Not Everything Is Selling Quickly: A 3-Flat At 1832 W. Addison in North Center
We last chattered about this 3-flat at 1832 W. Addison in North Center in August 2012. (Yes- I finally have the right neighborhood on this one.)
See our prior chatter here.
And while our discussion evolved into whether or not it would be better to buy property in Berwyn versus this building, several of you did express that the financials of being a landlord on this property weren’t the strongest.
3 months later, the building is still on the market and is still priced the same- at $529,900.
If you reclal, it is located just four buildings to the west of the Addison Brown line stop.
The 3 units have the following:
- Unit #1: 2/1, rented for $800 a month
- Unit #2: 2/1, rented for $1200 a month
- Unit #3: 4/2 duplex up rented for $1400 a month
The 3-flat is on a standard 25×125 lot and has a 2-car garage.
Each of the tenants pays their own utilities. The listing doesn’t say if there is a washer/dryer somewhere in the building.
There is no central air.
The listing says the apartments have “newer kitchens” and that the plumbing and electrical has been updated.
Some of the units have original features such as hardwood floors and wood trim. The fireplaces also look original.
With the market apparently the hottest we’ve seen it in years, will this property sell in 2012 even without any price reductions?
Justin Francek at Dream Town still has the listing. See the pictures here.
1832 W. Addison: 3-flat, 8 bedrooms, 4 baths, 2 car garage
- Last sold before 1988
- Originally listed in June 2012 for $529,900
- Was listed in August 2012 at $529,900
- Currently still listed at $529,900
- Taxes of $7102
- No central air
- Rents total: $3400 a month
Those apartments look depressing with the drop ceilings and bad carpeting. With a little updating, these apartments can rent for a bit more (obviously)
“will this property sell in 2012 even without any price reductions?”
No. No it will not.
That’s a lot of money for a three flat with external obsolescence. This property is what, 12-15 feet off addison street?
This property has been on the market for what 90+ days? This one has been on the market for 9 days and already apparently has an offer. Yes I know it’s miles west and not GZ, but someone is gonna take a chance on it.
http://www.redfin.com/IL/Chicago/4027-N-Leclaire-Ave-60641/home/13477557?utm_medium=email&utm_source=myredfin&utm_campaign=instant_listings_update
Its not external obsolescence.
Quit throwing that term around. What do you propose – tearing down everything on Addison, Irving, Montrose, Western, Damen etc.?
“Definition for external obsolescence:
Web definitions:
An element of accrued depreciation; a defect, usually incurable, caused by negative influences outside a site and generally incurable ”
for example, busy streets, power lines, high traffic, flood plain, etc.
“for example, busy streets, power lines, high traffic, flood plain, etc.”
You just described most of the North Side.
“Its not external obsolescence.”
If it’s not, are you proposing that this would be worth exactly the same if it were arounf the corner on Wolcott?
“You just described most of the North Side.”
He sez it about the city in gerenal, too, if he’s in a bad enough mood–like he would be in a world with *no* Madigan style gerrymandering, which owuld have lead to him having a R us rep, but that rep being in the minority (since MI, OH, PA and NC all gerrymandered just like IL, but in favor of Rs).
Obsolescence in one sense of the word is a state, and in another is a process. Obsolescence — the state — provides clarity wrt buildings such as this. Appraising price is simple financial analysis. Obsolescence the process is the specter haunting Crib Chatter, what with all the obsession with finishes and amenities and their nebulous influence on value.
So these things sell on cap rate and the cap rate on this one comes out to about 6.3%, which is not bad but not great. Most of my investors want 8%+ but things do sell this low all the time. The question is whether or not that basement unit is legal. A lot of buyers won’t pay for illegal units. In a market where good investment properties sell overnight with multiple offers there must be an issue at this price.
It should be cheaper on an major street but I wouldn’t call it obsolete by any means
Plus being a 3 flat who cares if its on Addison.
I’d have to agree with Lunker,
being located on a busy street is not really what I’d call external obsolence.
HD’s defintion is missing the fact that to me, external obsolence also describes an at least somewhat “abnorma” negative external influence, like being located next to a landfill or on an indian burial ground or having a railraod line running through the kitchen.
Being located on a busy street is obviously a depreciating factor, but it’s nothing extraordinary. This problem is shared by a gazillion of units throughout the city.
If that’s external obsololence, than being located anywhere else than Gold Coast or LP is external obsolence, too. Or having less than 1 acre of land.
let’s say living on a busy street is a mild form of external obsolence, with everyone having a slightly different threshold for tolerance. DINKs may not mind as much as a couple with children for instance.
http://agbeat.com/editorials/real-estate/what-is-obsolescence/
I think one of the acid tests for EO is whether the obsolence was always there (landfill or indian burial ground) or might go away at some point (power lines or railroad tracks).
I think it being a 3 flat on a busy street is not a big deal. Single Family is more of an issue.
I still don’t consider it obsolete.
All the work/risk of being a landlord for 6-8% return? Seems like a lot of work for little gain (excluding the use of debt leverage).
external obsololence does not mean obsolete. It’s means an incurable and undersirable condition that lowers the value of a property. Appraisers routinely subtract seemingly arbitrary values for busy streets in their appraisals. Some people won’t ever consider busy streets, ever. One commenter on the snobby gardenweb site said that if you can’t afford a home on a side street in the town you want to live, then the town is too expensive for you, and you should look elsewhere. How many cars a day pass by this house at all hours of the night? How much higher would rents be if this three flat was on a side street? I’m just sayin. My previous residence on Damen right aroudn the corner fromthis sold for $550, in 2005. And it was torn down. And these guys want $529? Crazy town. That 6% cap rate will disappear with the first 2 major repairs that I’m sure have been deferred for years.
There can be value living on a busy street, especially if its set back 50 or more feet, and there’s a lower speed limit. But western or oakton or river road is just a bit much for me. I was In Wheaton today and driving on Main st there were some pretty fancy homes and upscale houses despite the high traffic on the street.