Update on Lofts in 540 N. Lake Shore Drive in Streeterville
Since we were talking about 540 N. Lake Shore Drive so much the other day, I decided to revisit the units I had last chattered about in September 2007.
At the time, numerous units were on the market including one, Unit #625, where the seller was trying to double his/her money after owning for only about two years.
Well, that unit is still on the market and has been reduced.
From the listing:
HIGH END FINISHES – OAK FLRS, EXPOSED BRICK. KITCHEN W/SLATE FLOORS, SNAIDERO CABINETS, SS APPLIANCES, LAKE VIEWS! BATHROOM WITH CARRERA MARBLE, DOUBLE VESSEL SINKS, GROHE FIXTURES, RAINSHOWER.
Unit #625: 1 bedroom, 1 bath, 1165 square feet
- Sold in August 2005 for $280,000
- Was listed in September 2007 for $535,000
- Reduced and now listed at $450,000 (not sure about parking- I know there is rental available for only $200 in the building)
- Does have a w/d in the unit- the building allows it but not every unit has installed it
- Assessments of $635 a month
- Streeterville Properties has the listing
Out of the other five units I talked about, only one has sold.
Unit #324: 2 bedroom, 1 bath, 1052 square feet, stainless, granite in the kitchen
- Was listed in September 2007 for $369,000
- Sold in December 2007 for $360,000
I can’t find any sales record for these and they are not currently on the market.
- #221: 1 bedroom, 1 bath, 1110 square feet, granite in the kitchen: listed for $350,000 in September 2007
- #716: 1 bedroom, 1 bath, 1000 square feet, top floor with skylights, new kitchen: listed for $350,000 in September 2007
- #405: 1 bedroom, 1 bath, 1000 square feet, new kitchen: listed for $339,000 (had just reduced the price) – in September 2007
- #321: 1 bedroom, 1 bath, 1100 square feet, new kitchen and baths, stainless, granite: listed for $399,000 in September 2007
Anyone with any more info on these units?
A Snaidero kitchen, but the microwave is sitting on the counter? Gotta love those Home Depot Kitchen Designers…
Actually, the more I look at this place, the more I like it. Still overpriced, though. Even at a quite generous $250 sq ft, it should be less than $300K.
What planet is this person on? Bought it at the peak for $280 and thinks it gone up $170? Read a paper.
I know. It’s frustrating. I’d be interested in this place, but am not even going to bother looking at it. I’d offer $260,000, they’d be “insulted,” and it would be a big fat waste of time. So instead, I just wait another year, and THEN pick one of these places up at what they actually should have been asking a year before, and all that has been accomplished is that they have to pay another year’s worth of mortgage, and/or continue to live in a place they don’t want to live in anymore.
Okay, K, you think I’m too bearish sometime, but you and CBB are a little off base here–there is NO WAY that the remodel of the kitchen and bathroom had been done before the ’05 sale. They have a lot more into the place than $280.
$450 is still nuts, nuts, crazy nuts, tho. They should be thrilled to sell it for $280 plus their remodel costs–so maybe $330k, if they put $50k into it (50k is probably about right, no?).
No way there should be a 100% return on the renovations, even for kitchens and baths. Maaaaaybe 75% less another 5% per year since completion.
True, but you’ve seen pictures of the “before” in this building, right? The K’s and B’s were sucking wounds–depressing the value.
And even with that, I said they should be “thrilled” to get their ’05 price plus their remodel costs–asking $450 is asking to just being a hog.
Sure, they’d be thrilled to get what they bought it for at peak in 2005. But virtually by definition, they paid too much in 2005. If they should have paid in the low 200’s, and the upgrade is worth another $30K, then I still think an opening offer of $260 (with maybe UP TO an acceptable final-pay price of $280) is reasonable. I think CBB is right here–to expect to get more than the peak price
they paid in 2005 is just wrong. SINCE they put in money to renovate, I think they should expect to get about what they originally paid (the $280 figure.) But they would not even entertain an initial offer of $260,000. Because they are crazy.
Anon, this unit doesn’t have deeded parking, or any outdoor space, and while it is in Streeterville, it is probably in the least convenient/crummiest part of the neighborhood. I stand by my thought that $250 sq. ft. is plenty generous, and does take into account what they put into the place.
Also, anon, I’ve never thought you were “too” bearish. I think you are mostly a 2003-ish guy, right? I think that is pretty much conventional wisdom right now. (Does anyone follow the Chicago Housing Futures markets? What are they saying?) I do think lower than 2003 prices are possible, but unlikely. But let’s see how the economy (and this selling season) goes…
Yeah, I am mostly a ’03 guy, right now. I’m not optimisitc that that’s the real bottom, tho. Nominal prices, sure, but I think there’s a lot of pent up inflation that’s going to pop sometime fairly soon and cause more significant real declines.
I do think that $280k for that space in Summer ’05 was low compared to comparable space (not w/ comp. finishes) b/c the finishes were so, so sub-standard for ’05. If the prior owner had done what the current owner has, it would have sold for significantly more.
All baseless speculation, in any case. Why they thought is was worth $450+/foot is absolutely beyond me.
To all the smart guys, isn’t it a pretty good deal to be able to deduct your HOA of $400 per month if it incudes all utilities from your taxes? Does that increase the arguement for buying? Just wondering.
Since when can you deduct your HOA? What am I missing?
I owned a rental, Maybe you can’t if it is your own property.
You can deduct the HOA if it’s a rental because a rental property is a business, and the assessments are a business expense. Same with depreciation, repairs, brokerage commissions, etc….
Right, but Jason is talking about living in it. (Otherwise, his question wouldn’t make sense. Unbundled utilities are paid by the tenant. It’s no advantage to you to have to pay the utilities even if you get to deduct them. Landlords would always rather the utilities NOT be bundled into HOA, because then the tenant has to pay them.)
So, why doesn’t everyone buy a place, flip it into an LLC or an S Corp, then rent it to themselves. Or rent from thier own LLC. Reading too much tax/corp law, and this Rolling Rock is making me think outside the box. You could be your own landlord if you structure it right. (I am an attorney.) I’ve seen some structures like this in housing court. Can’t figure out if it is a scam or not.
Jason,
Thats an interesting thought. Can someone essentially create a contract with themselves? I know that it would be classified as a related party transaction since you own more than 80%. I am taking the regulation section of the CPA tomorrow, so Ive been reading quite a bit about this. I’d like to give it some more thought.
What I do know right off the bat is that you would not need to claim as much depreciation on your 1065/1120 return, which would limit the depreciation recapture upon sale (taxed at ordinary income instead of gain).
Also, you have to consider that the property would be classified as business property, which would prompt gains taxes upon sale. However, these gains taxes can be avoided by completing a 1031 exchange.
Anyway, back to studying, i’d like to see what others think about the subject!
1031 is that like type property exchange I think. But why worry about the sale? What a deal over the years. Tax has always been my achilles Heel.
But here is another thought. You don’t have to be a member of the LLC. You can create ANOTHER corporation that owns the LLC. As long as you have a manager to sign the K’s you are all good. And you can create another corp that owes, say, 21%. (I learned alot about corporate structuring by trying to pierce corporate veils, which is near impossible. There is no doubt in my mind that you can contract with your own company. You can lend it money, that is a contract. Anyway, thoughts are welcome.
Owns, sorry tpye – o
One more quick comment on this. I once prosecuted some land bankers who had this crazy structure. They even called one of their “corps” BANCO PANAMERICO. Usually, you see that on title and you think it is a mortgagee. Turns out it was just another shell corp. And somehow, they gave another one of thier corps a mortgage. Amazing.
I am not sure what you mean by contracting with yourself, since you cant sue yourself, and your contract would therefore be unenforceable. You can certainly transfer something to a company you own or control so that the company, not you personally, owns the asset. So I think you are really describing a change of ownership, not a contract (offer, acceptance, consideration).
Pete,
I was referring to the tax implications regarding such a transaction. The IRS may have ruled against these transactions already. It might be worth looking into (google search/tax code/rulings). The idea is to be able to claim a tax benefit from the costs of the HOA. What I meant to say was “Does the IRS recognize/allow such a contract between an individual and a related party (wholly owned scorp/llc).”
An LLC isn’t a tax entity. You’re taxed as either a partnership or corporation (or sole proprietor for a single-member LLC). If you engage in a transaction with yourself or an entity that you control, losses arising from the transaction aren’t deductible.
The threshold for control is 80% for corporations with some special rules thrown in about spousal relationships, related parties, trusts, etc. Partnerships are 50%.
People have thought of this one already…
Just curious, you are absolutely correct. Losses resulting from a transaction between a partner (50% owner) and the partnership are disallowed.
Just read that in my CPA book!
kenworhty if you are so interested in this building as you are saying you should buy another unit and do all the the upgrade as the 625….after that you’ll know if you save some money.
Actually, it was the unit and its pretty upgrades that I liked, and the place has lost a little of its shine as I’ve seen more properties. The location is terrific for me (well… “very good.” The wind tunnel there is hellish), but the lack of outdoor space (or a wbfp), while not deal killers, aren’t ideal. But if the price was right, sure, I’d do what you are suggesting. Do you know of any units for sale in the building in need of a good upgrade? What are they asking per sq. ft.?
ken I believe there are some units for sale on the low 300s but not at 250$sf as you are looking for. you should take a look to other locations outside downtown
Hi, I live in this building. I got a fantastic deal on my unit several years ago and did a total gut rehab and redesign of the layout. The result is that I live in essentially a brand new condo, with high ceilings, brick, timber, fully sprinkled in the event of fire. The taxes and assessments are very reasonable.
This building is actually in a great location. You can walk under Lake Shore Drive and be on Ohio Street Beach in less than 3 minutes, and in 5 minutes you can be in Olive Park or Navy Pier. The back side of the building is on several bus routes, and cabs are plentiful.
We are undergoing a major renovation to our lobby. The roof is being replaced. We are up to date on tuckpointing. We have healthy reserves and have not had a special assessement since I’ve been here.
We are one of the few buildings that do not allow dogs.
Our doormen are wonderful, it’s a very friendly and cozy building.
While we don’t have deeded parking, we own the attached parking garage and offer monthly self-parking. Many people park across the street at the W hotel. They offer monthly parking with a valet service for about the same price (around $200/month).
The two towers at 600 LSD are almost completed. Although many at 540 lost their lake views, I believe that building will be a huge improvement (real estate values and standard of living) to that end of Ohio Street.
Not every person appreciates loft living, it’s not for everyone. We have lots of creative types, and professional people here, and a few children. There have also been several celebrities that have lived here (an Emmy winner, and 2 Oscar-nominated actors). The building is small, around 100 owners (many have been combined, a couple people have merged 3 or 4 units).
This building is still a great value for the neighborhood and the rock solid construction. Many of the units have been improved, but I think there may still be a few sleepers around. I am also on the lookout for another one.