting on foreclosures here – they are liquidating them. In a few years, it will have stabilized and might even be one of the first to see rising values.
“jfmii – are you thinking of buying in this building? has your landlord “wised” up and not accepting your demands for lower rent?”
no. if there is one thing ive learned as a trader, it is “dont fade trends.” im close to putting a bid in on a place in a pre-war walk-up in ELV but my bid will be around 2000 pricing. im hesitant though bc everything i read and and see is telling me that the “trend” is still down.
“The only upside I could imagine was if you owned a boat and it was stored there during the summer. ”
Could/can keep your boat there in the winter, too, so that’s a big plus, if that’s your thing.
And, it can hold a big enough boat to live on, too. I knew someone about 15 years ago who did this.
@clio,
how do you get 2000/month?
Lets say I want to buy in river north/Streeterville. I have a little over 300k in cash that i am willing to use, any places that look like they will appreciate well in the next 5-7 years.
That 160 E Illinois 1/1.5 posted some time ago was tempting but i wanted to wait till summer and hopefully save a bit.
Not sure about River City’s rules, but when I was in Marina City 6-7 years back the marina had a rule that you couldn’t spend the night on your boat parked there. Plus they kicked you out around 10 pm so you couldn’t even party long into the evening.
appreciation? I think you should wait until the depreciation ends before you start investing in properties for appreciation.
“Lets say I want to buy in river north/Streeterville. I have a little over 300k in cash that i am willing to use, any places that look like they will appreciate well in the next 5-7 years.
spence, with 300k in cash, the world is your oyster!!! I seriously would look long and hard at all options. Even if it means buying a 500k place and taking a 200k mortgage. I have seen some phenomenal deals in the 400-700k range. Gosh, with 300k in cash, you could buy a beautiful place in the palmolive!!! I know of at least one unit that is a 2/2 1850 sq ft that the owner would sell for 800 w/o a realtor. That would be a phenomenal deal for you!!!
Give me the $300,000 and I’ll return $280,000 to you in 3 years.
Trust me, you’ll lose less money with my advice than you otherwise would by investing in real estate for appreciation.
HD – no no no – even if you are bearish on the market, there ARE some very good deals out there for long term owner occupied properties.
Well as long as the owner occupancy is above 51% and there is a functioning HOA, 10% reserves you should be able to find a lender to do it. However if its below that or there is anykind of litigation it would be VERY challenging. Thats my guess on the price drop, i mean look at the 8 w monroe building and the severe price drops, cause of the open litigation issue.
@Clio, wow fast response, thx i like oysters
Although i can get a 200-300k mortgage, I plan on purchasing a place in cash and taking a line of credit out to pay for my MBA(thus the location) Im 23, and although i have a well paying job, I don’t really feel comfortable taking on so much debt.
1850 sqft 2/2 in the palmolive for 800k? yeah right. I don’t have enough cash to be rolling in a place like that. Assessments have to be crazy and I wouldn’t know what to do with all that space.
@homedelete I can spend 20k in 3 years too, sadly i am limited in my ability to invest in the capital markets because of compliance issues with my job.
Wicker, you can live on a boat at River City.
http://www.usaboatslips.com/cms/new-ad/downtown-chicago-boat-slips-55-50-38-32-28-27.html
Stumbled on this blog a few weeks ago, and am totally new to real estate in Chicago, but have a question about association fees that is probably quite relevant to the Sterling..
A lot of these apartments are either short sales or foreclosures in this building, what happens to the months of assessments those people are probably not paying? Do the other apartments assessments increase? How far can they go up? What happens if you don’t pay the assessments, but pay your mortgage?
Boy spence were I you I’d be tempted to rent a cool place around wrigley by the red line and have fun for a couple years.
@itcaffey,
tempting, except im allergic alcohol, and have some lofty career goals.
“except im allergic alcohol”
Don’t ever come near Wrigleyville.
“have some lofty career goals’
Don’t ever come near Wrigleyville.
Replace wrigleyville w hyde park.
“jfmii – are you thinking of buying in this building? has your landlord “wised” up and not accepting your demands for lower rent?”
Just a thought…
From :”chicagorealestatedaily”
Yet the move comes as the downtown apartment market favors landlords. Demand has outpaced supply and the depressed condominium market and shaky economy have encouraged more people to rent instead of buying. The occupancy rate for Class A downtown apartments rose to 94.7% in the third quarter, up from 94.5% in the second quarter and 91.1% a year earlier, according to a recent report from Appraisal Research Counselors, a Chicago-based residential consulting firm.
Read more: http://www.chicagorealestatedaily.com/article/20110113/CRED0701/110119927/downtown-apartment-tower-competes-on-price#ixzz1B2yaCpxw
Stay up-to-date on Chicago real estate with our free, daily e-newsletter
“That 160 E Illinois 1/1.5 posted some time ago was tempting but i wanted to wait till summer and hopefully save a bit”
Save a bit – are you nuts? How are you 23 and have $300K liquid? I’d say that you should just sit tight. Keep plenty of it in cash. I know that this sucks but everything else is just as risky. Besides you will need that cash for bail money and lawyers once whoever you stole it from tracks you down.
Why the F…. would you take out a line of credit and pay interest on a loan to get an MBA? That is nonsense. If you really have the money then you should pay cash for the education and live frugal for two or three years. At that time when you are finished with your education you can get excited about buying a home that you can stay in for TEN plus years. Until then what is the upside to purchasing and creating a big education loan?
“lofty career goals.”
If he’s got it, wants to spend it, and expects it to be easily replaced – I say go for it and enjoy. Better that than future taxpayers any day.
@jp3 yeah, worked all through college for a hedge fund, and live at home while working in finance full time for the last 2+ years, fairly easy to save living at home with the rents.
Don’t want to do night school and commute to the western suburbs, my thinking was a HELOC would give me needed liquidity to pay for classes at a fairly low rate(student loans for mba’s are not cheap), and interest would be tax deductible, along with tuition(questionable)
Perhaps the interest on that HELOC is tax deductible but you are still paying at least .60 on the dollar for that interest expense. How is the tuition tax deductible? Do you own a business?
You would likely be purchasing a declining investment in the short term. While that home might be serving you well at the moment you will likely outgrow in less than the time needed to create any upside equity.
Sit on the sidelines and buy an awesome place in three years after the MBA program is over.
I live/own in The Sterling and have an intimate knowledge of the building owing to my attendance at board meetings, owner appreciation events, holiday parties and Sterling community appreciation social events (e.g. EPIC, Havana, PNC Bank, etc).
My reason for purchase was simple– my mortgage, association dues and taxes are less than rent for any unit in River North.
Some great points and various opinions on the building and, more generally, the housing market have been brought up on this blog. Everyone can have their opinion, but I would like to address some false information that has been spread.
— Despite the foreclosure challenges the association is in great shape. The building has reserves measured in the millions (yes more than one) and monthly association dues have not been raised in over 3 years and operating expense routinely coming under budget.
— No pending lawsuits.
— The building has American Invesco (AI) “legacy issues” (primarily image and former unit owners), but AI management was kicked out over 3 years ago.
— The building recently won a tax appeal and all properties will see a reduction in 2010 and a more significant tax reduction in 2011.
— Owner occupancy over the prior two years has increased from roughly 20% to now mid-40%. Once achieving 50% threshold credit will be back in the building and purchases will no longer be cash deals.
— The board understands the credit issue very well and has been working hard with several lenders trying to bring credit back to the building. Recently, Bank of America announced The Sterling will return to an approved building for lending.
— The board also understands concerns over The Sterling’s image and is working with the community to change the story. The Sterling has built solid relationships with River North businesses and has formed a nice community of residents. Also, The Sterling actively participates in The River North Business Association, among others.
The official Sterling website has some great photos. You should go check them out–
http://thesterlingprivateresidences.net/gallery/gallerylist.asp?assn_id=14917&link_id=149963
Go Bears!
“Don’t want to do night school and commute to the western suburbs, my thinking was a HELOC would give me needed liquidity to pay for classes at a fairly low rate(student loans for mba’s are not cheap), and interest would be tax deductible, along with tuition(questionable)”
Has the housing obsession gone away? Clearly not since Spence is considering buying a property and then HELOCing it to pay for graduate school when he is just 23- instead of just paying cash for graduate school outright.
And tuition is almost NEVER tax deductible. Not even as a business expense if you work for yourself.
Party on housing bubble!
Well perhaps it could be reimbursed by the business or deducted outright. Thise are some very aggressive tax strategies. All you need is an accountant that is an outlier. That does not mean that the IRS will one day come back at you for the deduction!
After rereading the blog he mentioned how he worked for a hedge fund for the last two years. Unless grandpa kicked and left him with a huge bucket of cash there is little chance that he was able to save $300k on his own in the last three years. Not on that entry level income.
I say BS to that whole story.
“Well perhaps it could be reimbursed by the business or deducted outright. Thise are some very aggressive tax strategies. All you need is an accountant that is an outlier. That does not mean that the IRS will one day come back at you for the deduction!”
Every single person would try to do this if they could (deduct the cost of the MBA etc.) But there are certain credits (Hope credit, tuition credit etc.) that you can get if you qualify based on income level etc.
Kid with 300k liqiud – dont listen to the haters on this site tellin you to sit tight with that cash, invest it, in a house, yourself, and the market.
Coming from someone that can relate, play the market with diversity and watch 100k of that turn into 1M. Buy a house but do not live beyond your means – a mortgage is fine given the low interest rates and plan on paying that back asap. Borrowing is never the way to true wealth but you are young enough to. Of course, keep some of that in a CD or relatively high interest checking account IF something happens…
Just my 2 cents…btw, every window in this building leaks cold air and some, water…POS building.
“Kid with 300k liqiud – dont listen to the haters on this site tellin you to sit tight with that cash, invest it, in a house, yourself, and the market.”
That wasn’t his options. He either was going to pay to go to graduate school with it or buy a house in cash and then take out loans to go to graduate school.
Why would you tell someone with just $300k in cash to spend it all buying a depreciating asset that will go up, in the best case scenario, just 1% to 3% a year for the next 25 years?
Loans are near record lows (and only going higher.) Why not use the leverage?
Actually invest the rest of the money in something that IS an investment- like stocks etc. I’m not against someone taking $100k and putting that into a downpayment, taking out a loan and then investing the rest of it in something that WILL grow. But he wanted to buy the property with CASH. It makes no sense.
That is the housing bubble speaking, as I said. Housing is a dead asset class and will be for decades- but apparently 23 year olds think it’s a great place to put their money.
Very rarely can full time students successfully deduct their MBA tuition, but there are a number of cases where part time students who use the MBA to improve skills in their existing career, and do not pursue career change down the line, have successfully defended their tuition deduction. It is a bit of a crapshoot, but there are definitely tax court precedents for it. Of course the big advantage is avoiding the audit lottery in the first place.
Sabrina – hes young enough to recover. sitting on cash yields no results but peace of mind. If he invests in himself via MBA, the 100k investment could yield 150k/year in job security. He should buy a house while rates are low and housing is “cheap” so he doesnt piss it all away on rent and actually has an asset – but within his means. All at the same time while playing the market and that 23yr old is ahead of most 40 yr olds…
I agree with A-fed on the MBA situation, not sure about buying property yet though.
300k at 23 is a good place to be, and spending 100-120k on a MBA is a smart investment, better than having loans that collect interest. I was in a similar situation a few years ago when i gained access to a trust fund, I paid my med school tuition and housing in full, but being the nervous nelly I am, decided to sit on the cash and not really put it in anything investment wise. If nothing else, I’m happy that it’s still sitting pretty, having collected a bit of interest…nothing wrong with having 300k in the bank when you’re 25, post – MBA and with a six figure salary to boot.
“Coming from someone that can relate, play the market with diversity and watch 100k of that turn into 1M”
That’s a bit optimistic don’t you think? 100k turning into 1mil is a pretty legit feat. If it was that easy everybody with 100k would be hiring people to do it.
maybe I misread his post, paying all that in cash for a house or an MBA are poor investments. Borrow – as much as I hate to say that – because his cash could yield 10 fold if invested properly. That should be by way of a house, schooling, and stocks.
But then again, dont listen to me if you dont want to…
Riz – SMART investments. Ill cite just one example for you. I put 8k into DJIA: F, when it was $1.02. I put 5K into Nasdaq: C, when it was $1.03. If I had more money at the time, I would have gone all in, 50k, 100k, 1M, whatever I had in the bank.
Those two investments alone, turned 13K into over 200K….get my drift?
Maybe I am too conservative but houses are real tangible assets that don’t lose completely their value. Stocks can turn to zilch zero nada. I think a mix is a better choice of portfolio. I would never put all my earnings in stocks.
Afed, I get your drift. Those are serious exceptions to the rule. That doesn’t happen all the time, nor for everyone. I know some very gifted traders that can’t do 100k to 1 mil very easily. Let’s focus on the rule, not exception. Borrowing for MBA might be a poor idea, might be a good idea. I dont like borrowing and hedging my other investments make me rich in the meantime, bc if they don’t, well, you get my drift?
Riz – its very easy once you open your eyes. You just cant pig out. Pick a side, bull or bear. Yes those may have been exceptions, I agree, but those traders, those pros, complicate things too much and second guess all day long. Anyone can do it. Look under your sink and buy those companies. Find companies that were murdered in 2008-9, destined for a great recovery. If the stock goes down by more, do not panic. I can turn a dollar into ten without a finance degree. Just common sense…do you not see facebook, groupon, worth as much as apple or google? Wait til those IPO’s hit the market….Yahoo is huge in Asia and Mircrosoft offered $33/share in 2008….Right now Im playin small cap bank stocks fwiw.
(Sorry to hijack with finance talk sabrina, still think this building should be for rental on IMHO)
“Riz – SMART investments. Ill cite just one example for you. I put 8k into DJIA: F, when it was $1.02. I put 5K into Nasdaq: C, when it was $1.03. If I had more money at the time, I would have gone all in, 50k, 100k, 1M, whatever I had in the bank.
Those two investments alone, turned 13K into over 200K….get my drift?”
You’re a genius a-fed! Genius!
Can you do it again over the next couple of years? Sure- people who suspended their fears and bought in the 2008-2009 carnage have done quite well. Very few people could suspend the fear. Now with stocks up 90% since the March lows- what’s the upside now? Small caps, by the way, up 133% in that same time. Will Apple go up another 80%?
But it does show you that everyone (including many on this site) who dissed stocks over the last few years- are getting their lunch eaten (for now.) Stocks have been a MUCH better investment than housing. Actually, always have been.
“Sabrina – hes young enough to recover. sitting on cash yields no results but peace of mind. If he invests in himself via MBA, the 100k investment could yield 150k/year in job security. He should buy a house while rates are low and housing is “cheap” so he doesnt piss it all away on rent and actually has an asset – but within his means. All at the same time while playing the market and that 23yr old is ahead of most 40 yr olds…”
He didn’t say anything about “playing the market” with ANY of the money. That’s what I was arguing. He either was going to put all his cash into housing or get the MBA with some of it and we don’t know what else with the rest of it.
Yes- if you’re 23 and you put even $100k into the stock market (even the S&P 500 fund) you will be very, very rich in your old age. I would never tell someone to just sit there in cash at that age (and never have said that on this site.)
But why in heavens name would you take all $300k and buy real estate to live in for a few years- when you could be putting a chunk of it into something else? Heck, buy a dividend stock with $200k of it and get $10k to $20k a year just in dividend income. It’s a no-brainer.
Sabrina – thanks for the sarcasm! But you hit the nail on the head. The trick is doing it over, and over, and over again. Constantly gaining wealth. I do not mean to brag what so ever, only using it to make a point that cash in the bank is fine and good, but investing in yourself and what you believe in CAN yield great results. I took that money and paid off my student loans, put 20% down on a house, helped my parents pay down one of their motgages(they were suckered into the housing bubble big time).
Above all, I would glady share investment strategies so all you can be profitable, such as I would stay away from apple due to the risk and already inflated price and drift towards their competiton (microsoft, yahoo). Gold is a safe bet – not gold funds though, physical gold. I keep talkin up Nasdaq: UWBK, and have a relatively big position in that bank. I still love GM though I hate the company, too big to fail (minus lehman) means profit, Pharmy’s all always tricky, but if you like to gamble, stick to the lazy people fat loss drugs (next big pharmy bubble). Green engery (solar, wind power) any alternative energy will do just fine, patience though.
Great call on the dividends Sabrina. This is one way to cover your risks. American capital is paying 20% in dividend returns! Ha, even WWE (yes, world wrestling entertainment) pays 10%! though I cannot reco that at all.
To your point, when everyone else is selling, im buying. If you stick to the norm, you will be the norm – and whats that saying, 90% of the USA’s wealth is held by 1% of the population or something?? Sure their are risks, but played properly and risks can be kept to a min.
and for the triple post…that 300k kid needs to have an asset, maybe not yet, but soon. Take 100k to put down on a 300k house, overpay on the mo payments, throw 100 into the market, 50k for half that MBA and keep the other 50k in the bank. Just remember, you cannot sleep in a bank account.
Just what I would do, oh and I would buy a good watch. No fancy car, just a nice watch.
“Just what I would do, oh and I would buy a good watch. No fancy car, just a nice watch.”
Now we are talking about something that really excites me…lol
Please buy a Patek Philippe or a Cartier : )
MiuMiu – good advice, stay away from trends for your first “good” watch though and he doesnt need a tourbillion (sp?), though Im drooling over a Hublot King Power Unico…mmm, king power, ahhh (cue homer simpson).
Though shelling out 40k on a PP isnt exactly sensible for him, especially at 23 cause that baby is gonna get beat up. A nice Breitling or Stainless Cartier Roadster I’d go for. Maybe an Omega if your that type of person, JLC if he knows watches.
a-fed I like your taste : ) You are right about PP. It might be too much. Actually Cartier has some nice affordable pieces for yound people, say ballon bleu.
By the way- I don’t believe your investing prowess a-fed. Did Ford even get as low as $1.25? I don’t see it in the historical prices. Not saying you didn’t get in at $1.50 or something as low as that (on the 1 or 2 days it traded that low.)
Ditto on C. You’re saying you got in at $1.03? It traded that low on only like 1 or 2 days in 2009. The very bottom of the market (March 9.)
It makes me laugh when people tell me about their investments that they, of course, just happened to buy at the LOWEST possible place in the market. It’s totally laughable.
But yes- if you put $10k into Ford during the dark hours, you would have around $150,000 today. I wonder how many employees did so?
clearly it’s better to skip the 10k watch, and sink the cash into a-fed’s stock pics.
Me: “Shut about your $120,000 MBA you paid for in cash and make me my 1/2 decaf, double espresso no whip 1/2 cream 1/2 skim grande mocha – chop chop.”
Barista at Starbucks: “OK sir. Can I give you a copy of my resume?”
Me: “No. Is my coffee ready yet?”
wow this got some activity, thx ppl.
Yes, My mba will be to climb the ladder at my current job, I am actually locked in my position until i complete the MBA so i think i have precedence to write off tuition. (Employer will contribute some too)
i am invested(limited) in the capital markets, I am limited to the amount($$) and volume that I can trade. In high school and college i traded rather aggressively but now I have very strict restrictions due to work. I contribute 15% to my 401K and have been(since age 18) and plan to do max contributions to my IRA. Investing in the stock market is troublesome
I guess the underlying questions is will property values rise in the next 5 years. Are prices down because of the recession, or are we seeing a recalibration of the real estate market in general
and HD, yes i know mba graduates looking for jobs, i dont know why people thought a full time program guarantees them a job as a consultant or Investment banker.
http://www.redfin.com/IL/Antioch/26381-W-Beach-St-60002/home/17771196
Lake house STEALS within short driving distance of chicago
Being near Lake Michigan, as opposed to a real beach is bad enough, I would hardly classify that as a “lake house”.
“Are prices down because of the recession, or are we seeing a recalibration of the real estate market in general.”
Um…
As I’ve said many times- this housing bust is a once in a lifetime event. It’s not “down because of the recession.” Chicago has been through many recessions that did not lead to a decline in housing prices (let alone a 20% to 50% decline- depending on the neighborhood.)
It was a bubble and is correcting (and will likely over correct to the downside.)
Also- you cannot deduct tuition just because you are working and getting your MBA. Get some good tax help before you make the leap.
I’d be cautious about getting a home on the Chain O Lakes or the Fox River. There has been lots of flooding in the past couple years as the are has developed. Check out historical flood data, and determine whether this house is protected or even insurable.
Lake Michigan has had noticeable elevation decreases in the past year. My biggest fear is a catastrophic failure of the lake bottom in Lake St. Claire, causing a sudden change in the lake levels.
Chain o’ lakes are an interesting place. It seems to be much more affordable today than in times past. but isn’t everywhere?
Yeah HD they have dropped big time. I was watching Wonder Lake for the last three summers but now with one kid and another on the way it’s not on my short term horizon! Those small cottages are still a great fun inexpensive second home options that could get some great use due to their proximity. Our cousins had one on WL when we were growing up and they used it all summer.
Sabrina – yes I made a trade at both of those prices. Nov 19th 2008 for F, March 5th 2009 for C. Not to be rude but you understand that one single small trade, such as demonstraded by F in this example, will not reflect in the day’s overall high/low if not enough to sway the market and someone accepted by bid price. A great free website than can be used to track bid/ask prices is the following (scroll about halfway down the page and enter ticker in up to (3) places):
http://www.level2stockquotes.com/level-ii-quotes.html
Note: My overall was actually a bit higher than this for both securities since I was buying on the way down – not by much though.
spence – prices will rise in the next 5 years on “good” properities. troubled and toxic properities have issues.
the stock market is only troublesome if you do not perform your due dilligence or are too greedy. the crash of 08 made a lot of good companies appear in worse situations than they actually are.
miumiu – im a sucker for cartier too and I like the ballon bleu but only the chrono version because of the 9 o’clock date and chrono counter orientations, so cool…and the tourbillion!…back to homer simpson mode: drool.
“Sabrina – yes I made a trade at both of those prices. Nov 19th 2008 for F, March 5th 2009 for C.”
So you just happened to get in the very, very ultimate low on those two stocks at the very second they were the lowest they’ve ever been in their entire history?
Ha!
I love it. I hear this ALL THE TIME. Things like, “I bought gold in 2002 for $225 an ounce.”
Whatever A-fed. Good luck to you. At least you’re apparently buying stocks- which is the much better investment than housing will be for the next several decades (more than most of this site want to believe.)
“spence – prices will rise in the next 5 years on “good” properities. troubled and toxic properities have issues.”
What’s “good”?
Nearly every high rise in the city has had short sales/foreclosures. Are those “troubled” and “toxic”?
If only one house on your block goes into foreclosure- does that make your block “good”? Or is that also “troubled”?
I’m confused.
And don’t we have to work through inventories before anyone talks about rising prices?
Sabrina – yes, I was fortunate enough to hit *almost* the very bottom of both those securities. Doesn’t happen all the time, but sometimes you get lucky…dont believe me if you dont want to, I dont give a %&$^.
A good property, imo, is one that has the following characteristics:
– in a desirable location
– is not a cookie cutter and/or shoebox (no 1,000 sq ft 2/2’s or 650 sq ft 1/1)
– has a full height bedroom wall, windows
– updated kitchen with garbage disposal
– central a/c
– parking (covered preferred but a spot none the less)
– outdoor space (balcony)
– non-obstructed view
– in a healthy building (if condo)
Now, additional selling points are the following:
– seperate bath/shower with dual vanities in MB
– special fp features (den, sun room, dining room)
– special designs (floor-to-ceiling windows, ceiling detail, handworked trim, etc..)
– 4-pipe system (if condo)
– stairs
– marble/granite
Regarding the toxic/troubled property, a few forclosures in the building is mutually exclusive of a toxic or troubled property imo. The foreclosure is due to the buyer living outside their means (buying another condo when they should just live in their house, or making 50k and purchasing a 500k condo) or the buyer has lost their job. This is not a relfection of the property itself but the current owners situation – in most cases imo.
A toxic asset, by definition, is an asset that has significantly depreciated – regarding housing or not. The basic being that the house valuation will not cover the mortgaged amount. I will use my parents Miami Beach condo as an example, to which they paid 420k for in 2007 and it is probably worth, maybe 200k now, if that. This is toxic. They will never be able to recover the original investment – or at least not for some time. They couldn’t even probably sell it, unless at a huge loss.
” They will never be able to recover the original investment – or at least not for some time. They couldn’t even probably sell it, unless at a huge loss”
So what – if this is their home and they enjoy it – who cares if it is worth 1 million or 1 penny?! This is what I don’t understand – people freak out about the value of their homes when they have no intention of moving in the first place. Do they not realize that this is again ALL PSYCHOLOGICAL. I cannot tell you the number of people that were feeling “really good” about their house values in 2005 (even if they weren’t thinking of moving) who , now, are completely depressed (again, none are or were ever considering moving). It makes no rational sense whatsoever – can’t people realize that this panic (and previous joy) are irrelevant in reality – again, only talking about people who are not moving and have no plans on moving.
clio is going to beat that horse (real estate) until it’s resurrected.
CH – don’t need to = the general population will be the ones resurrecting the market.
Clio – it was supposed to be an investment property, not just a summer home, therefore, this is not all psychological but has monetary value as well.
@Sabrina yeah from what my coworkers say i can write off my mba, But i will for sure seek tax counsel. I know its a very hit or miss write off and i wouldn’t want to be audited and be on the wrong side of the IRS.
@ A-fed
I like your list, now where in streeterville fits that.
“CH – don’t need to”
but it must feel “really good”
http://www.google.com/search?q=clio+psychological+site%3Acribchatter.com&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a
CH- do you disagree with me? Isn’t it obvious that psychology plays an often underestimated role in home buying? Again, I have bought and sold scores of properties over the past 15 years and seen hundreds (if not thousands) of potential buyers and they ALL buy based on emotion and unfulfilled fantasy – this is not only true in real estate but everything else. Look at children’s athletics as well as the discussion on schools on this blog. Every parent wants or fantasizes that their kid is going to be successful, go to Harvard, etc. etc. – most people’s lives and motivations are based on these unfulfilled dreams/fantasies. There is no denying it. As soon as you realize this, things will become much clearer.
yes. but my point was you repeat this point a lot. do you do this bc you think it is effective way to convince the reader you are right, or yourself.
“you think it is effective way to convince the reader you are right, or yourself.”
Himself.
CH – just trying to educate people so I don’t get irritated every time someone is “surprised” that something they thought was overpriced sells. If they just understood the psychological impact that is involved in real estate purchases, they would understand the market better.
Spence – Thanks! Everywhere in Streeterville is $$$$$. Personally, I would look at 600 N. LSD and 505 N McClurg. Other more trendy options are 550 St. Clair, 600 N Fairbanks. There are a handful of others right by the enterance to Navy Pier, not sure of the exact addresses though. Some nice buildings at Michigan ave and Illinois too.
“CH – just trying to educate people so I don’t get irritated every time someone is “surprised” that something they thought was overpriced sells. If they just understood the psychological impact that is involved in real estate purchases, they would understand the market better.”
Clio, can you provide an example of property within the past year that sold at or above ask price and people commented that it was overpriced on cribchatter?
(I couldn’t find one, but perhaps you know of one)
Spence – I’ll give it one last try. Please save your dough and pay cash for the MBA….Then INVEST the rest and rent for a few years. I’d personally suggest that you put it ALL in a retirement fund and not touch it for 30+ years. When you are able to start with $200+ at this age it is like having a city job with a pension. That security started at such a young age will allow you to look at life differently. You will be able to retire quite early or have options to change to a “lifestyle job” in mid life.
Take it from a successful guy in his mid forties invest the cash in yourself (MBA) or into the retirement market. It will be a move that you will forever appreciate.
I had a friend of friend that thought he was worth a few million during the tech run up of 1999. Then it all crashed before he could liquidate. It was paper money but had he had the ability to cash out and put some of it away. Had he done that back then he would be MUCH happier today ten years later. Do not overlook this opportunity to set yourself up for a smooth life.
I’m sure that some insurance or financial type guy can give you a historical average of what it means to put away $200K at 23 and hold for 30 years. I’d wager around $2M minimum.
“Clio, can you provide an example of property within the past year that sold at or above ask price and people commented that it was overpriced on cribchatter?”
Not at or above ask. At or above a prior sale price from 05/06/07. Maybe narrower than that, but “peak” however you want to define it.
If it is priced above peak, and draws more than a handful of comments, *someone* will chime in with “WTF? How can they ask for 25% over 2006 price? Haven’t they heard the bubble popped? LULZ!!” Even if it’s a house that’s *clearly* been gut rehabbed in the last 4 years.
“what it means to put away $200K at 23 and hold for 30 years. I’d wager around $2M minimum”
at 7% per, it’s $1.5mm. Need to get to just under 8% to hit $2mm.
anon is that in “real dollars” – you better clarify before G gets up in your face
“anon is that in “real dollars” – you better clarify before G gets up in your face”
As you *should* know, the “insurance or financial type guy[s]” always assume the 7/8/9 returns are *above* inflation. So real $$.
Spence – do not listen to JP3. Though in theory it’s good advice but its playing the game way too safely. Risk generates reward. Remember that. The key is a balanced portfolio of risk. Always keep some cash on hand. His reference to the trader in 1999 is just an example of someone who pigged out, trying to make more and more w/o being satisifed. He could have pulled out at 1M instead of a few. Debt is ok – to an extent – but do not fall too far into debt. Also, I believe there are tax exemptions for student loans, so there are some advantages to having a student loan. Putting money in the bank for 30 years is a great idea – but only if you can live the way you want for those 30 years. Who cares if you are 55 and rich, but lived 25-55 poorly….
“Putting money in the bank for 30 years is a great idea – but only if you can live the way you want for those 30 years. Who cares if you are 55 and rich, but lived 25-55 poorly….”
I cannot agree with you more, A-fed. Saving is important – but living your life is MORE important. I cannot stress to everyone that people, when they are dying all say the same thing – that their life went by way too fast and they never expected it to end like this. Most people imagine retiring in Arizona, playing golf, laughing with friends after they stop working – the reality is that they spend most of their time sleeping, driving to the doctor, and recovering from procedures that they need. Savings ARE important but not at the cost of your happiness. Old age is NOT fun, retirement is likely NOT what you imagine…
Spence,
You lost your credibility with you maxing out your ROTH. You can only do a ROTH if your income falls below a certain level.
Many posters are not able to do ROTH because incomes are too high.
Unless you had trust fund no way you have accumulated 300k liquid (after paying income tax with no deductions living at home as single person).
I actually had 200k liquid when I was 25 but that was only because my grandparents gave it to me. Outside of that even as a frugal guy with no school debt I might have had 100k liquid at 25.
I am not buying your story. And if you make so much money why not rent a place downtown and go to school there at night while working during the day?
@humboldt1
i don’t get it? I am not making over the Max to contribute. No where did i say i saved it all up in that last 2 years of working. I have been saving my money(with the help of my parents) since I was 10. I got what i got, so chillax
As for renting, That is an option, a very tempting one too. My brother swears by renting, and constantly tells me how its better than buying. I have no clue myself, i got close to 6 months to figure it out.
@everyone else thx for the advice.
P.S. clio, every time i see your name i think of the Miss Cleo infomercial “Call me now for your free readin”
Does anyone have any updated information on the sterling?
I am 27 yrs old and have 250-300k to use for purchasing a condo. If i plan on staying in it for 10+ years, is it worth buying now, waiting for lower prices, or just renting?
I am thinking of buying a 2BR condo in this building. Does anybody have any info about the association / building reserves? Any other comments? Really appreciate all your help.
Thanks.