Overseas Owner Wants Out! 60 W. Erie in River North
60 W. Erie in River North is distinctive for its green windows and balconies.
It is a small, boutique building that first closed on units in 2003. Many of the units have nice layouts with windows in the kitchens and bathrooms.
A two bedroom unit is on the market where the listing states: “Overseas Owner Wants Out!”
Unfortunately, that owner is going to lose money even though he’s owned for four years.
Unit #1102: 2 bedrooms, 2.5 baths, 2157 square feet
- Sold in March 2004 for $926,500
- Currently listed for $930,000 includes 1 car parking
- Assessments of $1200 a month (it is high because the building is so small and that means there aren’t as many units to pay for maintenance, upkeep, the doorman etc.)
- Katherine Chez at Coldwell Banker has the listing
The doorman is part time there, nights only. Only 24 units, 2 per floor, very boutique.
Some people have mentioned fx rates/foreign buyers, etc. in the prior posts….
due to the weakening dollar this seller will lose money (the degree varying on country) even if this unit is sold at list.
example….assume EU buyer bought in in 2004 @ $926,500 or 770,000 euros @ $1.20 to one euro.
if this unit sold today @ $930,000, this equals 612,000 euros.
or a real return of ~ -15% pre-transaction costs, carrying costs, taxes, etc.
ouch.
but then again the owner had the intangible benefits of ownership.
left out….current fx rate is ~1.52 euro to $1.
ooops reverse that $1.52 to 1 euro. sorry.
But if Chinese, Japanese or Middle Eastern, basically no fx effect. And if Argentine, then close to a 10% fx gain. Or South African, 15% gain.
$1200/month assessments? Assuming this is the median unit in the building $1200*24 units * 12 months = 345,600.
All for a part time doorman and common area insurance. Sure a million is a million but if I owned here I’d be asking what that 350k is being spent on.
1200 / mo for assessments?? that’s 200 more than my rent! c-r-a-z-y!
Can anyone explain how assessments are allocated among units? Is it based on value or square footage? Is it regulated by statute? What stops a condo board from screwing over other owners?
If I lived in a more expensive unit, I can think of arguments for why I shouldn’t have to pay more, as I may not use the doorman any more than residents of a cheaper or smaller unit.
I’d be willing to assume there are enough safeguards in a large building, but how do owners of condos in a three flat work out these issues among themselves?
DZ:
Water and sometimes gas/heating is also included in the assessment. Because it is more expensive to support a larger unit, assessments are typically allocated based on square footage. Other things, such as pool, door man, workout facility, etc. should be broken down evenly between units.
You mentioned 3-flats. The units are identical in most cases, that’s why it is easier to break down the costs.
Condo and co-op assessments are based on the square footage of the unit.
You can’t argue on the basis of how much you might personally use a service, because it is there for all residents and something you agree to contractually when you buy the unit.
Best to get a copy of the condo associations bylaws and their financial reports before you submit an offer, and hire competent legal assistance to read the docs and help you understand what you’re agreeing to.
“anon on March 5th, 2008 at 12:55 pm
But if Chinese, Japanese or Middle Eastern, basically no fx effect. And if Argentine, then close to a 10% fx gain. Or South African, 15% gain.”
wrong on China, that is a loss of 15%. Argentina is not overseas but whatever, why not pick Brazil, loss of 42%. Peru, loss of 16%, Chile, loss of 26%. Colombia, loss of 31%.
Far East, Japan is a glaring exception and they haven’t been buying any real estate in the US since they got burned in the 1980s. How about Singapore, loss of 18%. Taiwan, loss of 7%. Korea, loss of 20%. Phillipines, loss of 29%. Thailand, loss of 20%. Malaysia, loss of 16%. This list goes on.
Middle East, c’mon those are pegged currencies and the domestic inflation there has FAR outpaced ours ie. local real estate is much higher in stable countries.
Sorry for the rant, but your post was disingenuous. The dollar is down against just about any basket of currencies you put together. To suggest otherwise due to a very few isolated exceptions is nonsense. That is the problem with a sinking currency, it may make assets cheap but there is no telling how much cheapER things will be down the road. Liquid securities are one thing, real estate is another. Waiting for foreigners to support this market? Good luck Estragon…
John
“Condo and co-op assessments are based on the square footage of the unit.”
I live in a new highrise in Evanston and the assessments must have been established on the value of the unit. The identical unit below me pays a lower assessment, and above me pays higher. Granted, this makes little sense to me….
John:
Please, I’m not one of the nuts who think that either (1) foreigners will save the RE market or (2) that everything is dandy.
I was merely challenging the assertion that the seller “will” lose money in their home currency. Not that I think it’s likely that whoever is selling this would immediately re-convert the proceeds–more likely to re-invest elsewhere in US assets, given the currently horrible fx situation.
Also, do you really think that a RE agent would NOT describe an Argentine as “overseas”? Seriously? Besides, I can’t think of any reasonable manner to get to Argentina that doesn’t involve going “over” a “sea”. Or is Hong Kong not “overseas” from London b/c you could get there on land + Chunnel?
Oh, and you’re absolutely right about the yuan. I hadn’t been paying attention and did not realize that the Chinese had allowed it to slide that much.
You all are assuming that the owner is a foreigner by the way the agent said “Overseas owner wants out”.
But I have seen many cases where Americans have been transferred for jobs or marriage “overseas” and hence just need to sell their places here in Chicago.
I’m not saying that’s the case in this situation, but it’s a possibility.
“I live in a new highrise in Evanston and the assessments must have been established on the value of the unit. The identical unit below me pays a lower assessment, and above me pays higher. Granted, this makes little sense to me….”
I have to agree with Tony in that I don’t understand why a higher floor unit in the same “stack” or square footage should pay higher HOA fees. HOA fees should be based only on sq. ft., and as someone currently renting in a building where the homeowners taxes and fees barely cover what I pay in rent, I cannot help but chuckle when I read in the lobby that fees were being raised another $110 dollars a month, while I was able to negotiate $150 off my lease when I renewed.
Laura, “Condo and co-op assessments are based on the square footage of the unit.” This is wrong. The developer decides % of ownership. The developer breaks down each unit in each building before turned over to the HOA. Each assessment for each unit is based on percentage of ownership. You can have a greater percentage of ownership if you live on a higher floor or if you have better views than another unit on the other side of the building.
This means they factor square footage, views, floor height, # of baths and or outdoor space. I live on the top floor in my building. I pay about $15 a month more than the condo 1 floor below me.The condo below me has the same square footage and same layout as me. I also own a greater percentage of the building than the and unit below me with the same floor plan.
This % of ownership never changes after the condo association is turned over to the HOA. Even if views change or get worse in your building the % of ownership will always be the same. No matter how hard you try you can never get this % changed even if it doesn’t make sense..
Just to pick at this a little more, co-op assessments are based pro-rata on the number of shares of ownership in the building corporation, not on square footage (although the number of shares may have been tied to SF way back in the day). With co-ops, you don’t technically own your unit – you just own shares in the building corporation and get a proprietary lease for your unit that goes along with these shares. sounds goofy now that we have condos but co-ops have been around longer.
anon,
Fair enough. Re: Americans overseas, a colleague of mine in London (Chicago native) recently bought a half-million dollar condo in Lincoln Park. She is renting it out until she moves back here (could be years). I estimate that it is costing her almost $800 a month in negative carry, not including any maintenance or vacancies.
I think the brainwashing of society into thinking that it is always a good time to buy real estate has been a tremendous success. Economic pain and suffering is the only re-education that will work. Only once that re-education is well on its way will it truly be a good time to buy, excepting one-off auctions etc. We have barely even begun…
John
From what I have seen, units on higher floors of a high rise have higher assessments, for the same tier, because they have more square footage.
The I-beams of a building are narrower the higher you go, because the higher floors are not supporting as much weight. Therefore, higher-floored units have more square footage, even if only a little. On the lower floors, these beams are very substantial, on the top floor very narrow.
I veiwed three apts in a vintage highrise in Edgewater. The 14th floor unit had an assessment about $30 higher than the 8th floor on the same tier, but the units did indeed differ in square footage, and you could see that the supporting members were larger in the 8th floor unit, hence fewer square feet, for about 20 square feet difference in the living room and a few feet in the bedrooms.