Selling 22 Years Later in Old Town: 327 W. Eugenie
This brick townhouse at 327 W. Eugenie in Old Town was built in 1971. If you like Old Town, this is in a fantastic location. It is right near the Historic Triangle and the restaurants/shops on Wells Street.
This seller bought in 1986, when the neighborhood was just a tad different.
Here’s the listing:
OLD TOWN! FAB ONE-OF-A-KIND FEE SIMPLE TOWNHOME(NO ASSESSMENTS).FEELS LIKE A SINGLE FAMILY! SUNFILLED TRIPLEX 2 BR/2 BA+DEN/3RD BR.LR W/SOARING 17′ CEILING & WBFP. KIT W/NEWER SS APPS, SEPARATE DINING RM. NEWER BATHS W/MARBLE & HRDWD FLOORS ON UPPER LEVELS.
2 DECKS-1 OFF SUNROOM ON MAIN LEVEL, 1 OFF HUGE MASTER. UTL. RM W/W/D. PKG INCL. WALK TO WELLS ST, LAKE, LINCOLN PARK, FANTASTIC DINING & NITELIFE-EVERYTHING!
John Sutton at Century 21 Sussex & Reilly has the listing. See more pictures and a virtual tour here.
327 W. Eugenie: 2 bedrooms, 2 baths, den, no square footage listed
- Sold in April 1986 for $152,000
- Originally listed in August 2007 for $789,000
- Several reductions
- Currently listed at $649,000 (includes one car parking)
- No assessments
- Taxes of $7,539
- Central Air
- OR you can rent it for $2500 a month
The buy/rent differential is so extreme it would be utterly foolish purchase at this price. If that’s a fair market rental rate, it’s hard to imagine a purchase price any higher than about $450K, which incidentally would also imply a plausible nominal annual appreciate rate of between 4-5% since 1986.
It wasn’t quite as tony as it is now, of course, but this still wasn’t a particularly rough area in 1986. Old Town Triangle was one of the first neighborhoods in Chicago to “gentrify,” with such investment in rehab and preservation dating back to the mid-1960s or so.
I’d start with the $450K, then subtract the cost of renovations which would absolutely have to be done, to the tune of probably $50K minimum. I can’t imagine this selling for more than $400K. And I wouldn’t even pay that for it, frankly…
Another listing agent who apparently has never used a computer since the days of the TRS-80 and doesn’t understand what the caps lock is for. Or maybe they are so excited about this property they feel it justifies typing in all caps.
“still wasn’t a particularly rough area in 1986”
True, but Cabrini had a much bigger influence on the area then–hell it had a much bigger influence in 1996. Eugenie would have been reasonably insulated from it, but there’s a reason that Piper’s Alley didn’t have any windows.
Who said the $2500 rent is fair market? Perhaps they’re just trying to break even on their monthly expenses once they move out and want to rent it quickly… with a mortgage of perhaps $120k (80% of $150k), what’s the monthly payment on that? Plus taxes, insurance, etc.?
2,500 I would say is fair market for a 3/2 or 3/3. For a 2/2 try more like 2,000-2,200.
The owners must forget that as you go up in bedrooms the rent is supposed to drop on a per bedroom basis. If 1brs rent for 1,200 this is not going to rent for 2,500 or even 2,400.
This unit is a depressing time capsule of 1980; pick it up and put it in a museum! The decorating is “early bachelor”, and the view is “vintage alley”; how does the realtor plan to get his asking price? This unit would have potential if the price was at $400,000 (two bedroom unit w/outdoor parking; don’t include basement office as a 3rd bedroom) and the new owner brought a contractor.
Yeah, the first thing I did was calculate the owner’s return on invested capital – which is the selling price and not their acquisition cost – assuming both the rent and the selling price are fair (which I know is flawed). Renting makes a lot of sense vs. this price – for buyers. Of course, if Steve is free today he’ll jump in on this conversation soon.
The thing is that so many – even educated people – don’t get the concept of opportunity cost. A lot of owners figure that if they merely cover their mortgage payment – or their interest cost – then they are OK. Apparently they feel no need to get a return on their equity.
Return on equity, what’s that these days. I am merely shooting for a return of equity. See Argentina?
This is a perfect example of my dilemma as a potential buyer in this market. I agree it’s a no brainer that renting is a better deal here, but I couldn’t live in this place as is. I’d have to gut the kitchen and probably the baths to be happy here…but I can’t justify buying it unless it’s way closer to 400K. This is exactly the kind of place I’m looking for though…2 baths, parking, no association to deal with, outdoor space, and somewhere on the red line between the loop and Belmont. It meets all my basic requirements, but I’d have to give up all hope of buying it as a smart investment knowing what the rent vs. buy calculations would say.
Danny,
Two thoughts:
1) Check out Craig’s list. I bet you can find a pretty decent rental. There are a lot of buyers who are holding out for higher prices and are thinking irrationally about renting their places out. Behavioral economics provides some insight into why they do this but it’s sufficient to know you can take advantage of them.
2) Eventually the market will rationalize and you will be able to find decent buying opportunities. Buying may still look worse than renting in the short run but with expected future rent increases buying could make sense in the long run.
I don’t understand, does this seller want to sell the unit? Because it ain’t happening with that price. Rent price seems reasonable though the renters would have to be OK with living in the past.